UK 19:27 Friday, 23 October 2026
Breaking news and expert analysis on fast-moving AIM and LSE listed shares
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
John Hempton of Bronte capital in Oz, was a star of the recent Gold & Bears show and is right now King of the Bears - you can see his performance HERE. I started looking at Alibaba (US:BABA) as a cracking short yesterday HERE but now bring you a Hempton article from a couple of months ago which is absolutely brilliant. Read this and then tell me if you believe a word that Alibaba claims. It is a slam dunk short. Over to the King of the Bears..
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Comments
Duck and Dive
Assuming that Alibaba’s Singles Day works in a similar way to Amazon’s Black Friday/Manic Monday promotions (ie a rolling conveyor belt of time-slotted genuine bargains throughout the day which encourages shoppers to keep coming back to purchase all the items on their wishlist – and going to the checkout on each occasion), then it is certainly feasible that an individual could purchase 10, or even 50, items in 5 or more separate transactions over 24 hours.
It would be worth getting McKinsey or some other reputable consumer research outfit operating in China to establish what proportion of the population bought on Singles Day and what the average number of items/transactions and total expenditure was.
The logistics processes may not be comparable. Amazon would be delivering most orders within 2-3 days and within 24 hours to Prime customers. I would assume that Alibaba’s deliveries are made over a much longer period. Hence, peak transactions wouldn’t directly relate to peak deliveries.
From a long investor’s POV, it’s easy to ignore every Chinese stock on the simple premise that facts are hard to establish. I guess the same should be true for shorters.
Denis
Just a thought, if you look at Alibaba web site you find many things that have a minimum purchase order number, could be 100, 200, 500, 1000, 5000. Now if the minimum purchase is 5000 & you have 1000 purchasers you have shipped a 5 million items, it would soon add up. Not sure if it would be enough though.
warun boofit
The contrast between Fedex/UPS/Amazon and Alibaba I would describe as one being slick and the other slack, I am surprised that Alibaba allowed those videos to be made, they should feel embarassed. One day soon Alibaba and its logistics partners will no longer have cheap labour, their workers must have empathy with battery farmed chickens, no amount of money would get me picking and packing for Alibaba or Amazon or Sports Direct etc but in China there is little alternative. Fedex/UPS/Amazon are clearly well ahead with automation so Alibaba have a lot of investing to do in their vast empty warehouses, they could at least make a start and buy some decent shelves. I have not studied your numbers but I agree Alibaba is a good candidate for a short, I was looking at Apple as a short as well for 2016 but I now think this is a better candidate. Another longer term consideration which will not impact in 2016 is that manufacturing is moving out of China, I worked for a company that moved its UK production to east Europe, then moved some of it to China and within the last year sold a market leading brand to an American company that is now moving the production line back to the UK, this will become a trend as automation costs reduce. China is devalueing its currency this year but that could hasten domestic inflation and drive upward pressure on wages and by the way they have kicked off 2016 they are serious about it.