The Alibaba IPO is expected to be one of the largest IPOs in history, and while some might think it’s a good idea to shun the hype, it looks like the hype might be understated.
Star stockpicker Leon Cooperman of Omega Advisors said, “We are highly impressed with Jack Ma and his management team.” Cooperman says he intends to get in on the deal. David Tepper of Appaloosa Management and Daniel Loeb of Third Point attended Alibaba’s Roadshow in the past week. The company raised enough to cover the entire deal in the first two days of the Roadshow, and there is more to come. Loeb has called Alibaba the “hidden jewel” within Yahoo, a holding in his fund, and said, “Alibaba is central to our investment thesis” in Yahoo.
One hedge fund manager, who asked not to be identified, said, “A lot of people are excited about this. Every single fund is going to be playing this.” Some think the estimates for income are too low, and could be around $10 million as opposed to the estimated $7 million. Alibaba could be worth over $300 billion, which is $100 billion more than the average estimate.
However, Will Graves, head of Boardman Bay Capital Management gave a note of caution. Since there is already a sizeable portion of Alibaba shares in private hands, he says, “the sheer magnitude of the offering, in addition to those private shares that are not locked up on the first day, will lead to more volatile profit taking than normal.”