Chase Coleman (Trades, Portfolio), founder of Tiger Global Management and one of Julian Robertson (Trades, Portfolio)’s former “tiger cubs,” disclosed he expanded his stake in Sea Ltd. (SE, Financial) by 10.57% on April 16.
The guru’s New York-based hedge fund is known for focusing on small-cap stocks and technology startups, having become an early investor in Facebook Inc. (FB, Financial) and Spotify Technology SA (SPOT, Financial).
According to GuruFocus Real-Time Picks, a Premium feature, Coleman invested in 1.3 million shares of Sea for an average price of $23.65 per share. He now holds 13.6 million shares, which represent 1.13% of the equity portfolio.
GuruFocus estimates he has gained 68% on the investment since the first quarter of 2018.
The Singapore-based application software company, which is engaged in the electronic gaming and multimedia business, has a $10.52 billion market cap; its shares were trading around $23.64 on Wednesday with a price-sales ratio of 9.68.
The median price-sales chart below shows the stock is trading above its historical value, suggesting it is overpriced.
On Feb. 27, the company reported fourth-quarter and full-year 2018 results. For the quarter, it posted an adjusted loss of 81 cents per share, topping Zacks’ estimates of a loss of 85 cents. Adjusted revenue grew 136.6% to $389.3 million, beating expectations of $297.3 million.
For the full year, the company recorded a net loss of $2.84 per share on $1.1 billion in revenue.
Sea is scheduled to report its first-quarter results in May.
Sea’s financial strength and profitability and growth were both rated 3 out of 10 by GuruFocus. In addition to having poor cash-to-debt and debt-to-equity ratios, the Altman Z-Score of 0.55 warns the company is at risk of going bankrupt.
The company is also being hurt by negative margins and returns, which underperform a majority of competitors. Sea's low Piotroski F-Score of 3 indicates poor business operations.
Holding roughly 4% of outstanding shares, Coleman is by far the company’s largest guru shareholder. Steve Mandel (Trades, Portfolio), Frank Sands (Trades, Portfolio) and Steven Cohen (Trades, Portfolio) also have positions in the stock.
Portfolio composition
The guru’s $15.02 billion equity portfolio, which is composed of 66 stocks, is largely invested in the technology and consumer cyclical sectors.
His five largest positions as of the fourth quarter were Spotify, Microsoft Corp. (MSFT, Financial), JD.com Inc. (JD, Financial), Fiat Chrysler Automobiles NV (FCAU, Financial) and Amazon.com Inc. (AMZN, Financial).
Disclosure: No positions.
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