Alpha-Centric ESG Research

Kyle Rudden

After a year-long investigation, the U.S. Department of Justice (DOJ) <a href="https://www.justice.gov/opa/pr/justice-department-sues-monopolist-google-violating-antitrust-laws" target="_blank" rel="noopener">announced</a> that it filed a civil <a href="https://www.justice.gov/opa/press-release/file/1328941/download" target="_blank" rel="noopener">antitrust lawsuit</a> against Google; owned by, and nearly synonymous with, <a href="https://www.smartkarma.com/entities/alphabet-inc-cl-c" target="_blank" data-smartkarma-citation="entities:11369:1" rel="noopener">Alphabet (GOOG US)</a>.Not exactly a surprise since Google and its FAANG brethren have been in the crosshairs for a while. Still, the formality hits hard. Like getting dumped; you know it's coming, but the words still sting.DOJ's case is already quoted ad nauseam in the media, so I will regurgitate just a few small bits for context, then delve into my particular "angle" on this – i.e., how the U.S. Elections factor in.In Facebook parlance, "It's Complicated," but here is the gist:<ul>
<li>Antitrust cases of this magnitude and complexity can be drawn out over many, many years.</li>
<li>Long-term, big-picture? Bad. Even just the overhang. Bad for Google, foreboding for others.</li>
<li>If you zoom in to a smaller near-term window, however… it's still bad. But maybe, a bit less.</li>
<li>The 2020 U.S. Elections could change the antitrust mood and direction, even if Trump wins.</li>
<li>Google will still have issues (there is bi-partisan thirst for its blood, just on different terms).</li>
<li>Still, post-elections, this likely goes from "bad and chaotic" to "bad, but somewhat orderly."</li>
</ul>This is a quick take on what is still today's news, but the overall thought process is similar to <a href="https://www.smartkarma.com/insights/delisting-deceitful-chinese-companies-act-not-a-slam-dunk-and-has-more-bark-than-bite-if-it-passes" target="_blank" data-smartkarma-citation="insights:40025" rel="noopener">"Delisting Deceitful Chinese Companies Act" Not a Slam Dunk and Has More Bark Than Bite if It Passes</a>.

After a year-long investigation, the U.S. Department of Justice (DOJ) announced that it filed a civil antitrust lawsuit against Google; owned by, and nearly synonymous with, Alphabet (GOOG US).Not exactly a surprise since Google and its FAANG brethren have been in the crosshairs for a while. Still, the formality hits hard. Like getting dumped; you know it's coming, but the words still sting.DOJ's case is already quoted ad nauseam in the media, so I will regurgitate just a few small bits for context, then delve into my particular "angle" on this – i.e., how the U.S. Elections factor in.In Facebook parlance, "It's Complicated," but here is the gist:
Antitrust cases of this magnitude and complexity can be drawn out over many, many years.
Long-term, big-picture? Bad. Even just the overhang. Bad for Google, foreboding for others.
If you zoom in to a smaller near-term window, however… it's still bad. But maybe, a bit less.
The 2020 U.S. Elections could change the antitrust mood and direction, even if Trump wins.
Google will still have issues (there is bi-partisan thirst for its blood, just on different terms).
Still, post-elections, this likely goes from "bad and chaotic" to "bad, but somewhat orderly."
This is a quick take on what is still today's news, but the overall thought process is similar to "Delisting Deceitful Chinese Companies Act" Not a Slam Dunk and Has More Bark Than Bite if It Passes.

