Matthews International Capital Management Dumps $18 Million Worth of Sea Limited (NYSE:SE) Shares: Has the Stock Run Too Far?

Matthews International Capital Management sold 106,055 shares of Sea Limited (NYSE:SE) in Q3 2025, an estimated $18.17 million transaction, reducing its stake. Despite this divestment, Sea Limited remains Matthews' second-largest holding, comprising 8.87% of its AUM with 213,226 shares valued at $38.11 million as of September 30, 2025. This move is largely interpreted as a portfolio rebalancing strategy following Sea's substantial stock appreciation, rather than a negative assessment of the company, which continues to demonstrate strong growth and profitability.

Analysis

Matthews International Capital Management executed a significant portfolio rebalancing, selling 106,055 shares of Sea Limited (NYSE:SE) in Q3 2025, valued at an estimated $18.17 million. This transaction reduced their stake by 4.23% of reportable 13F AUM, yet Sea Limited remains their second-largest holding, comprising 8.87% of AUM with 213,226 shares valued at $38.11 million as of September 30, 2025. This move is primarily a response to SE's substantial appreciation, tripling since early 2024, rather than an indictment of the company's fundamentals.

Sea Limited has demonstrated robust performance, with its stock up 63.68% over the last year, outperforming the S&P 500 by 54 percentage points. The company reported 29% sales growth and is consistently generating positive net income and free cash flow, underscoring its strong operational momentum across digital entertainment, e-commerce, and digital financial services. This fundamental strength supports the continued conviction from Matthews, despite the partial divestment.

While SE trades at 41 times forward earnings, its integrated ecosystem and strong growth trajectory suggest potential to quickly outgrow this valuation. The overall sentiment for Sea Limited is strongly positive (0.8 per-ticker sentiment), reflecting market confidence in its strategic positioning and execution in key emerging markets.

Key Decisions for Investors

• Investors should interpret Matthews' partial divestment as a portfolio rebalancing strategy rather than a negative fundamental signal for Sea Limited, given the stock's significant appreciation
• Monitor Sea Limited's continued revenue growth, profitability, and free cash flow generation to assess its ability to justify its 41x forward earnings valuation
• Consider the company's robust integrated ecosystem and strong market position in emerging markets as key drivers for sustained long-term growth