Sina CEO Cao Guowei, known as "Accountant Cao" in the industry, has made another very good deal.

On September 13, according to data compiled by Bloomberg, Cao Guowei, a former auditor of PricewaterhouseCoopers, bought US$456 million worth of Sina stocks in his personal capacity last year and has made approximately US$423 million so far.

Sina’s private placement to Cao Guowei was announced as early as June last year. The announcement issued at that time stated that it had reached a subscription agreement with Cao Guowei, chairman and CEO of the board of directors, and sold 11 million newly issued ordinary shares to Cao Guowei. The transaction was finally completed in November last year for a total consideration of US$456.39 million.

Talking about the reasons for the large increase in Sina's holdings, Ricky, Beijing-based investment director of iMeigu Fund, a hedge fund that invests in Chinese concept stocks and holds Sina shares, said that Cao Guowei believed that Sina's stock price was significantly undervalued. "He understands Sina better than any of us. As CEO and largest investor, Chao Guowei has many tools to unlock Sina's value." ”Ricky said.

This also means that Cao Guowei replaced Platinum Investment Management Limited as Sina's largest shareholder, with a shareholding ratio of 16.02%. The latter holds 4.3927 million shares of Sina, accounting for 7.5% of the shares.

After it increased its holdings in Sina, Sina's shares rose sharply, largely due to the increase in the value of Sina's Weibo shares and Cao Guowei's previous decision to distribute Weibo shares to Sina investors.

On August 31, Sina's board of directors approved the distribution of Weibo's shares to shareholders at a fixed ratio. After completing the distribution of Weibo stocks, Sina's shareholding ratio in Weibo dropped from approximately 54% to approximately 51%.

Since its listing, Weibo’s active users have maintained a growth of more than 30% for nine consecutive quarters. The company’s second quarter report as of June 30 showed that Weibo’s monthly active users reached 282 million, a year-on-year increase of 33%. Daily active users reached 126 million, a year-on-year increase of 36%.

Weibo’s second quarter financial report also accelerated the growth of Weibo’s stock price. Its revenue reached US$146.9 million, a year-on-year increase of 36%; net profit was US$25.9 million, a year-on-year increase of 516%. All indicators exceeded Wall Street analysts’ expectations. Based on this, the total market value of Weibo once exceeded 10 billion US dollars on August 16.

Due to the benefits released by user growth and financial reports, the value of Sina’s Weibo shares exceeds US$5 billion, which is close to the market value of parent company Sina itself.

This is one of the reasons why Cao Guowei decided to distribute dividends from part of Weibo shares held by Sina to Sina shareholders. The move sparked speculation that he may take more actions to unlock the value of investments in the company. Alibaba's subsequent increase in holdings also verified the above speculation.

On September 10, Alibaba Group submitted documents to the U.S. Securities and Exchange Commission (SEC), disclosing that it had purchased a total of 3 million Weibo shares held by Sina management such as Cao Guowei and Wang Gaofei, accounting for 1.4% of Weibo’s total outstanding share capital. The total transaction price was US$135 million.

After the transaction is completed, Alibaba’s shareholding in Weibo will increase from 30.1% to 31.5%, and its voting rights will increase from 14.5% to 15.2%. Alibaba said that the purchase of some Weibo stocks sold by Sina executives shows Alibaba's continued support and optimism for Sina and Weibo's management team. Sina's stake in Weibo will be reduced from 54% to 51%, and its voting rights will be reduced from 78% to 75%.

But this does not affect Cao Guowei's huge profits from it. If Weibo can still maintain a sustained growth trend in this fiscal year, perhaps Cao Guowei and Sina may sell more Weibo shares.

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