MICHAEL BURRY’S PORTFOLIO

Michael Burry's Portfolio

MICHAEL BURRY'S SCION ASSET MANAGEMENT Q4 2024 PORTFOLIO

Scion Asset Management, a hedge fund managed by Michael Burry, disclosed 13 security holdings in their SEC 13F filing for the fourth quarter of 2024, with a total portfolio value of $77,436,000

As of Q4 2024, Michael Burry’s portfolio reveals a strategic recalibration, with both reductions in key Chinese tech holdings and new bets in the healthcare and consumer sectors. Below is a detailed overview of his latest positions and notable changes since the previous quarter.

1. BABA – Alibaba Group Holdings 16.43%

2. BIDU – Baidu Inc. 13.61%

3. JD – JD.com Inc. 13.43%

4. EL – Estee Lauder Cos. 9.68%

5. MOH – Molina Healthcare Inc. 9.40%

6. PDD – Pinduoduo Inc. 9.39%

7. HCA – HCA Healthcare Inc. 5.81%

8. BRKR – Bruker Corp. 5.68%

9. VFC – V.F. Corp. 5.54%

10. MAGN – Magnera Corp. 4.69%

11. OSCR – Oscar Health Inc. 3.47%

12. ACIC – American Coastal Insurance Co. 2.54%

13. GOOS – Canada Goose Holdings Inc. 0.32%

1. Alibaba Group Holdings (BABA)

Portfolio Allocation: 16.43%
Recent Activity: Reduced 25%
Shares Held: 150,000
Reported Price: $84.79
Value at Reported Price: $12,719,000

Once again a prominent holding, Alibaba has been trimmed by 25%. Despite the reduction, Burry still maintains a sizable stake in this Chinese e-commerce powerhouse, suggesting he remains cautiously optimistic about Alibaba’s long-term prospects in cloud computing and digital retail—while acknowledging ongoing regulatory and macroeconomic uncertainties in China.

2. Baidu Inc. (BIDU)

Portfolio Allocation: 13.61%
Recent Activity: No change
Shares Held: 125,000
Reported Price: $84.31
Value at Reported Price: $10,539,000

Baidu remains a core position, reflecting Burry’s steady confidence in the company’s AI capabilities and its potential for continued innovation in autonomous driving and smart city solutions. By keeping this stake unchanged, he signals a long-term commitment to Baidu’s leadership in China’s growing tech ecosystem.

3. JD.com Inc. (JD)

Portfolio Allocation: 13.43%
Recent Activity: Reduced 40%
Shares Held: 300,000
Reported Price: $34.67
Value at Reported Price: $10,401,000

Burry significantly reduced his stake in JD.com, another major Chinese e-commerce platform. Although JD.com was previously a high-conviction holding, this cut may indicate a more conservative stance toward China’s online retail market amid competitive pressures and economic headwinds. Nonetheless, JD remains a top portfolio position.

4. Estee Lauder Cos. (EL)

Portfolio Allocation: 9.68%
Recent Activity: Buy
Shares Held: 100,000
Reported Price: $74.98
Value at Reported Price: $7,498,000

A new addition to the portfolio, Estee Lauder reflects a pivot toward consumer-facing companies with strong brand equity. Estee Lauder’s global reach in beauty and skincare may offer growth opportunities, particularly as consumer spending in luxury and personal care recovers in various markets.

5. Molina Healthcare Inc. (MOH)

Portfolio Allocation: 9.40%
Recent Activity: Reduced 16.67%
Shares Held: 25,000
Reported Price: $291.04
Value at Reported Price: $7,276,000

Molina Healthcare remains a significant holding, albeit reduced this quarter. Its focus on government-sponsored health plans provides defensive qualities—an attractive feature when balancing risk across more volatile tech positions. Burry’s partial reduction may free up capital for new investments while still maintaining healthcare exposure.

6. Pinduoduo Inc. (PDD)

Portfolio Allocation: 9.39%
Recent Activity: Buy
Shares Held: 75,000
Reported Price: $96.99
Value at Reported Price: $7,274,000

Burry’s addition of Pinduoduo underscores continued interest in Chinese e-commerce, specifically in platforms known for innovative, value-oriented shopping experiences. This new position partly offsets reductions in Alibaba and JD.com, suggesting Burry still sees upside in China’s online retail sector—albeit in a more diversified manner.

7. HCA Healthcare Inc. (HCA)

Portfolio Allocation: 5.81%
Recent Activity: Buy
Shares Held: 15,000
Reported Price: $300.13
Value at Reported Price: $4,502,000

Another healthcare purchase, HCA strengthens the portfolio’s defensive characteristics. As a leading hospital operator, HCA provides relatively stable cash flows and could benefit from ongoing demand for healthcare services, even in uncertain economic conditions.

8. Bruker Corp. (BRKR)

Portfolio Allocation: 5.68%
Recent Activity: Buy
Shares Held: 75,000
Reported Price: $58.63
Value at Reported Price: $4,397,000

Bruker’s inclusion highlights Burry’s interest in the life sciences and diagnostic equipment space. With research and development spending on the rise globally, Bruker’s specialized instruments could capitalize on growing demand for advanced analytical technologies.

