One of the most well known Quotes in the investment world comes from Warren Buffet in one simple line.
“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”Warren Buffet
This could very well be the case with the company Tencent during the recent problematic period in which China’s State Administration for Market Regulation (SAMR) fined 12 companies over 10 deals that violated anti-monopoly rules.
The companies included Tencent, Baidu, Didi Chuxing, SoftBank and a ByteDance-backed firm, the SAMR said in a statement.
This highlighted the shear amount of risk when dealing with a single part authoritarian communist state that can at any moment change the rules of the game . The result was a market drop of over 70%.
If you believe there is a reasonable chance that the current majeures may be the end of the story , it leaves us with Tencent previously valued at over 50 Billion dollars market cap selling now for under 17 Billion with a price to Book ratio of 0.3 .
Personally i believe the market has overcorrected and left potential buyers with a significant discount to justify the increased risks.
The Charts seem to say a similar story . An oversold RSI and a bounce from the previous bottom.
In accordance I bought Leap Calls for June 2022 and Jan 2023 . I will write a new article when i close some of those positions and at what profit/loss.