Magellan Fund Sells Tencent on Crackdown, Adds Amazon Instead

(Bloomberg) -- An equity fund run by Magellan Financial Group Ltd., one of Australia’s biggest investment managers, sold its shares in Tencent Holdings Ltd. in early August in response to China’s regulatory crackdowns and “made the switch” to a new position in Amazon.com Inc.

Tencent’s “large and important gaming, social media and other content businesses are exposed to regulatory, social and political tail risks that we cannot handicap,” said Chris Wheldon, who co-manages the Magellan High Conviction Fund. 

Some assets were shifted to a stake in Amazon after the Seattle-based company’s shares dropped in the wake of its second-quarter results, he said in a webinar Wednesday. 

Amazon’s price fall “coincided with a change in our risk-adjusted views regarding the Tencent investment case,” he said. The U.S. e-commerce and cloud-computing firm is “right in the center of the dartboard in terms of business quality and long-term compounding potential,” Wheldon said, adding that the fund previously “had a question mark next to its valuation.”

Magellan oversees A$117 billion ($85.6 billion) in global equity and infrastructure strategies, according to its website. Its Tencent stake was in Hong-Kong listed shares of the Chinese tech giant.

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