9. V.F. Corp. (VFC)

Portfolio Allocation: 5.54%
Recent Activity: Buy
Shares Held: 200,000
Reported Price: $21.46
Value at Reported Price: $4,292,000

V.F. Corp., known for iconic brands like The North Face and Vans, marks a deeper foray into consumer discretionary. Burry’s purchase suggests optimism about brand loyalty and the potential recovery of retail demand, particularly in apparel and outdoor segments.

10. Magnera Corp. (MAGN)

Portfolio Allocation: 4.69%
Recent Activity: Buy
Shares Held: 200,000
Reported Price: $18.17
Value at Reported Price: $3,634,000

A newly added position (hypothetical ticker), Magnera Corp. signals Burry’s willingness to explore opportunities beyond established mega-caps. The company’s exact sector or niche isn’t specified, but the purchase indicates Burry’s hunt for emerging or undervalued prospects.

11. Oscar Health Inc. (OSCR)

Portfolio Allocation: 3.47%
Recent Activity: Buy
Shares Held: 200,000
Reported Price: $13.44
Value at Reported Price: $2,688,000

Oscar Health broadens the portfolio’s exposure to health insurance, specifically focusing on technology-driven solutions. This bet aligns with a theme of modernizing healthcare services and could complement Burry’s existing investments in Molina and HCA.

12. American Coastal Insurance (ACIC)

Portfolio Allocation: 2.54%
Recent Activity: Added 46.10%
Shares Held: 146,100
Reported Price: $13.46
Value at Reported Price: $1,967,000

Despite past caution toward insurance plays, Burry substantially increased his stake in American Coastal Insurance. This addition may reflect renewed confidence in property and casualty insurers or a view that current valuations present a compelling risk-reward opportunity.

13. Canada Goose Holdings Inc. (GOOS)

Portfolio Allocation: 0.32%
Recent Activity: Buy
Shares Held: 24,838
Reported Price: $10.02
Value at Reported Price: $249,000

A modest purchase in Canada Goose suggests a small but strategic bet on luxury outerwear and premium lifestyle branding. While this holding is small relative to others, it hints at Burry’s interest in selective consumer discretionary names.

Overview of Portfolio Changes

1. Reduced Exposure to Chinese E-Commerce Leaders:
Alibaba and JD.com—previously among the largest holdings—were notably trimmed. This pivot indicates a desire to lock in gains or reduce risk exposure amid regulatory headwinds and economic uncertainties in China. Still, both remain top holdings, and Burry offset these cuts by initiating a new position in Pinduoduo.

2. New Emphasis on Healthcare and Defensive Plays:
The portfolio features significant activity in healthcare, with Molina Healthcare partially reduced but HCA Healthcare newly added. Oscar Health further diversifies Burry’s bets in the sector. This move suggests a preference for stable, demand-driven businesses to balance out more volatile tech positions.

3. Expansion into Consumer and Specialty Stocks:
New positions in Estee Lauder, V.F. Corp., and Canada Goose highlight a tilt toward consumer discretionary and luxury brands. Bruker and Magnera represent specialized bets, possibly capitalizing on niche growth opportunities in diagnostics, scientific research, or emerging markets.

4. Selective Increase in Insurance:
After previously cutting insurance exposure, Burry significantly increased his stake in American Coastal Insurance. This addition could reflect an opportunistic move based on pricing or a reevaluation of risk within the property and casualty segment.

Market Context and Strategic Considerations

Throughout Q4 2024, global markets faced persistent volatility, driven by geopolitical tensions, fluctuating consumer demand, and shifting regulatory landscapes—particularly in China. Burry’s adjustments show a nuanced approach:

He remains engaged with Chinese tech but has become more selective, trimming some positions while adding Pinduoduo.
Healthcare continues to serve as a defensive anchor, evident in his holdings of Molina, HCA, and Oscar Health.
Consumer discretionary appears to be a renewed focus, with apparel, cosmetics, and luxury goods positions aimed at capturing potential rebounds in consumer spending.

Conclusion

Michael Burry’s Q4 2024 portfolio underscores a blend of caution and conviction. While reducing stakes in top Chinese e-commerce names, he has diversified within the tech sector (Baidu, Pinduoduo) and reinforced his defensive positioning through healthcare investments (Molina, HCA, Oscar). New consumer plays (Estee Lauder, V.F. Corp., Canada Goose) and expanded insurance exposure (American Coastal) reflect opportunistic moves to capture value in sectors poised for recovery or stable returns.

These shifts suggest Burry is balancing risk management—by trimming oversized stakes and emphasizing defensive healthcare—with targeted growth opportunities in consumer, specialty, and Chinese tech segments. As markets evolve, his portfolio positioning highlights a continued willingness to pivot quickly and capitalize on changing market dynamics, all while maintaining core convictions in both tech and healthcare.

Overview of Portfolio Changes

1. Reduced Exposure to Key Chinese E-Commerce Holdings

Contrary to the prior quarter’s increases, Alibaba (BABA) and JD.com (JD) were both trimmed this time around—by 25% and 40% respectively. Despite these cuts, each remains a top holding, indicating Burry’s decision to lock in gains or mitigate risk while still maintaining a significant presence in China’s e-commerce space.

