I sold Tencent (TCEHY) at $72.70 today. I bought it for roughly $40 nearly two years ago. There has been a lot of drama over my period of association. Surprisingly most of it did not bother me much.
I do believe that the future is bright for Tencent, and wish it well. But in recent days, I had started getting mildly anxious. TCEHY had grown into my third largest position (behind FB and BRK) at nearly 6%. The sour tone of US-China dialogues somehow started becoming an X-factor. Trump’s messing with TikTok, could be reciprocated in unexpected ways.
I’d never fully grown comfortable with the VIE structure, but my ignorance ensured that it did not bother me as much as other more sophisticated investors. Also the stock had started trading above my estimate of fair value, which I pegged around ~$70, already a generous 40x earnings.
In the end, the combination of worsening US-China relations, a full sticker price, and general exuberance among tech stocks spurred me to dispose my shares.
While I hoped TCEHY would be a coffee-can investment, I am happy to take a 30+% CAGR on a decent-sized bet over two years, and look for greener pastures elsewhere.
UPDATE: Two days after I sold out, the share price plummetted 10% to $65 on Trump’s talk of a WeChat ban. Feels great to get lucky!