John Huber presented his in-depth investment thesis on Tencent Holdings (Hong Kong: 700, OTC: TCEHY) at Wide-Moat Investing Summit 2017. John also shared insights into common-sense investing, the evolution of competitive moats, and the most important moat.
Tencent is a Chinese Internet company with one of the most powerful network effects in the world. The company operates in numerous businesses that generate significant free cash flow, take very little capital to grow, and have long runways for growth in China and around the world. These businesses and investments consist of video game publishing, music and video subscriptions, ecommerce, mobile payments, and online advertising, among other assets. But the company’s crown jewel is WeChat, a mobile app that is unlike any application that exists in the West. WeChat is used for just about everything in China including messaging, work communication, calls, social networking, online shopping, paying bills, transferring money, and much more. WeChat is an asset that has barely been monetized yet, but is in prime position to capitalize on numerous fast-growing industries worth hundreds of billions of dollars. Tencent is growing free cash flow at 40+% per year, and given its unique competitive position and the markets in which it operates, there is likely a very long runway ahead for the company, despite already being one of the most valuable companies in China.
About the instructor:
John Huber is the Managing Member and Portfolio Manager of Saber Capital Management, LLC, a value-focused investment firm that manages separate accounts and a private partnership. John founded Saber in 2013 as a personal investment vehicle that would allow outside investors to invest with him alongside his own investment account. Prior to starting Saber, John spent almost a decade managing a few small residential and commercial real estate partnerships. Saber’s investment strategy is to make concentrated investments in undervalued stocks of high-quality businesses that are likely to compound intrinsic value over time. John also writes about his investment approach at his website Base Hit Investing.
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