Meet CEO who made $423m bet­ting on self

China Daily (USA) - - ACROSS AMERICA - By YE XIE, TAY­LOR HALL

Sina Corp Chief Ex­ec­u­tive Of­fi­cer Charles Chao isn’t your typ­i­cal in­ter­net com­pany boss.

Known more for his fi­nan­cial acu­men than strate­gic in­sight, Chao is some­thing of an out­lier in an in­dus­try that cel­e­brates lead­ers with grand vi­sions of the fu­ture. His nick­name -- The Ac­coun­tant -- doesn’t ex­actly scream cut­ting edge.

Yet for Chao and Sina’s share­hold­ers, the 50-year-old CEO’s knack for fi­nance is pay­ing off big time this year.

The for­mer au­dit man­ager at Price wa­ter house Coop­ers LLP is sit­ting on gains of about $423 mil­lion af­ter he made a per­sonal bet worth $456 mil­lion on Sina shares last Novem­ber -- pay­ing for more than half the pur­chase with bor­rowed money, ac­cord­ing to data com­piled by Bloomberg. Shares of the on­line me­dia com­pany have jumped since his pur­chase thanks to a surge in the value of Sina’s stake in Weibo Corp., a Twit­ter-like ser­vice in China, and Chao’s de­ci­sion last month to dis­trib­ute Weibo shares to Sina in­vestors.

The move comes af­ter a grow­ing user base at the mi­croblog lifted the value of Sina’s con­trol­ling stake to more than $5 bil­lion, nearly equiv­a­lent to the par­ent com­pany’s mar­ket cap­i­tal­iza­tion. Chao’s de­ci­sion to dis­trib­ute some of the stake to Sina share­hold­ers has spurred spec­u­la­tion he may do more to un­lock the value of the com­pany’s in­vest­ments, which also in­clude Alibaba Group Hold­ing Ltd. and Leju Hold­ings Ltd., an on­line real es­tate bro­ker­age.

“Chao be­lieves that Sina is sig­nif­i­cantly un­der­val­ued and that’s why he in­vested,” said Ricky Zhong, a Bei­jing-based in­vest­ment di­rec­tor at iMeigu Fund, a hedge fund that in­vests in U.S.-listed Chi­nese com­pa­nies and holds Sina shares. “He un­der­stands the com­pany bet­ter than any of us. As the CEO and largest in­vestor, Chao now has many tools to un­lock the value.”

The Novem­ber pur­chase lifted Chao’s to­tal “ben­e­fi­cially owned” stake in Sina to al­most 18 per­cent as of March 31, ac­cord­ing to the com­pany’s an­nual re­port. While Sina dis­closed that the share ac­qui­si­tion was fi­nanced by a $230 mil­lion loan from Credit Suisse Group AG, it’s un­clear where the ad­di­tional funds came from or whether Chao in­tends to sell shares to re­pay the debt. Sina didn’t re­spond to an e-mail and a phone call seek­ing com­ment. A rep­re­sen­ta­tive for the com­pany con­firmed re­ceiv­ing the re­quest.

Chao timed his pur­chase well. Sina shares traded at $75.12 on Fri­day, up 81 per­cent from his per-share cost of $41.49. Chao will also be en­ti­tled to an ad­di­tional 1.1 mil­lion Weibo shares when the dis­tri­bu­tion is paid out in Oc­to­ber, a stake val­ued at about $53 mil­lion at the end of last week. Sina fell 1.2 per­cent in U.S. trad­ing at 9:38 a.m. in New York.

Weibo shares hav e quadru­pled over the past year as the firm’s video con­tent, livestream­ing of­fer­ing and part­ner­ship with Alibaba at­tracted users and ad­ver­tis­ers -- eas­ing in­vestor con­cern over com­pe­ti­tion from Ten­cent Hold­ings Ltd’s pop­u­lar WeChat mes­sag­ing ser­vice. The num­ber of monthly ac­tive Weibo users rose 33 per­cent in June from a year ago to 282 mil­lion, clos­ing in on San Fran­cisco-based Twit­ter’s 313 mil­lion.

That growth has helped boost the bot­tom line at Sina, which gets 60 per­cent of its rev­enue from Weibo. Sina’s ad­justed earn­ings rose to 27 cents per share in the sec­ond quar­ter, com­pared with the me­dian fore­cast of 15 cents in a Bloomberg sur­vey of an­a­lysts.

Sina and Weibo’s “fi­nan­cials have been very pos­i­tive,” said Bren­dan Ah­ern, the New York­based chief in­vest­ment of­fi­cer at KraneShares, which runs an ex­change-traded fund in­vest­ing in Chi­nese In­ter­net com­pa­nies. “Ul­ti­mately for any share­holder, to be sit­ting on the same side of the ta­ble, know­ing the CEO has a lot of skin in the game, is ben­e­fi­cial.”

PHOTO / CFP

Cao Guowei, chair­man and CEO of Sina.com, speaks at the 2016 China Green Com­pa­nies Sum­mit in April in Jinan, Shan­dong prov­ince.

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