2. Diversification Within Chinese Tech

Although Alibaba and JD.com were reduced, Burry added Pinduoduo (PDD) to the portfolio, suggesting a nuanced stance on Chinese tech. By introducing Pinduoduo, he balances exposure among different e-commerce models, signaling ongoing confidence in the sector’s innovation and consumer demand.

3. Healthcare Adjustments

Burry reduced Molina Healthcare (MOH) by 16.67% but initiated new positions in HCA Healthcare (HCA) and Oscar Health (OSCR). This indicates a shift toward a more diversified healthcare strategy, aiming to balance risk across different subsectors—managed care (MOH), hospital operations (HCA), and tech-driven insurance (OSCR).

4. New Consumer and Specialty Plays

The portfolio now includes Estee Lauder (EL), V.F. Corp. (VFC), and Canada Goose (GOOS), highlighting a move into consumer-facing companies with strong brand recognition. Additionally, Bruker (BRKR) and Magnera Corp. (MAGN) were added, pointing to an appetite for opportunities in diagnostics/life sciences (Bruker) and potential emerging markets or niche industries (Magnera).

5. Insurance Repositioning

After previously trimming insurance exposure, Burry added 46.10% to his stake in American Coastal Insurance (ACIC). This substantial increase suggests he sees renewed value or improved risk-reward in the property and casualty space, potentially due to pricing, market conditions, or new strategic considerations.

Market Context and Strategic Considerations

Throughout Q4 2024, persistent market volatility and ongoing geopolitical uncertainties continued to shape investment decisions. Burry’s adjustments—particularly the reduction in two major Chinese e-commerce names while adding Pinduoduo—reflect a more selective but still significant commitment to China’s tech landscape.

Meanwhile, new investments in healthcare (HCA, Oscar) and consumer/luxury brands (Estee Lauder, V.F. Corp., Canada Goose) illustrate a broader diversification strategy. Burry appears to be seeking stable, demand-driven sectors (healthcare) and consumer plays with strong brand loyalty, balancing the portfolio’s inherent volatility from tech-focused holdings.

Portfolio Strategy Shifts

1. Cautious Realignment in Chinese Tech
By trimming Alibaba and JD.com yet adding Pinduoduo, Burry reveals a nuanced approach—still believing in the long-term potential of Chinese e-commerce but diversifying within the space.

2. Enhanced Healthcare Diversification
The reduced position in Molina, combined with fresh buys in HCA and Oscar Health, underscores a tactical spread across different healthcare verticals, aiming for stability and growth potential.

3. Consumer & Specialty Expansion
With Estee Lauder, V.F. Corp., Canada Goose, and Bruker, Burry is branching out beyond tech and insurance. These moves suggest optimism about post-pandemic consumer spending and sustained investment in scientific research.

4. Renewed Insurance Confidence
The notable increase in American Coastal Insurance implies a reassessment of risk in property and casualty, possibly anticipating a favorable market environment or improved underwriting conditions.

Conclusion

Michael Burry’s Q4 2024 portfolio exhibits a calibrated shift: trimming select high-profile Chinese e-commerce holdings while adding new names in both healthcare and consumer sectors. His willingness to reduce exposure to Alibaba and JD.com—yet introduce Pinduoduo—shows a balanced approach to managing geopolitical and market volatility. At the same time, increased stakes in HCA, Oscar Health, and American Coastal Insurance underscore a drive for defensive and diversified growth.

Overall, Burry’s Q4 positioning reflects both caution and conviction: paring back on oversized bets to mitigate risk, yet embracing new opportunities in consumer, healthcare, and specialty industries to capture potential upside in a rapidly changing global market.

Molina Healthcare, Inc. (MOH) Stock Analysis

Molina Healthcare, Inc. (MOH) Stock Analysis
Market Capitalization: $15.11 B
Shares Outstanding: 55.50 M
Sector: Healthcare
Industry: Managed Healthcare / Health Insurance
Analysis as of: February 15, 2025

1. Company Overview

Molina Healthcare, Inc. (NYSE: MOH) is a Fortune 500 company providing managed healthcare services to low-income families and individuals through government-sponsored programs such as Medicaid, Medicare, and Marketplace. The company operates health plans in multiple U.S. states and Puerto Rico, focusing on cost-effective care and strong medical cost management.

Key Business Segments

1. Health Plans: Offers Medicaid, Medicare Advantage, and Marketplace coverage to beneficiaries in multiple states, often serving high-acuity populations.

2. Behavioral Health & Specialty Services: Provides integrated mental health and specialty pharmacy solutions to address complex patient needs.

3. Pharmacy Management: Facilitates prescription drug benefits, negotiating with pharmacy benefit managers (PBMs) and drug manufacturers to optimize cost.

Strategic Initiatives

Geographic & Product Expansion: Pursuing new state Medicaid contracts and potential acquisitions to expand membership in underserved markets.
Operational Efficiency: Ongoing focus on controlling medical costs and administrative expenses, leveraging data analytics and value-based care arrangements.
Digital Health & Member Engagement: Enhancing telehealth, digital enrollment, and care coordination to improve member outcomes and experience.

2. Financial Performance

Revenue & Growth

TTM Revenue: $39.16 B
Recent Growth Rate: +6–18% range YoY in the last few quarters, driven by Medicaid contract expansions and acquisitions.

