'When I Find Things I Have A Lot Of Conviction In, I Go All-in': Ryan Cohen's Stake In Alibaba And History Of Activism

Activist investor Ryan Cohen has made a name for himself for investments in several companies that became popular with retail traders, including GameStop Corp GME and Bed Bath & Beyond BBBY.

Now, a new holding by Cohen has been announced. Here’s a look at his new stake and the past history of his positions.

What Happened: Ryan Cohen took a stake in Chinese e-commerce giant Alibaba Group Holding BABA, according to a Monday report. 

Cohen’s position is said to be valued in the hundreds of millions of dollars, and has not been confirmed by an official filing yet.

Alibaba’s Board of Directors was contacted by Cohen in August, according to a report from the Wall Street Journal.

Cohen told Alibaba that their shares were undervalued, and the company could see double-digit sales growth and 20% free cash flow growth over the next five years.

One of the major objectives on Cohen’s docket from his stake in Alibaba would be to push the company’s Board of Directors for share buybacks, the report said. Cohen thinks the company could increase the current share buyback from $40 billion to $60 billion.

Share buybacks can sometimes increase investor attention, as they could demonstrate that the Board of Directors thinks shares are currently undervalued. The buybacks also can improve financials as they lower the number of outstanding shares and can improve the per-share earnings.

Cohen has held a sizable position in technology giant Apple Inc AAPL, a company that has bought back hundreds of billions of shares since 2012.

Alibaba has struggled in recent years due to the COVID-19 pandemic and global macroeconomic concerns. In August 2022, the company had its first quarterly revenue drop since going public in 2014.

In June 2022, Cohen tweeted, “I have a crush on China.”

Related Link: Is GameStop's Ryan Cohen Becoming The Millenial Generation's Warren Buffett? 

Cohen’s Activist Investor History: Cohen is the founder of Chewy Inc CHWY, which he sold for $3.3 billion in 2017.

After the sale of Chewy, Cohen invested in Apple and Wells Fargo & Company WFC.

Years later, Cohen took a position in video game retailer GameStop and pushed for changes. In August 2020, Cohen disclosed a 9% stake in the company, the position was later increased to 13%. Cohen replaced members of the Board of Directors and eventually became the chairman.

GameStop became the center of a David vs. Goliath battle between retail traders and hedge funds, catapulting Cohen to become one of the most recognizable names among newer and younger investors.

After the events of GameStop, Cohen turned his attention to struggling retailer Bed Bath & Beyond. Cohen took a 9% stake in the retailer and pushed for several changes.

“We believe Bed Bath needs to narrow its focus to fortify operations and maintain the right inventory mix to meet demand, while simultaneously exploring strategic alternatives that include separating buybuyBaby Inc and a full scale of the company,” Cohen said in a letter to the company at the time.

Shares of Bed Bath & Beyond jumped 90% on the news of Cohen’s stake, and many retail traders who made profits from GameStop or saw what Cohen had done in elevating the share price of the video game company may have followed the activist investor into the trade.

Cohen’s stake in Bed Bath & Beyond jumped to around 11.8% including options later in 2022. Bed Bath & Beyond saw shares trade higher as a short squeeze and meme stock candidate.

Later, a filing showed that Cohen had completely exited his position in Bed Bath & Beyond, selling shares between $18.68 to $29.21 each. Shares fell sharply on the disclosure that Cohen was out of the name.

He became the target of negative comments for a potential pump-and-dump scheme with Bed Bath & Beyond shares and options activity. Cohen made a profit of around $68 million from Bed Bath & Beyond investments in a seven-to-eight-month period.

Cohen’s Investment Strategy: Investing in Apple and Wells Fargo after the sale of Chewy shows that Cohen may not be a believer in diversification like other investors, instead taking large positions in two stocks.

“When I find things I have a lot of conviction in, I go all-in,” Cohen said at the time.

Cohen often holds positions for years and believes in a long-term investment strategy.

“I don’t want to swing for a single.”

Cohen recognized years ago that his investment strategy is not for everyone, but has seen many investors follow him into his picks thanks to past success.

“You need to have the temperament to block the noise. Sometimes it feels like a rollercoaster.”

Reports say Cohen still holds his investments in Apple and Wells Fargo, along with investments in Citigroup Inc C and Netflix Inc NFLX.

Cohen’s history has shown that his investments are typically long-term holdings, other than Bed Bath & Beyond.

In the case of GameStop and Bed Bath & Beyond, Cohen fought for changes. When it comes to other investments, Cohen has been a passive investor and watched from the sidelines.

Based on the comments about share buybacks, it could be predicted that Cohen will push for changes by Alibaba to try and unlock shareholder value. Reports have also indicated that Cohen sees the investment as a long-term play.

BABA Price Action: Alibaba shares are down 1% to $115.59 on Tuesday, versus a 52-week trading range of $58.01 to $136.75. Shares of Alibaba are down 12% over the last year and up 25% year-to-date to start 2023.

Read Next: If You Invested $1,000 In Bed Bath & Beyond Stock When Ryan Cohen Did, Here's How Much You'd Have Now

Photo: Courtesy of Bill Jerome on Flickr and Shutterstock.