Google Antitrust Lawsuit: The 2020 Election Angle

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*Whoops They Did It Again..: In Afterpay’s Touch’s (APT.AU) [Afterpay] latest update, it was announced that Afterpay will allow Westpac Banking (WBC.AU) to offer its Banking-as-a-Service to Afterpay’s approximate 3.3 mn, which include deposit accounts and cash-flow management tools, as early as FY 2Q21. If successful, this partnership could transform the sleepy Australian banking market as we know it;  *Tencent Tutelage: Afterpay is helping Tencent enter markets earlier and with Tencent’s (700.HK) tutelage likely will help Afterpay more deeply penetrate North America.  We fully anticipate that Tencent will help Afterpay enter the Asian markets - uncharted territory with a large young population – with the big prize obviously being mainland China. Tencent’s digital expertise should also help Afterpay to improve its technology platform (e.g. its digital wallet checkout experience and its shopping platform, plus customer led generation). It also wouldn’t surprise us if Tencent took up greater than its pro rata share of the capital raise; and*Magic Fairy Dust: While no transaction particulars were disclosed, we calculate an average share purchase price of AUD 22.47 per share for the 5% stake or a hefty 6.8x P/BV for a company which is loss-making and where Tencent hasn’t control. Tencent has already earned 354% on this stake. Afterpay has already reached many of its key milestones, and we look forward to its quarterly update in a few weeks.

*Whoops They Did It Again..: In Afterpay’s Touch’s (APT.AU) [Afterpay] latest update, it was announced that Afterpay will allow Westpac Banking (WBC.AU) to offer its Banking-as-a-Service to Afterpay’s approximate 3.3 mn, which include deposit accounts and cash-flow management tools, as early as FY 2Q21. If successful, this partnership could transform the sleepy Australian banking market as we know it;  *Tencent Tutelage: Afterpay is helping Tencent enter markets earlier and with Tencent’s (700.HK) tutelage likely will help Afterpay more deeply penetrate North America.  We fully anticipate that Tencent will help Afterpay enter the Asian markets - uncharted territory with a large young population – with the big prize obviously being mainland China. Tencent’s digital expertise should also help Afterpay to improve its technology platform (e.g. its digital wallet checkout experience and its shopping platform, plus customer led generation). It also wouldn’t surprise us if Tencent took up greater than its pro rata share of the capital raise; and*Magic Fairy Dust: While no transaction particulars were disclosed, we calculate an average share purchase price of AUD 22.47 per share for the 5% stake or a hefty 6.8x P/BV for a company which is loss-making and where Tencent hasn’t control. Tencent has already earned 354% on this stake. Afterpay has already reached many of its key milestones, and we look forward to its quarterly update in a few weeks. 

*Lucky and Smart: In Afterpay’s Touch’s (APT.AU) [Afterpay] latest update, it was announced that AUSTRAC has decided that it will not be taking any further regulatory action and that that it had uplifted its AML/CTF compliance framework and financial crime function, and satisfactorily completed all required remediation activity. Further, Afterpay `launched its instore offering in the US market just in time for the Christmas shopping season following its Simon Property Group (SPG.US) collaboration in the US;*Tencent Tutelage: Afterpay is helping Tencent enter markets earlier and with Tencent’s (700.HK) tutelage likely will help Afterpay more deeply penetrate North America.  We fully anticipate that Tencent will help Afterpay enter the Asian markets - uncharted territory with a large young population – with the big prize obviously being mainland China. Tencent’s digital expertise should also help Afterpay to improve its technology platform (e.g. its digital wallet checkout experience and its shopping platform, plus customer led generation). It also wouldn’t surprise us if Tencent took up greater than its pro rata share of the capital raise; and*Magic Fairy Dust: While no transaction particulars were disclosed, we calculate an average share purchase price of AUD 22.47 per share for the 5% stake or a hefty 6.8x P/BV for a company which is loss-making and where Tencent hasn’t control. Tencent has already earned 328% on this stake.

*Lucky and Smart: In Afterpay’s Touch’s (APT.AU) [Afterpay] latest update, it was announced that AUSTRAC has decided that it will not be taking any further regulatory action and that that it had uplifted its AML/CTF compliance framework and financial crime function, and satisfactorily completed all required remediation activity. Further, Afterpay `launched its instore offering in the US market just in time for the Christmas shopping season following its Simon Property Group (SPG.US) collaboration in the US;*Tencent Tutelage: Afterpay is helping Tencent enter markets earlier and with Tencent’s (700.HK) tutelage likely will help Afterpay more deeply penetrate North America.  We fully anticipate that Tencent will help Afterpay enter the Asian markets - uncharted territory with a large young population – with the big prize obviously being mainland China. Tencent’s digital expertise should also help Afterpay to improve its technology platform (e.g. its digital wallet checkout experience and its shopping platform, plus customer led generation). It also wouldn’t surprise us if Tencent took up greater than its pro rata share of the capital raise; and*Magic Fairy Dust: While no transaction particulars were disclosed, we calculate an average share purchase price of AUD 22.47 per share for the 5% stake or a hefty 6.8x P/BV for a company which is loss-making and where Tencent hasn’t control. Tencent has already earned 328% on this stake. 