Profitability Metrics

Net Income (TTM): $1.18 B
EPS (TTM): $20.42
PE Ratio (TTM): 13.33
Forward PE: 11.09

Margins

Gross Margin: 12.09%
Operating Margin: 4.36%
Profit Margin: 3.01%

Analysis:

Robust Revenue Streams: Membership gains in Medicaid, Medicare, and Marketplace segments have contributed to solid top-line growth.
Steady Profitability: Despite operating in a lower-margin Medicaid segment, Molina’s medical cost discipline supports stable margins and net income.

3. Balance Sheet

Cash & Equivalents: $8.99 B
Total Debt: $3.22 B
Net Cash Position: $1.44 B (or roughly $25.91 per share)
Shareholders’ Equity: $4.50 B (Book Value Per Share: $80.29)
Debt/Equity Ratio: ~0.72

Analysis:

Strong Liquidity: Molina maintains a sizable cash balance, partly reflecting regulatory capital requirements for health plans.
Manageable Leverage: A net cash position indicates flexibility, while a moderate debt/equity ratio suggests prudent use of debt.

4. Valuation

Market Cap: $15.11 B
Enterprise Value: $13.67 B
Key Multiples:
- PE (TTM): 13.33
- Forward PE: 11.09
- Price-to-Sales (PS): 0.40
- Price-to-Book (PB): 3.39
- PEG Ratio: 0.85
- EV/EBITDA: 7.49
- EV/FCF: 25.14

Analysis:

Attractive Valuation: Molina’s PE and PS ratios are relatively low for a managed care provider, possibly reflecting narrower margins and Medicaid concentration.
Growth Outlook: With a PEG below 1.0, the market may be underestimating Molina’s earnings growth potential relative to its current price.

5. Market Performance

52-Week Range: $262.32 – $423.92
Recent Close Price: $271–275 range
52-Week Price Change: –30.95%
Beta (5Y): 0.54

Trading & Short Interest

Average Volume (20 Days): ~0.73 M shares
Short Interest: ~1.14 M shares (2.06% of outstanding)
Short Ratio: ~2.22

Analysis:

Underperformance in Past Year: The stock has declined ~31% from its 52-week high, possibly due to concerns around Medicaid redeterminations and sector rotation.
Low Beta: MOH’s lower volatility can appeal to investors seeking a more defensive healthcare name.

6. Financial Health & Risks

Liquidity & Leverage

Current Ratio: 1.62
Quick Ratio: 1.56
Net Cash Position: $1.44 B
Interest Coverage: ~14.47

Analysis:

Ample Liquidity: Higher current and quick ratios indicate a strong short-term liquidity profile.
Solid Balance Sheet: Significant net cash provides resilience against shifts in reimbursement rates or state-level contract changes.

Operational & Market Risks

Medicaid Redeterminations: With pandemic-related expansions ending, membership churn could reduce enrollment and revenue.
Regulatory & Political Factors: Changes in state and federal healthcare policy, or reimbursement rates, can significantly affect profitability.
Medical Cost Trends: Unforeseen spikes in healthcare costs (e.g., new treatments, pandemics) may pressure margins.

Profitability & Cash Flow

Free Cash Flow (TTM): $544 M (1.39% margin)
FCF Per Share: $9.80
Capital Deployment: No dividend; management invests in acquisitions and share repurchases to enhance shareholder returns.

7. Conclusion

Pros

1. Focused Medicaid & Medicare Platform: Strong presence in government-sponsored healthcare markets.

2. Healthy Balance Sheet: Net cash position and moderate leverage enhance financial flexibility.

3. Attractive Valuation Multiples: Relatively low PE, PS, and PEG ratio suggest potential upside if growth continues.

Cons

1. Regulatory Uncertainty: Shifts in Medicaid eligibility or rate adjustments can materially affect enrollment and revenue.

2. Lower Margins: Medicaid typically yields thinner margins compared to commercial health plans, limiting profitability expansion.

3. Concentrated Exposure: Heavily reliant on government programs, which can be impacted by policy changes or funding fluctuations.

Final Note:
Molina Healthcare’s emphasis on Medicaid and Medicare Advantage has driven solid membership gains and revenue growth. Its balance sheet strength and operational efficiency support further expansion, though regulatory shifts in Medicaid eligibility remain a key risk. For long-term investors comfortable with potential policy volatility, Molina’s current valuation and growth outlook present a reasonably attractive opportunity.

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Investing involves risks, including potential loss of principal. Past performance is not indicative of future results. Consult a qualified financial advisor before making any investment decisions.

American Coastal Insurance (ACIC) Stock Analysis

American Coastal Insurance Corporation (ACIC) Stock Analysis
Market Capitalization: $595.33 Million
Shares Outstanding: 48.20 Million
Sector: Insurance
Industry: Property & Casualty Insurance
Analysis as of: February 15, 2025

1. Company Overview

American Coastal Insurance Corporation (NASDAQ: ACIC) is a specialty property and casualty insurer, primarily focusing on coastal regions and wind-exposed properties. The company underwrites residential and commercial lines in high-risk geographies, leveraging reinsurance programs to mitigate hurricane and catastrophic event losses.

Key Business Segments

1. Homeowners & Condo Insurance: Provides dwelling coverage for policyholders in hurricane-prone states, including windstorm, flood, and named-peril policies.

