Ruffer LLP / Ruffer Investment Company Limited on Alibaba Group Holding Limited
Thesis
Alibaba was the largest positive contributor to Ruffer's portfolio in July, with its shares rising nearly 30% even as semiconductor stocks suffered their worst month since 2008. The release of the inexpensive Chinese AI model Kimi K3, which was trained using Alibaba's cloud technology, highlighted the company's exposure to the development of Chinese AI infrastructure. Ruffer contrasts opportunities such as Alibaba with the crowded and highly valued global AI trade, where it believes the prevailing narrative offers little margin of safety. Alibaba illustrates the type of asymmetric position where a relatively small change in fundamentals or news flow can produce an outsized positive return.
“Whilst semiconductor stocks had their worst month since 2008, Alibaba was the largest positive contributor to the fund in July, with its share price up nearly 30%.”