John Burbank’s Passport Capital LLC has purchased 6 million shares of Sungy Mobile Ltd (NASDAQ:GOMO), held as 1 million ADR, worth an estimated $16 million according to a recent Securities and Exchange Commission filing. Sungy Mobile Ltd is a Chinese mobile app and platform developer, and anyone familiar with Burbank’s recent acquisitions won’t be surprised by this latest move.
Burbank is counting on in his other investments
Burbank has been investing in Chinese and Japanese internet companies recently, and while Sungy Mobile isn’t exactly an internet company, it is positioned to tap into the same growth in mobile computing that Burbank is counting on in his other investments.
“Revenues [at Qihoo] are driven by both PC and mobile search. We think significant potential upside may exist, as the smartphone install base is expected to exceed that of PCs next year, and believe Qihoo is very well-positioned in mobile,” Burbank wrote in a recent investor letter, using language that could soon be used to justify the investment in Sungy Mobile Ltd (NASDAQ:GOMO).
Burbank explained that in a slow growth world, he generally prefers developed markets to emerging markets, but he also thinks that internet companies are one of the best ways to gain exposure to Chinese consumers as China transitions from a high growth, investment economy to a consumption economy, especially since the Chinese government is promoting “national champions” who can dominate the local IT sector instead of allowing foreign companies like Google Inc (NASDAQ:GOOG) to have free rein.
Burbank is also interested in Japanese internet companies, though not for the same reason. He sees them as a good way to gain exposure to the Japanese equities market as it reflates under Abenomics and “under-owned internet companies dominate a culturally closed marketplace.”
“We view Internet companies as the best way to play the Chinese consumer. These companies target the growing middle class and are not as affected by slowing industrial growth. Additionally, because their business is digital, data and performance tracking is perceived to be more reliable and trustworthy,” he writes.
Burbank invested in Chinese internet company
Aside from Qihoo 360 Technology Co Ltd (NYSE:QIHU), Burbank has invested in Chinese internet company SouFun Holdings Limited (NYSE:SFUN) and increased exposure to Japanese IT through the internet holding company and venture capital firm Digital Garage, Inc. (TYO:4819).