2. Commercial Property Insurance: Offers commercial building coverage, focusing on condominium associations, multi-family complexes, and commercial structures.

3. Reinsurance & Catastrophe Management: Employs layered reinsurance treaties, alternative capital markets, and risk modeling to handle peak catastrophe exposures effectively.

Strategic Initiatives

Geographic Diversification: Seeking opportunities to expand into adjacent states or coastal regions to balance risk exposure and regulatory constraints.
Underwriting Discipline: Emphasizing rate adequacy, conservative underwriting guidelines, and advanced analytics to maintain profitable combined ratios.
Digital & Operational Efficiency: Investing in policy administration systems, claims automation, and data-driven risk selection to improve cost structure and customer experience.

2. Financial Performance

Revenue & Growth

TTM Revenue: $290.78 M
Revenue Growth (YoY): +1.02% (moderated after a period of volatility, reflecting shifting reinsurance costs and underwriting cycles)

Profitability Metrics

Net Income (TTM): $85.06 M
EPS (TTM): $1.76
PE Ratio (TTM): 7.02
Forward PE: 10.21

Margins

Gross Margin: 56.00%
Operating Margin: 40.45%
Profit Margin: 29.25%

Analysis:

Robust Margins: Despite operating in high-risk coastal areas, ACIC has achieved a solid operating margin, aided by disciplined underwriting and reinsurance structures.
Positive Earnings Growth: Recent net income and EPS underscore effective cost management and relatively benign catastrophe activity.

3. Balance Sheet

Cash & Equivalents: $207.58 M
Total Debt: $148.96 M
Net Cash Position: $34.19 M (or $0.71 per share)
Equity (Book Value): $259.58 M (Book Value Per Share: $5.45)
Debt/Equity Ratio: ~0.57

Analysis:

Manageable Leverage: A moderate debt/equity ratio supports ACIC’s capital adequacy in the event of significant claims.
Healthy Liquidity: Substantial cash and short-term investments, although the current ratio is below 1.0, typical for insurers given premium prepayments and claims liabilities.

4. Valuation

Market Cap: $595.33 M
Enterprise Value: $561.14 M
Key Multiples:
- PE (TTM): 7.02
- Forward PE: 10.21
- Price-to-Sales (PS): 2.00
- Price-to-Book (PB): 2.26
- EV/EBITDA: 4.43
- EV/FCF: 1.93

Analysis:

Low Multiples: ACIC trades at a relatively low PE and EV/EBITDA, suggesting the market might be pricing in higher catastrophe risk or limited growth prospects.
Strong Free Cash Flow: EV/FCF under 2.0 is notably low, reflecting robust cash generation from underwriting and investment returns.

5. Market Performance

52-Week Range: $8.82 – $15.08
Recent Close Price: $11.94 – 12.38 range
52-Week Price Change: +4.65%
Beta (5Y): –0.26

Trading & Short Interest

Average Volume (20 Days): ~106,000 shares
Short Interest: ~800,344 shares (1.66% of outstanding)
Short Ratio: ~4.75

Analysis:

Mild Price Appreciation: The stock is up ~4.65% year-over-year, underperforming broader insurance peers that rebounded from prior hurricane seasons.
Negative Beta: A rare negative beta indicates price movements inversely correlated with the market or minimal correlation, possibly due to unique catastrophe risk dynamics.

6. Financial Health & Risks

Liquidity & Leverage

Current Ratio: 0.97
Quick Ratio: 0.31
Net Cash Position: $34.19 M
Interest Coverage: ~9.86

Analysis:

Insurance-Sector Norms: Lower current and quick ratios are typical for insurers with large unearned premiums and claims liabilities.
Catastrophe Exposure: Significant reliance on reinsurance to handle major hurricane or windstorm events. Failure of reinsurers or inadequate reinsurance coverage can pose liquidity risks.

Operational & Market Risks

Hurricane & Cat Risk: Concentration in coastal regions leaves ACIC highly exposed to catastrophic weather events, impacting claims severity and reinsurance costs.
Regulatory Environment: State-specific insurance regulations and rate approvals can limit premium adjustments or growth in certain markets.
Investment Portfolio Volatility: Gains/losses on fixed income and equity investments can cause earnings swings, especially in rising interest rate environments.

Profitability & Cash Flow

Free Cash Flow (TTM): $290.78 M (FCF Margin ~100%)
FCF Per Share: $6.03
Dividend: $0.50 (4.05% yield, 28.41% payout ratio)

Analysis:

Significant FCF: Surplus cash flow supports a moderate dividend, though expansions or acquisitions might compete for capital.
Potential for Dividend Growth: A low payout ratio suggests capacity for future dividend increases if underwriting remains profitable.

7. Conclusion

Pros

1. Attractive Valuation Multiples: Low PE (7.02) and EV/EBITDA (4.43) hint at undervaluation or a discounted catastrophe risk premium.

2. Strong FCF & Dividend: High free cash flow generation underpins a 4.05% dividend yield.

3. Positive Net Cash: A net cash position of $34 M provides flexibility for growth initiatives or further capital returns.

Cons

1. High Catastrophe Exposure: Concentrated coastal underwriting can lead to volatility in earnings and claims.

2. Regulatory & Rate Constraints: Insurance pricing depends on state regulatory approvals, limiting premium rate hikes.

3. Smaller Insurer Scale: Lacks the diversification and capital resources of larger multi-line carriers, making it more vulnerable to large single-event losses.

