Alibaba (Held Indirectly via Yahoo)
“Alibaba’s corporate culture is the best-written corporate culture I have ever seen among Chinese companies.” — Duan Yongping (Source: Duan Yongping Investment Q&A (Investment Logic), 2010-04-04)
🏢 Basic Information
- Industry: E-commerce / Technology
- Duan Yongping’s Holding: Held indirectly through buying Yahoo (Yahoo)
- Investment Logic: Bought Yahoo to acquire Taobao and Alibaba Group
📅 Investment Timeline
| Time | Event | Duan Yongping’s Judgment |
|---|---|---|
| February 2010 | Heavy buying of Yahoo | ”The reason Yahoo is cheap is very simple” — market cap 7 billion |
| March 2010 | Continued buying | ”My rough estimate is that US Yahoo is worth about 15, and other investment value is also worth about 15” |
| 2010 | During holding period | ”I bought Yahoo to buy Taobao and Alibaba Group, so as long as Yahoo is decent, that’s fine” |
| 2013 | Predicting Alibaba valuation | ”I think Alibaba will eventually earn over 100 billion company” |
| Later | Sold Yahoo | Rotated into GE and other positions |
💡 Duan Yongping’s Core Views
1. Why buy Alibaba through Yahoo?
Duan Yongping’s valuation logic was very clear: “I think the reason Yahoo is cheap is very simple: Yahoo’s market cap is around 4.5 billion, Yahoo Japan and Alibaba’s Hong Kong listed portion belonging to Yahoo are worth around 7 billion.”
And this 500–700 million per year, plus 1 billion. “By the way, I forgot to mention Taobao and Alipay. I can’t say exactly how much Taobao and Alipay are worth, but it doesn’t seem too important, because no matter what they’re worth, they’re free.” (Source: Duan Yongping Investment Q&A (Investment Logic), 2010-02-08)
2. Why bullish on Alibaba?
“Alibaba’s corporate culture is the best-written corporate culture I have ever seen among Chinese companies. Having such excellent corporate culture plus having already found such an excellent business model, it would be hard for Alibaba not to succeed! This is also the most important reason I’m willing to buy Yahoo!” (Source: Duan Yongping Investment Q&A (Investment Logic), 2010-04-04)
3. Concerns about Taobao
“My main concern about Taobao is whether they might do evil if they become too dominant. Right now Taobao’s growth is excellent, but their crackdown on counterfeit and shoddy products doesn’t seem serious enough… If they can’t find a long-term effective way to restrict and eliminate this, Taobao could become a distribution hub for counterfeits… However, based on my understanding of Jack Ma, I feel he’s absolutely not a short-sighted person, and will definitely find a solution.” (Source: Duan Yongping Investment Q&A (Investment Logic), 2010-02-09)
4. Prediction on Alibaba’s Valuation
“I think Alibaba will eventually earn over 100 billion company. (Source: Duan Yongping Investment Q&A (Investment Logic), 2013-03-20)
❓ Selected Q&A
Q: What’s the logic for buying Yahoo?
A: I think I’ve been clear from the beginning — I bought Yahoo to buy Taobao and Alibaba Group. So as long as Yahoo is decent, that’s fine. (Source: Duan Yongping Investment Q&A (Investment Logic), 2010-06-01)
Q: Without Alibaba Group, would Yahoo be cheap?
A: Without Alibaba Group, Yahoo wouldn’t be cheap. (Source: Duan Yongping Investment Q&A (Investment Logic), 2010-03-03)
Q: What are your concerns about Taobao?
A: My main concern about Taobao is whether they might do evil if they become too dominant. Right now Taobao’s growth is excellent, but their crackdown on counterfeit and shoddy products doesn’t seem serious enough. While “national conditions” might be a good excuse, if they can’t find a long-term effective way to restrict and eliminate this, Taobao could become a hub for counterfeits, which would greatly harm most merchants who do business seriously on Taobao, while also destroying Taobao’s reputation. However, based on my understanding of Jack Ma, I feel he’s absolutely not a short-sighted person, and will definitely find a solution. (Source: Duan Yongping Investment Q&A (Investment Logic), 2010-02-09)
💬 Original Quotes
“Alibaba’s corporate culture is the best-written corporate culture I have ever seen among Chinese companies. Having such excellent corporate culture plus having already found such an excellent business model, it would be hard for Alibaba not to succeed! This is also the most important reason I’m willing to buy Yahoo!” — Duan Yongping (Source: Duan Yongping Investment Q&A (Investment Logic), 2010-04-04)
“I think I’ve been clear from the beginning — I bought Yahoo to buy Taobao and Alibaba Group. So as long as Yahoo is decent, that’s fine.” — Duan Yongping (Source: Duan Yongping Investment Q&A (Investment Logic), 2010-06-01)
“By the way, I forgot to mention Taobao and Alipay. I can’t say exactly how much Taobao and Alipay are worth, but it doesn’t seem too important, because no matter what they’re worth, they’re free. Though it’s not entirely unimportant either, since this is the biggest reason I bought Yahoo.” — Duan Yongping (Source: Duan Yongping Investment Q&A (Investment Logic), 2010-02-08)
“Without Alibaba Group, Yahoo wouldn’t be cheap.” — Duan Yongping (Source: Duan Yongping Investment Q&A (Investment Logic), 2010-03-03)
📚 Investment Insights
- Corporate culture is the most important moat: The most important reason Duan Yongping bought Alibaba was its corporate culture — “the best-written corporate culture”
- Logic of indirect investment: Holding Alibaba indirectly through Yahoo is a creative margin of safety approach — Yahoo itself is worth that price, and Alibaba is “free”
- Power of rough estimation: Duan Yongping doesn’t calculate precisely, but a rough calculation reveals it’s cheap — this is practice of intrinsic value judgment
- Focus on the long term: Duan Yongping’s concerns about Taobao are long-term (whether they’ll do evil), not short-term (quarterly performance)
🔗 Related Notes
Related Concepts Corporate Culture · Business Model · Moat · Margin of Safety · Rough Estimation Related People Duan Yongping Related Companies Tencent · PDD · Amazon Related Topics How to Judge a Good Company · Duan Yongping’s Classic Investment Cases