PROSF - SaltLight Capital - Tencent: Compelled To Self-Heal

2024-05-08 00:35:00 ET

Summary

• Tencent is reinvesting in advertising to enhance margins and monetize its vast social network, following the success of TikTok.
• The company plans to use AI to improve video engagement and ad targeting, which could significantly boost profitability.
• Tencent is returning capital to shareholders through increased dividends and share repurchases, and there is a possibility that Prosus will also increase its repurchases.

The following segment was excerpted from this fund letter.

Tencent ( OTCPK:TCEHY )

During the quarter, we reinvested back in Tencent (and proxy Prosus) primarily because we're observing another pattern from our playbook that we cited in our last letter: the idea that advertising is a helpful 'switch' that can be 'turned on' to enhance margins when they're required....

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