Dear Sun Tzu,
Thank you for your reply and insights.
While I do agree with you that the VIE structure does induce varying levels of doubt and uncertainty to different individuals, I would argue the following:
1. The VIE structure is nothing new. Back in the day when BABA saw its share price peak at approx. USD 307.31, were investors not cognisant of the fact that BABA was in fact, listed in the US under the VIE structure? Why did we not see a valuation compression back then? If your counter argument is going to be that investors as a whole were ignorant that it listed as a VIE to begin with, then I have nothing further to add.
2. Personally, I do not command the kind of funds that would enable me to exert meaningful influence over the board, nor participate in any activist related activities (not that I seek to). Now some of you may, but I doubt you guys represent the majority of retail investors.
3. True, the company has zero obligations to buy back stock and pay dividends, but then again, what listed company is obligated to do so? Dividends and share buybacks are almost always conducted at the discretion of senior mgmt + the board of directors. Sure, activists may induce or initiate such programs but initiations (even vigorous ones) do not necessarily convert into obligations.
4. Finally, despite BABA's not being obligated to conduct activities in the best interest of shareholders. I would argue that their actions have indicated otherwise, as evidenced by their consistent execution + recent share buyback program enlargement announcements.
Again, I appreciate your feedback, despite us not seeing eye to eye.
Sincerely,
Burryville18 |
