Five Points Capital

@the_zack_zhu I’m curious, what are you waiting for to deploy cash? You don’t think $SE at 24x trailing EV/earnings is better than a short term bond? If $SE even grows earnings at 10% per year it will be a decent investment. And I expect earnings to grow at ~20-30% per year for a while.

I think there are quite some stocks that price in very attractive spot. But I’m still hesitant to go in, I’m still 98%+ in cash or short term bonds. I think, in the past few time of downturn, investors got into the habit of not thinking of things ahead, and eventually, after a very short period of time, everything become very good. I tend to think different. But like I said, I’m just a business nerd and super bad at macro.

I feel like the stock market is still pricing like the strait will open up after two weeks. In reality, it’s probably should be price in for a lot longer. I think now, at most, market only suffer from minor valuation compression, but if it close for more than 3 months, it will cause huge supply chain problems and economy downturn. Then it will cause huge growth compression. Then it’s the real show. I’m really bad at macro, so I’m just saying. I’m not an expert in this topic. But I will still believe in myself.

@the_zack_zhu It may not have the same dollar value, but everyone’s time on Earth is equally valuable. It’s also irrelevant. People want things quickly, regardless of whether they need it or not.

I think one of the core thoughts of $PDD is that "poor people's time is not valuable". And this concept forms of the the most important distribution strategies of $PDD logistics and how they gain traffic.

To anyone who feels like they “missed it” and don’t want to buy today: You didn’t miss anything. We are back to last week’s prices. $SE at $83, $MSFT at $370, $RDDT at $135, $META at $570, $MELI at $1700, $RBRK at $48, $HOOD at $68, these are all great buys.

@SteadyCompound In some cases, you can get quality + a massive sell off. $SE $RDDT $HOOD to name a few

During sell-offs, people rush into whatever has dropped the most. Down 60%? Must be a deal. But a bad business down 60% is still a bad business. Quality matters more when everything is falling. Buy the companies that will come back stronger, not the ones that fell the hardest.

For the types of stocks Buffett is generally interested in, I’d say he’s right. Many of these “boring, stable businesses” trade at 20-25x earnings with 3-5% EPS growth. But there’s a lot of value in growth stocks like $SE, $MELI, $RDDT that have 30-70% EPS growth and trade at 30x earnings.

Huh, interesting. *WARREN BUFFETT SAYS STOCK VALUATIONS STILL AREN'T ATTRACTIVE

@JayC_Investing Yes if you look at total hedge fund and family office ownership it’s the highest for $SE

@fivepointscap Sea Limited is the most popular of the group among hedge funds? that's something new

Why is $SE so unpopular with retail investors? Whenever the topic of ex-China EM growth stocks comes up on X, $RDDT, YouTube, etc. you get a lot of comments regarding $MELI, $NU, $GRAB, even $DLO, but $SE gets ignored or bashed. My only guess is that the stock became very popular in 2021, people bought in at $300+, and eventually sold for a huge loss. Now they just write it off because of the bad experience. Any other ideas why? Interestingly it’s the most popular of the group among hedge funds…

@illegalHDBcat What government crackdown? I’m not sure I understand what you’re referring to

@fivepointscap Every result is deemed “sketchy”, margin gonna be eroded by other platform (eventhough they are mostly operating in different segment), every results beat must be accompanied by rumor of possible govt crackdown (worse for SE since they are not even based in China)

@plantmath1 @EquityBrian And then another few weeks away from delisting

No theres a huge difference to me. China invades Taiwan —> US investor in US stocks. They’re down big but the value will come back in a few years. China invades Taiwan —> US investor in Chinese stocks. They’re down 100%. The capital is permanently lost and cannot come back. That distinction is huge. It’s not that I “expect” anything to happen, but theres idk a 20-50% chance China invades Taiwan by 2030? I’m not gonna sit on the sidelines because that might happen. But I’m also not gonna buy Chinese stocks knowing that I’m one headline away from a -80% overnight move.

US still overvalued heading into what could be a recession. Chinese tech is cheap, growing, and nobody owns it. So what’s the argument that China doesn’t work from here?

Yeah, I think you made good points. I think Shopee’s margins are definitely my biggest question mark as well. I don’t have total confidence they’ll get to 2-3% EBITDA/GMV consistently. There may just be constant pricing wars, higher levels of investment, more subsidies, etc. But the good news is that at $80/share, or even $100/share, you don’t need Shopee to ever have 2% EBITDA/GMV margins for that price to be fair.