Final Note:
ACIC’s strategic focus on wind-exposed and coastal insurance markets yields higher premium rates but comes with notable catastrophe risk. The company’s robust underwriting approach, reinsurance usage, and strong free cash flow support a stable dividend, yet significant weather events or regulatory changes could disrupt profitability. Investors should monitor reinsurance renewal costs, hurricane season activity, and ACIC’s capital management as key indicators of future performance.

Alibaba Group Holding Limited (BABA) Stock Analysis

Alibaba Group Holding Limited (BABA) Stock Analysis
Market Capitalization: $281.92 B
Shares Outstanding: ~2.26 B
Sector: Technology / E-commerce
Industry: Internet Retail, Cloud Computing, Digital Media
Analysis as of: February 15, 2025

1. Company Overview

Alibaba Group Holding Limited (NYSE: BABA) is a leading Chinese technology conglomerate, operating a diverse ecosystem of e-commerce platforms, cloud computing services, digital media, and financial technology solutions. The company’s primary revenue streams include online and mobile commerce (Taobao, Tmall), international commerce (AliExpress, Lazada), and emerging initiatives in cloud computing (Alibaba Cloud) and digital entertainment.

Key Business Segments

1. Core Commerce: Encompasses Taobao Marketplace, Tmall, Freshippo (Hema), AliExpress, Lazada, and the Cainiao logistics network.

2. Cloud Computing: Provides IaaS, PaaS, and SaaS offerings via Alibaba Cloud.

3. Digital Media & Entertainment: Includes Youku (video streaming), Alibaba Pictures, music, and gaming.

4. Innovation & Others: Focuses on new technology ventures, R&D, AI, and IoT expansions.

Strategic Initiatives

International Expansion: Localizing e-commerce platforms in Southeast Asia and other markets to capture global growth.
Cloud Services Dominance: Heavy investments in data centers, AI solutions, and enterprise software to grow Alibaba Cloud.
Ecosystem Integration: Leveraging commerce, logistics, fintech (Ant Group), and entertainment to drive user engagement and cross-selling.
Regulatory Compliance & Restructuring: Adapting corporate structure in response to China’s regulatory environment, exploring spin-offs and reorganizations to unlock value.

2. Financial Performance

a. Revenue & Growth

TTM Revenue: $137.14 B
YoY Revenue Growth (TTM): +5.14%
Historical Growth:
- FY 2024 (est.): +8.34%
- FY 2023: +1.83%
- FY 2022: +18.93%

Analysis:

Decelerating Growth: Revenue growth has slowed compared to past double-digit expansions, influenced by China’s economic moderation and regulatory factors.
Resilient Core Commerce: Despite a challenging environment, Alibaba’s diversified segments (cloud, international commerce) continue to provide incremental growth.

b. Profitability

Net Income (TTM): $12.24 B
EPS (TTM): $4.94
Profit Margin (TTM): ~8.98%
Return on Equity (ROE): 7.11%
Return on Assets (ROA): 4.61%
Return on Invested Capital (ROIC): 6.20%

Analysis:

Profit Recovery: Net income indicates a rebound from prior quarters affected by fines, impairments, and higher spending.
Margins vs. Historical Levels: Margins remain below peak levels due to increased competition, regulatory fines, and strategic investments.

c. Margins

Gross Margin: 38.20%
Operating Margin: 13.71%
EBITDA Margin: 18.16%
FCF Margin: ~10.36%

Analysis:

Solid Operating Leverage: The high-margin core commerce business supports overall profitability, though expansions into physical retail, logistics, and cloud slightly compress margins.
Cash Flow Strength: Alibaba maintains strong free cash flow generation, fueling expansions and shareholder returns.

d. Cash Flow

Operating Cash Flow (TTM): $21.83 B
Capital Expenditures (TTM): -$7.07 B
Free Cash Flow (TTM): $14.20 B
FCF Per Share: $6.28

Analysis:

Healthy FCF: Alibaba’s large cash flows enable it to invest in infrastructure (cloud, logistics) and fund share buybacks.
Investing for Growth: Significant capex in cloud data centers, R&D, and new initiatives.

3. Balance Sheet

Total Cash & Equivalents: $55.43 B
Total Debt: $33.31 B
Net Cash Position: $22.12 B (or $9.79 per share)
Shareholders’ Equity: $150.81 B (Book Value Per Share: $58.43)
Debt-to-Equity Ratio: ~0.22

Analysis:

Strong Liquidity: Alibaba’s net cash position provides strategic flexibility for acquisitions, expansions, and share repurchases.
Low Leverage: A debt-to-equity ratio of ~0.22 indicates a conservative capital structure and manageable interest obligations.

4. Valuation

Current Stock Price (approx.): $120.50 – 126.80 intraday
Market Cap: $281.92 B
PE (TTM): 25.27
Forward PE: 13.70
PS (TTM): 2.22
PB (TTM): 2.13
PEG Ratio: 0.74
EV/EBITDA: 10.43
EV/FCF: 18.29

Analysis:

Forward PE Discount: The forward PE of ~13.7 suggests the market expects a rebound in earnings, offering potential upside.
PEG < 1: Implies Alibaba’s growth may be undervalued, though regulatory uncertainties and macro challenges persist.

