Saber Capital is a big fan of Tencent Holdings Ltd (OTCMKTS:TCEHY), which was the third biggest contributor to investment firm’s performance during the last year. In the Saber Capital’s 2017 investor letter, John Huber, the managing member and portfolio manager , discussed his investment thesis on TCEHY, noting that the stock looks very cheap based on his “preferred definition of value.” In this article, we’ll look at Saber Capital’s thoughts on Tencent, which is a China-based investment holding company.
Here is what Huber said about Tencent in the letter:
Tencent (TCEHY) was our third biggest contributor to performance, but our biggest gainer in percentage terms, as the stock more than doubled in 2017. Much of that increase was justified by increasingly dominant operating results, and in terms of business momentum, Tencent continued to stampede ahead.
The company’s growth actually accelerated last year, with revenue and earnings growth topping 50%. Tencent did about $35 billion in revenue last year, but when you look at the businesses that the company participates in (and leads) such as social media, communication, video content, payments, ecommerce, cloud and gaming – industries that collectively make for an addressable market well over $1 trillion – it’s clear that there is still a very long runway ahead for Tencent.
When we invested in Tencent a little over a year ago, the company was valued around $250 billion ($25 per share). We paid roughly 24 times what I estimated the company would earn in the following 12 months, which was a price that I thought was very cheap for a great business that will have far more earning power in the future than it does today.
This price actually turned out to be only around 21 times free cash flow, as earnings grew faster than expected. The free cash flow is growing at more than 50%, and will be $17 or $18 billion or so this year. This means at double the price ($500 billion), the stock still only trades around 28 times the free cash it should generate this year. This doesn’t get value investors excited, but for a business growing at 40-50% (a rate of growth that will slow but will remain above average for many years), I think this actually remains significantly cheap, especially when your average wide-moat, blue-chip stock with a single digit growth rate has a P/E ratio that isn’t much different than Tencent’s. By my preferred definition of value – the present value of the future cash flow – I still think Tencent is very cheap. I used the recent market downturn to add to our position around $51 per share.
Credit: Chris Yunker/Flickr
Tencent Holdings Ltd (OTCMKTS:TCEHY) is a Chinese investment holding conglomerate that is involved, through its subsidiaries, in various Internet-related services and products, entertainment, artificial intelligence and technology both in China and globally.
For the third quarter ended September 30, 2017, Tencent had total revenues of RMB 65.21 billion ($9.83 billion), up 61% year-over-year. The company reported a profit attributable to equity holders of RMB 18.01 billion ($2.71 billion), an increase of 69% year-over-year. Revenues from value added services business rose 51% to RMB 42.12 billion for the third quarter on a year-on-year basis.
Meanwhile, Tencent Holdings Ltd (OTCMKTS:TCEHY) has been performing well, gaining more than 90% year-to-date. Over the past 12 months, the stock has moved up more than 108%.
Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal!
My #1 AI stock pick delivered solid gains since the beginning of 2025 while popular AI stocks like NVDA and AVGO lost around 25%.
The numbers speak for themselves: while giants of the AI world bleed, our AI pick delivers, showcasing the power of our research and the immense opportunity waiting to be seized.
It’s the revolution reshaping every industry on the planet.
From driverless cars to medical breakthroughs, AI is on the cusp of a global explosion, and savvy investors stand to reap the rewards.
Here’s why this is the prime moment to jump on the AI bandwagon:
Exponential Growth on the Horizon: Forget linear growth – AI is poised for a hockey stick trajectory.
Imagine every sector, from healthcare to finance, infused with superhuman intelligence.
We’re talking disease prediction, hyper-personalized marketing, and automated logistics that streamline everything.
This isn’t a maybe – it’s an inevitability.
Early investors will be the ones positioned to ride the wave of this technological tsunami.
Ground Floor Opportunity: Remember the early days of the internet?
Those who saw the potential of tech giants back then are sitting pretty today.
AI is at a similar inflection point.
We’re not talking about established players – we’re talking about nimble startups with groundbreaking ideas and the potential to become the next Google or Amazon.
This is your chance to get in before the rockets take off!
Disruption is the New Name of the Game: Let’s face it, complacency breeds stagnation.
AI is the ultimate disruptor, and it’s shaking the foundations of traditional industries.
The companies that embrace AI will thrive, while the dinosaurs clinging to outdated methods will be left in the dust.
As an investor, you want to be on the side of the winners, and AI is the winning ticket.
The Talent Pool is Overflowing: The world’s brightest minds are flocking to AI.
