5 Best Cheap Stocks To Buy According To Billionaire Dalio

4. Tencent Music Entertainment Group (NYSE:TME)

Stock Price: $4.15

Ray Dalio’s Bridgewater Associates’ Holdings: $15.15 million

Percentage of Ray Dalio’s Bridgewater Associates’ Portfolio: 0.06%       

Number of Hedge Fund Holders: 14

Tencent Music Entertainment Group (NYSE:TME) is a Shenzhen-based provider of music streaming services to the Chinese market. The company has over 800 million users across its platforms like Kugou Music, Kuwo Music, QQ Music, and WeSing.

On August 31, Tencent Music Entertainment Group (NYSE:TME) entered into a partnership with Billboard. The deal aims to leverage the technology of Tencent Music and combine it with the global brand power of Billboard to promote Chinese music across the world. Tencent Music Entertainment Group (NYSE:TME) has been aggressively working on reducing its content costs. The company has reworked its agreement with some of the music labels and brought down its expenses related to bandwidth and storage capability. These developments are expected to result in an expansion of Tencent Music Entertainment Group’s (NYSE:TME) gross profit margin.

Here’s what Bireme Capital said about Tencent Music Entertainment Group (NYSE:TME) in its Q4 2021 investor letter:

“We initiated one material long position during Q4, in a Chinese company called Tencent Music (TME).

One of the largest positions of the since-imploded Archegos fund, TME has fallen from $20 in Jan 2021 to less than $7 today, implying an enterprise value (net of cash) of less than $8b. We think this is extremely cheap for the dominant online music platform in China that currently generates $5b in revenue and $570m of trailing net profits.

With over 800m users across its many apps, Tencent Music is the primary way that people in China interact with online music. Today, the majority of revenue comes from virtual gifts sent to streamers in its “Social Entertainment” segment, which has grown revenue from $300m in 2016 to $2.9b in 2020. Within this segment, the most popular app is WeSing, a karaoke app with hundreds of millions of users in China. While competition from platforms such as Douyin (the Chinese version of TikTok) is increasing, WeSing continues to generate substantial profits for TME.”