Marathon Cuts $11.3 Million From Tencent Music Stake Even With Shares Up 37% in a Year

Company Overview - Tencent Music Entertainment is a major digital music platform in China, operating leading music streaming, online karaoke, and live entertainment platforms such as QQ Music, Kugou Music, Kuwo Music, and WeSing [6][7] - The company generates revenue through music subscriptions, virtual gifts, advertising, live streaming, and music-related merchandise sales, targeting mass-market Chinese consumers seeking digital music and interactive entertainment [7] - As of February 5, the company's revenue (TTM) is $4.57 billion, net income (TTM) is $1.56 billion, and dividend yield is 1.11% [4] Recent Financial Activity - Marathon Asset Management sold 559,011 shares of Tencent Music Entertainment in the fourth quarter, with an estimated transaction value of $11.34 million [1][2] - The quarter-end value of the position decreased by $26.44 million, reflecting both share sales and stock price movement [2] - Following the sale, Tencent Music accounted for 1.55% of Marathon Asset Management's 13F reportable AUM [3] Stock Performance - As of February 5, shares of Tencent Music were priced at $15.93, representing a 37.2% increase over the past year, outperforming the S&P 500 by 25.05 percentage points [3] - In the fourth quarter, shares experienced volatility, falling close to 25%, which may have influenced portfolio management decisions [9] Operational Performance - Tencent Music's revenue rose more than 20% year over year, driven by a growing subscription base and higher average revenue per paying user [10] - Music subscriptions increased at a double-digit pace, with net income jumping more than 36% year over year, and gross margins improved [10] - The company maintains a strong balance sheet with over $5 billion in cash and short-term investments [10] Strategic Positioning - Tencent Music's affiliation with Tencent Holdings provides strategic advantages in distribution, user acquisition, and content sourcing [8] - The recent sale of shares appears to be a portfolio management decision rather than a negative outlook on the business, as Tencent Music remains a significant holding alongside larger positions in companies like Amazon and Alphabet [11]