From computer scientists to mathematicians, the next generation of innovators is pouring its energy into this field.
This influx of talent guarantees a constant stream of groundbreaking ideas and rapid advancements.
By investing in AI, you’re essentially backing the future.
The future is powered by artificial intelligence, and the time to invest is NOW.
Don’t be a spectator in this technological revolution.
Dive into the AI gold rush and watch your portfolio soar alongside the brightest minds of our generation.
This isn’t just about making money – it’s about being part of the future.
So, buckle up and get ready for the ride of your investment life!
Act Now and Unlock a Potential 10,000% Return: This AI Stock is a Diamond in the Rough (But Our Help is Key!)
The AI revolution is upon us, and savvy investors stand to make a fortune.
But with so many choices, how do you find the hidden gem – the company poised for explosive growth?
That’s where our expertise comes in.
We’ve got the answer, but there’s a twist…
Imagine an AI company so groundbreaking, so far ahead of the curve, that even if its stock price quadrupled today, it would still be considered ridiculously cheap.
That’s the potential you’re looking at. This isn’t just about a decent return – we’re talking about a 10,000% gain over the next decade!
Our research team has identified a hidden gem – an AI company with cutting-edge technology, massive potential, and a current stock price that screams opportunity.
This company boasts the most advanced technology in the AI sector, putting them leagues ahead of competitors.
It’s like having a race car on a go-kart track.
They have a strong possibility of cornering entire markets, becoming the undisputed leader in their field.
Here’s the catch (it’s a good one): To uncover this sleeping giant, you’ll need our exclusive intel.
We want to make sure none of our valued readers miss out on this groundbreaking opportunity!
That’s why we’re slashing the price of our Premium Readership Newsletter by a whopping 70%.
For a ridiculously low price of just $29.99, you can unlock a year’s worth of in-depth investment research and exclusive insights – that’s less than a single restaurant meal!
Here’s why this is a deal you can’t afford to pass up:
• Access to our Detailed Report on this Game-Changing AI Stock: Our in-depth report dives deep into our #1 AI stock’s groundbreaking technology and massive growth potential.
• 11 New Issues of Our Premium Readership Newsletter: You will also receive 11 new issues and at least one new stock pick per month from our monthly newsletter’s portfolio over the next 12 months. These stocks are handpicked by our research director, Dr. Inan Dogan.
• One free upcoming issue of our 70+ page Quarterly Newsletter: A value of $149
• Bonus Reports: Premium access to members-only fund manager video interviews
• Ad-Free Browsing: Enjoy a year of investment research free from distracting banner and pop-up ads, allowing you to focus on uncovering the next big opportunity.
• 30-Day Money-Back Guarantee: If you’re not absolutely satisfied with our service, we’ll provide a full refund within 30 days, no questions asked.
Space is Limited! Only 1000 spots are available for this exclusive offer. Don’t let this chance slip away – subscribe to our Premium Readership Newsletter today and unlock the potential for a life-changing investment.
Here’s what to do next:
1. Head over to our website and subscribe to our Premium Readership Newsletter for just $29.99.
2. Enjoy a year of ad-free browsing, exclusive access to our in-depth report on the revolutionary AI company, and the upcoming issues of our Premium Readership Newsletter over the next 12 months.
3. Sit back, relax, and know that you’re backed by our ironclad 30-day money-back guarantee.
Don’t miss out on this incredible opportunity! Subscribe now and take control of your AI investment future!
No worries about auto-renewals! Our 30-Day Money-Back Guarantee applies whether you’re joining us for the first time or renewing your subscription a year later!
I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.
We’re independently funding today’s broadcast to address something on the mind of every investor in America right now…
Should I put my money in Artificial Intelligence?
Here to answer that for us… and give away his No. 1 free AI recommendation… is 50-year Wall Street titan, Marc Chaikin.
Marc’s been a trader, stockbroker, and analyst. He was the head of the options department at a major brokerage firm and is a sought-after expert for CNBC, Fox Business, Barron’s, and Yahoo! Finance…
But what Marc’s most known for is his award-winning stock-rating system. Which determines whether a stock could shoot sky-high in the next three to six months… or come crashing down.
That’s why Marc’s work appears in every Bloomberg and Reuters terminal on the planet…
And is still used by hundreds of banks, hedge funds, and brokerages to track the billions of dollars flowing in and out of stocks each day.
He’s used this system to survive nine bear markets… create three new indices for the Nasdaq… and even predict the brutal bear market of 2022, 90 days in advance.