Insiders Are Buying!

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ACTION: Buying BABA

Those who have been part of the Lockstep community for some time know we believe?Alibaba Group Holdings (BABA) is undervalued.

The company is currently valued at 7.4x operating income, significantly below its historical valuation. Assuming the market is correct implies investors expect earnings to drop by over 70% to justify the current valuation. YET earnings are increasing (admittedly only slightly). ??

We are not the only ones to think the company is cheap, as BABA itself continues to?buy its own shares, repurchasing around $9.5 billion in 2023 with an additional $11.7 billion still to go. And, yesterday SEC filings disclosed that the?group’s co-founder purchased over $150 million worth of shares in the US.?Rumours are that?Jack Ma himself has been buying shares.

We could not ask for a more bullish sign that BABA is undervalued than having the company and two founders, people intimately familiar with the business, buying shares. Although it doesn’t guarantee our success, it gives us greater confidence in our investment thesis. ?

We are adding?to our investment - Details are on the app/website.

Corporate News: Read across for GRBK as DHI’s results disappoint

Homebuilders had a lousy day yesterday after the US’s largest homebuilder by volume, D.R. Horton (DHI), reported its first quarter (Q1) 2024?results;

DHI managed to increase Q1 2024 revenue and earnings per share (EPS) Year-on-Year (YoY); however, EPS did miss analysts’ expectations due to rising costs. Even though the company raised its full-year 2024 revenue guidance, it wasn’t enough to alleviate inflation concerns within the industry. As a result, DHI’s share price dropped over -9%, dragging the entire sector down. Even our very own Green Brick Partners’?(GRBK) shares fell more than -5% ?

Is GRBK’s share price decline justified?

Read more in today's full newsletter.

Below, we highlight the earnings from companies?with a market cap > $100 billion and give you a heads-up of which firms are reporting today:

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