Fund manager likes a NYSE-listed Asia tech stock that's 60% off highs — and not based in China

Published Mon, Feb 14 20228:07 PM EST

The global sell-off has knocked tech shares for a good enough reason — inflation fears and higher rates raise operating costs and leave technology companies with high valuations especially vulnerable. But it hurt the strongest tech shares along with the weaker ones. A fund manager who spoke to CNBC remains especially bullish on one NYSE-traded, Asian tech company, Singapore-based Sea , even if the sell-off has slashed its share price by more than half from its October peak. Roderick Snell, fund manager at Baillie Gifford, argued that the big drop in the company's stock has had nothing to do with its business fundamentals. Markets have had a rough start to the year as the U.S. Federal Reserve signals it will begin hiking rates to combat historically high inflation. Tech stocks have been hit particularly hard as the prospect of higher rates could expose their high valuations and raise operating costs. January was the worst month since March 2020 for the tech-heavy Nasdaq Composite. Snell, who manages a total of $10 billion across a handful of funds, said investors should "find the companies that have been unjustly hurt in the market panic." He said Sea, a top holding in his Worldwide Asia ex-Japan fund, is "very much" in that category. "The long-term story here is better than nearly any kind of company across ASEAN, the best-managed business with best competitive advantage across the region," Snell said, during CNBC PRO Talks with Tanvir Gill last week. Sea shares hit an all-time intraday high of $372.70 on Oct. 21, but have since plummeted to $129.17 as of their Monday close. The Singapore-headquartered company owns popular e-commerce platform Shopee, which Snell noted is currently the top shopping app in Indonesia by both monthly active users and total time spent on the platform. "E-commerce penetration in Indonesia, which is its core market, is about 7%. That probably goes to 40%, 50% over the next five, six, seven years. They can pretty much double their market share at least, so this is a business that can easily grow tenfold. That's certainly not in the current valuations," Snell said. The fund manager also predicted fintech will be the most valuable business for Sea over the next decade and is currently "very lowly valued by the market." In the third quarter, the company's fintech unit SeaMoney saw total payment volume double from a year ago. Snell also dismissed concerns about Sea's gaming unit, which has to-date only produced one popular game, Free Fire. He argued that focus is misplaced. "Potentially, they might have another game that can come on the back of that, but I don't think that needs to happen for the company to do very well over the next 5 to 10 years," Snell said.