Alec Hogg: Naspers investment on notice as risk rises
In the year since Naspers joined the Biznews Share Portfolio, its shares have appreciated 25% – a tidy return from our fifth biggest holding (of 12). But the risk in holding the shares is rising. Were it not for the share price trading at a 40%-plus discount to the value of its underlying assets, we'd be cashing in that profit in tomorrow's portfolio update.
In line with Warren Buffett's advice, the policy of the Biznews portfolio is a holding period of "forever". The only exception being when there is a fundamental change in the underlying business. This may now be happening at Naspers, or more specifically in the determinant of its share price, that 31% stake in Chinese internet giant Tencent.
By order of the US Commerce Department, on Sunday night Apple and Google dropped WeChat from their US App stores* (see update, below). Given growing US hostility, Tencent's cosiness with China's Communist Party is a concern. Especially in the light of the mainland government's strong reaction to pro-democracy demonstrations in Hong Kong.
___STEADY_PAYWALL___