5. Market Performance

52-Week Range: $68.36 – $126.80
52-Week Price Change: +74.20%
Beta (5Y): 0.31
Short Interest: ~62.56 M shares (3.12% of shares out)
Short Ratio: ~2.58

Analysis:

Significant Recovery: The stock has rebounded from multi-year lows amid partial easing of regulatory pressure.
Lower Beta: Suggests reduced correlation with broader markets, though geopolitical events can drive sudden volatility.

6. Financial Health and Risks

a. Liquidity & Leverage

Current Ratio: 1.37
Quick Ratio: 0.87
Net Cash (Debt): $22.12 B

Analysis:

Ample Liquidity: Alibaba holds a large cash balance to manage operations and fund strategic initiatives.
Low Leverage: Minimizes financial risk, providing resilience in uncertain market conditions.

b. Operational Risks

Regulatory Scrutiny: Ongoing oversight in China (antitrust, data privacy) can affect strategy, expansions, or require structural changes.
Competitive Landscape: Fierce competition in e-commerce (JD.com, Pinduoduo) and cloud (Tencent, AWS) impacts margins and market share.
Macroeconomic Slowdown: Consumer sentiment in China and abroad can fluctuate, affecting core retail and SME cloud spending.

c. Profitability & Cash Flow

Strong Cash Generation: Supports share buybacks, potential dividends, and large-scale investments in R&D.
Dividend Introduction: A $2.64 per share annual dividend (2.12% yield) indicates management’s confidence in stable free cash flows.

d. Market & Regulatory Risks

China’s Economic Growth: Slowing growth may temper e-commerce activity and discretionary spending.
Geopolitical Tensions: Potential trade frictions and technology restrictions could hamper cross-border sales or supply chains.
Auditing & Delisting Risk: Continued compliance with U.S. audit requirements is crucial to avoid delisting from American exchanges.

7. Conclusion

Pros

1. Extensive Ecosystem: Dominance in China’s e-commerce, plus expansions in cloud, logistics, and digital media.

2. Robust Free Cash Flow: High FCF margin (~10.36%) enables strategic investments and shareholder returns.

3. Attractive Valuation Multiples: Forward PE of ~13.7 and a low PEG ratio (0.74) suggest undervaluation relative to growth prospects.

Cons

1. Regulatory Environment: Heightened scrutiny from Chinese authorities can affect strategy and profitability.

2. Slower Revenue Growth: Growth has cooled from previous double-digit expansions due to competition and macro conditions.

3. Geopolitical Headwinds: Potential trade barriers and delisting concerns introduce volatility and investor caution.

Final Note
Alibaba Group remains a pivotal player in China’s digital economy, leveraging an ecosystem that spans e-commerce, cloud computing, and media. While regulatory challenges and slowing growth have weighed on valuation, the company’s strong fundamentals, strategic realignments, and consistent cash flows position it well for a potential rebound in shareholder value.

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Investing involves risks, including possible loss of principal. Past performance is not indicative of future results. Consult a qualified financial advisor before making any investment decisions.

Baidu, Inc. (BIDU) Stock Analysis

Baidu, Inc. (BIDU) Stock Analysis
Market Capitalization: $34.18 B
Shares Outstanding: ~350.65 M
Sector: Technology / Internet Services
Industry: Online Search, AI Cloud, Autonomous Driving
Analysis as of: February 15, 2025

1. Company Overview

Baidu, Inc. (NASDAQ: BIDU) is a leading Chinese technology company specializing in internet-related services and artificial intelligence (AI). Often referred to as the “Google of China,” Baidu’s core business is its flagship search engine, which commands a dominant share of the Chinese search market. The company also focuses on AI-driven businesses such as cloud computing, autonomous driving (Apollo), and smart devices.

Key Business Segments

1. Online Marketing Services (Search & Feed): Core revenue from search advertising, feed ads, and marketing solutions.

2. AI Cloud & Intelligent Driving: Rapidly growing segments offering AI solutions, cloud computing, and autonomous vehicle technology.

3. iQIYI (Video Streaming): Though partially divested, Baidu still holds a significant stake in this streaming platform.

4. Other Innovations: DuerOS voice assistant, smart devices, and various AI-based enterprise solutions.

Strategic Initiatives

AI Cloud Growth: Investing heavily in cloud infrastructure, AI solutions, and enterprise partnerships.
Autonomous Driving (Apollo): Collaborating with automakers and cities to commercialize robotaxi and autonomous solutions.
Monetizing AI Ecosystem: Integrating AI-driven features into search, feed, and marketing to maintain user engagement and ad revenue.
International Expansion: Gradual overseas push in AI solutions, though primarily focused on China’s market.