@fivepointscap Agreed on all 3 points, that's why I own shares. I'm just saying where the negative sentiment seems to come from. Long term margins are a bit of a question mark for me, but today's price is nicely de-risked, IMO.

@illegalHDBcat In what sense?

@fivepointscap Same category as $BABA

Sure, there would absolutely be major disruptions. But TSMC does have manufacturing outside Taiwan. I believe they have new facilities in the US and Japan. We can debate what kinda selloff would happen. Maybe it would be 75% down on some tech names and 50%+ for the S&P. But they’d come back eventually. $PDD, $BABA, etc. are likely zeros for good. That money is gone and can never come back. Now maybe China handles things more diplomatically and we can avoid the zeros for Chinese ADRs. But that’s a real legitimate risk that is unique to Chinese ADRs (and maybe a few other countries).

@fivepointscap @EquityBrian What’s the value of NVDA if $TSM is a crater in the ground? Nvidia can’t make chips. What’s the value of AAPL without any of their Apple silicon chips? What’s the value of all of the hyperscalers without chips? I agree ADRs are a 0 if war, but also lots of our F500 are -75%.

@mathlonning Yes, this is absolutely the case for $RDDT. Also, people may sign up because they want to discuss the Iran War and then stay on the platform and become long term DAUs. News is one of the main reasons people use $RDDT, so big events drive a lot of traffic.

Wouldn’t any type of conflict anywhere in the world, especially involving the US be bullish $RDDT? They’re likely seeing massive amounts of traffic related to the war. Overall DAU time spent within the app/website also likely trending up.

And $MELI has like ~15% non-performing loans vs. $SE at 1.1%. We can find faults with every company. I don’t think $SE over expanding, and then course correcting immediately was some major red flag. To be honest, having 15x the default rate on your loan book is a little more concerning to me than that a mistake $SE made 5 years ago.

@fivepointscap @Sai_invst_jrnl Sea has a fantastic track record - not really. Lots of missteps in 2021 in regard to expanding into too many territories simultaneously.

Fair points, but I’ll respond to each. 1) About 59% of operating income came from Garena in 2025, but I suspect that number falls below 50% in 2026 as Monee and Shopee outgrow it. 2) Disagree here. If anything, TikTok Shop is the “impulse buy” app in the region and Shopee is the general purpose shopping app. Shopee is a high quality product, far better than anything else in the region. 3) Subprime lending carries significant risks but most of these loans are small dollar amounts ($250 or less), have very short maturities (90 days or less), and are spread among a huge number of borrowers. This means that if theres a recession, they can raise the interest rates on their loans to compensate for the higher default rate. Since most of the book is turned over in 90 days, the impact will be contained.

@fivepointscap I own shares so I am bullish, but the market is skeptical because 1) Most of the profits come from their gaming segment which is more volatile and has a shelf life. 2) Shopee is viewed as kinda similar to Temu. Cheap, impulse buys. 3) Subprime lending sketches investors out.

@ReturnsJourney I suppose so! Just kinda crazy that such a dominant business growing so quickly would trade at such low multiples to net income, free cash flow, ebitda, ebit, whatever metric you want it’s cheap.

@fivepointscap because share price is down! don't think harder

@ArcticAnalyst1 Completely agree. We just gotta be patient.

@fivepointscap Best EM play IMO. Eventually the stock price has to follow the underlying business.

@smsutherland @Sai_invst_jrnl Sea has a fantastic track record, I’d argue even higher quality management, and a very strong logistics infrastructure. Those three things don’t separate $MELI from $SE, they’re just things they have in common.

@Sai_invst_jrnl @fivepointscap Track record. Quality of management. Physical infrastructure as a moat.

That’s not true at all. China invading Taiwan would almost certainly cause serious economic problems and US stocks could fall dramatically. But Chinese stocks as a U.S. investor? Zero. They aren’t in your brokerage account anymore because the ADR doesn’t exist. There’s an enormous difference between the two.

@fivepointscap @EquityBrian Much of the US market is a zero if China invades Taiwan. Not worth worrying about.

All fair points and there’s definitely major upside for $META. WhatsApp monetization, TikTok Shop style social commerce, Meta’s small business thing they launched, the glasses, etc. I would say they have the highest potential upside and the highest potential downside of any Mag 6.

@fivepointscap @cadeinvests They are getting the best roi on capex though growing 30% plus and the metaverse wasn’t all a waste most of those chips and infrastructure are used for ai. A lot is being used for their glasses which are a huge success. Jenson wong said himself no one uses compute like $META

Quietly getting smoked…. $MSFT -33% $META -31% $NFLX -29% Feels like these have been overlooked in this pullback.