2. Sea Limited (NYSE:SE)
Number of Hedge Fund Holders: 108
Decline in Share Price in the Last 6 Months: 57.28%
Sea Limited (NYSE:SE) is a digital entertainment, e-commerce, digital payments, and financial services company. Sea Limited (NYSE:SE) shares slid 57.28% over the last six months, and Cathie Wood also trimmed her stake in the company by 32% in Q4 2021. Wood’s fund held 654,834 shares of Sea Limited (NYSE:SE), worth $146.4 million. The stock rebounded 15% on February 15 as Cathie Wood purchased shares.
On February 7, Barclays analyst Jiong Shao lowered the price target on Sea Limited (NYSE:SE) to $218 from $427 and kept an Overweight rating on the shares. The post-COVID economic reopening is having a negative impact on both the company’s gaming and e-commerce business as consumers reduce their digital presence, Shao told investors in a research note. The analyst believes Sea Limited (NYSE:SE)’s 2022 outlook may need to be reset.
According to the Q4 database of Insider Monkey, 108 hedge funds were long Sea Limited (NYSE:SE), down from 117 funds in the prior quarter. Kora Management is one of the leading shareholders of Sea Limited (NYSE:SE), with 3.4 million shares worth $779.40 million.
Here is what Hayden Capital has to say about Sea Limited (NYSE:SE) in its Q4 2021 investor letter:
“Sea Ltd represents a substantial portion of our portfolio, and this last market downturn has certainly been painful for shareholders. While I’d estimate (or rather guess?) that ~2/3rd of the stock price decline is due to concerns around the aforementioned rising rate environment hurting most long-duration growth companies, approximately ~1/3rd of the stock decline is likely due to investor’s concerns around Sea Ltd transitioning from “Act 1” to “Act 2”, which I’ll discuss in this section.
Previously, Sea has relied upon the exponential growth of its gaming business, Garena, and in particular that of the worldwide mobile game sensation, Free Fire, to provide the profits to reinvest into the Shopee ecommerce division within Southeast Asia. Between 2018 and 2021, profits from Garena grew over 10x, all of which was reinvested into building out the Shopee ecommerce platform.
This strategy has been tremendously successful, with Shopee now on track to achieve ~$100 Billion in GMV in 2022, making it one of the largest ecommerce companies in the world. More importantly, these new-to-ecommerce customers are extremely sticky (ordering more than 4x per month, logging in several times per day, and spending 30 – 60 minutes inside of the app per day).
This isn’t simply “renting customers” via deeply discounted promo codes. But rather, Shopee has trained a whole new segment of the population to shop online via their addictive & engaging platform. Nowadays, Shopee is definitively the dominant ecommerce leader in Southeast Asia (~55 – 60% market share), and the company feels that it is in a much more stable position compared to just a few years ago…” (Click here to see the full text)