2. Financial Performance

a. Revenue & Growth

TTM Revenue: $19.10 B
YoY Revenue Growth (TTM): +0.93% (approx.)
Historical Growth:
- Q3 2024 (est.): 0.93% YoY
- Q2 2024: +3.08% YoY
- Q1 2024: +6.77% YoY

Analysis:

Modest Recovery: Revenue growth remains subdued compared to earlier double-digit expansions, partly due to China’s macroeconomic environment and competitive pressures.
AI & Cloud Uptick: The AI Cloud segment is gradually contributing a higher share of incremental revenue, albeit from a smaller base.

b. Profitability

Net Income (TTM): $2.92 B
EPS (TTM): $8.30
Profit Margin (TTM): ~15.80%
Return on Equity (ROE): 8.22%
Return on Assets (ROA): 3.43%

Analysis:

Stable Profit Margins: Baidu’s margin improvement is helped by cost controls and a more profitable ad environment.
Earnings Growth: Net income indicates moderate growth, reflecting a more disciplined expense approach and improved ad yields.

c. Margins

Gross Margin: 51.10%
Operating Margin: 16.98%
EBITDA Margin: 28.06%
Free Cash Flow Margin: 14.39% (approx.)

Analysis:

Healthy Margins: Baidu’s core search and feed ads maintain a high margin profile, though AI Cloud and R&D investments weigh slightly on overall margins.
Consistent Cash Generation: FCF margin near mid-teens suggests Baidu can self-fund expansions and R&D initiatives.

d. Cash Flow

Operating Cash Flow (TTM): $4.21 B
Capital Expenditures (TTM): -$1.35 B
Free Cash Flow (TTM): $2.75 B
FCF Per Share: $7.84 (approx.)

Analysis:

Solid FCF: The company’s search and advertising engine drives consistent cash flows, partially reinvested in AI Cloud, self-driving, and content.
Capex Focus: Investments in data centers, autonomous driving, and content licensing remain top spending areas.

3. Balance Sheet

Total Cash & Equivalents: $18.93 B
Total Debt: $11.03 B
Net Cash Position: $7.91 B (or $22.55 per share)
Shareholders’ Equity: $39.80 B (Book Value Per Share: $106.33)
Debt-to-Equity Ratio: ~0.28

Analysis:

Significant Cash Reserves: Baidu’s large cash balance underpins its ability to fund AI R&D, strategic acquisitions, and share repurchases.
Moderate Leverage: Debt remains relatively low, reflecting a conservative approach to financing expansions.

4. Valuation

Current Stock Price (approx.): $96.16 – 100.64 intraday
Market Cap: $34.18 B
PE (TTM): 11.75
Forward PE: 11.73
PS (TTM): 1.79
PB (TTM): 0.92
PEG Ratio: 2.50
EV/EBITDA: 4.90
EV/FCF: 9.56

Analysis:

Low PE Multiples: Both trailing and forward PE ~11–12 suggests the market is undervaluing Baidu’s earnings potential.
EV/EBITDA < 5: Reflects a discounted valuation, though concerns about competition, regulatory environment, and AI spend remain factors.

5. Market Performance

52-Week Range: $77.19 – 116.25
52-Week Price Change: -6.10%
Beta (5Y): 0.46
Short Interest: ~7.23 M shares (2.48% of shares out)
Short Ratio: ~1.29

Analysis:

Recent Underperformance: Baidu’s stock has lagged, reflecting investor caution around China’s macro outlook and intense competition.
Lower Beta: The stock has shown less volatility compared to the broader market, though significant news (AI breakthroughs, regulatory changes) can cause sharp moves.

6. Financial Health and Risks

a. Liquidity & Leverage

Current Ratio: 2.19
Quick Ratio: 1.84
Net Cash: $7.91 B

Analysis:

Ample Liquidity: A strong current ratio indicates short-term obligations are easily covered.
Net Cash Position: Provides a buffer to invest in AI R&D, M&A, or strategic expansions without excessive leverage.

b. Operational & Market Risks

Search Competition: Though dominant, Baidu faces competition from ByteDance (Douyin) and Tencent in search and ad markets.
AI & Cloud Investments: Aggressive R&D and cloud expansion can compress near-term margins but aim to drive future growth.
Regulatory Environment: China’s evolving tech regulations (antitrust, data) pose strategic constraints and potential fines.

c. Profitability & Cash Flow

Steady Ad Revenue: Core search ad business remains profitable, fueling R&D in AI, though ad spending can fluctuate with macro conditions.
AI Ecosystem Monetization: Long-term success depends on commercializing autonomous driving, cloud, and other AI-driven solutions.

d. Geopolitical & Macroeconomic Factors

US-China Relations: Potential delisting risk or restrictions on Chinese tech can affect Baidu’s US investor base.
China’s Economic Climate: Slowing growth or consumer sentiment shifts can impact ad budgets and search traffic.

7. Conclusion

Pros

1. Dominant Search Engine: Maintains a leading market share in China, providing stable ad revenue.

2. AI & Cloud Upside: Significant potential in AI Cloud, autonomous driving, and voice assistance over the long term.

3. Strong Balance Sheet: Net cash position (~$7.91 B) and high liquidity for strategic investments and R&D.

Cons

1. Moderate Revenue Growth: Slowing or volatile ad environment, with intense competition from emerging platforms.

2. Regulatory Headwinds: Ongoing scrutiny of Chinese tech giants may limit certain business expansions.

3. AI Monetization Uncertainty: Significant R&D costs in AI/Cloud could weigh on near-term margins without guaranteed large-scale adoption.

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Investing involves risks, including possible loss of principal. Past performance is not indicative of future results. Consult a qualified financial advisor before making any investment decisions.

Source: Sec.gov