*Simon Says: In Afterpay’s Touch’s (APT.AU) [Afterpay] latest move, it was announced that it will collaborate with Simon Property Group (SPG.US) in the US across it’s significant footprint of retail shopping malls  - over 200 across the country. This collaboration enables Afterpay to establish an in-store presence in the US where both companies will work side by side with retailers in Simon shopping malls;*Tencent Tutelage: Afterpay is helping Tencent enter markets earlier and with Tencent’s (700.HK) tutelage likely will help Afterpay more deeply penetrate North America.  We fully anticipate that Tencent will help Afterpay enter the Asian markets - uncharted territory with a large young population – with the big prize obviously being mainland China. Tencent’s digital expertise should also help Afterpay to improve its technology platform (e.g. its digital wallet checkout experience and its shopping platform, plus customer led generation). It also wouldn’t surprise us if Tencent took up greater than its pro rata share of the capital raise; and*Magic Fairy Dust: While no transaction particulars were disclosed, we calculate an average share purchase price of AUD 22.47 per share for the 5% stake or a hefty 6.8x P/BV for a company which is loss-making and where Tencent hasn’t control. Tencent has already earned 278% on this stake.

*Simon Says: In Afterpay’s Touch’s (APT.AU) [Afterpay] latest move, it was announced that it will collaborate with Simon Property Group (SPG.US) in the US across it’s significant footprint of retail shopping malls  - over 200 across the country. This collaboration enables Afterpay to establish an in-store presence in the US where both companies will work side by side with retailers in Simon shopping malls;*Tencent Tutelage: Afterpay is helping Tencent enter markets earlier and with Tencent’s (700.HK) tutelage likely will help Afterpay more deeply penetrate North America.  We fully anticipate that Tencent will help Afterpay enter the Asian markets - uncharted territory with a large young population – with the big prize obviously being mainland China. Tencent’s digital expertise should also help Afterpay to improve its technology platform (e.g. its digital wallet checkout experience and its shopping platform, plus customer led generation). It also wouldn’t surprise us if Tencent took up greater than its pro rata share of the capital raise; and*Magic Fairy Dust: While no transaction particulars were disclosed, we calculate an average share purchase price of AUD 22.47 per share for the 5% stake or a hefty 6.8x P/BV for a company which is loss-making and where Tencent hasn’t control. Tencent has already earned 278% on this stake. 

Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

ASA Capital Management

ASA Capital Management is a boutique Research and Investment Advisory firm focusing on primary research in India. ASA provides bespoke research services to Institutional Clients with a focus on due diligence backed with primary research, Field Trips & Channel Checks.

Our objective with this weekly is to highlight notable developments in the India internet and consumer sector focusing on public and private companies. The sub-sectors covered include payment providers, e-commerce retailers,  social media platforms and consumer companies.
<ul>
<li>
<a href="https://www.smartkarma.com/entities/alphabet-inc-cl-c" target="_blank" data-smartkarma-citation="entities:11369:1" rel="noopener">Alphabet Inc Cl C (GOOG US)</a> monopoly is challenged. Indian entrepreneurs and application developers are hell bent on developing India's local Appstore which will directly compete with the Google PlayStore and <a href="https://www.smartkarma.com/entities/apple-inc" target="_blank" data-smartkarma-citation="entities:666:1" rel="noopener">Apple Inc (AAPL US)</a> 's AppStore. </li>
<li>
<a href="https://www.smartkarma.com/entities/walmart-inc" target="_blank" data-smartkarma-citation="entities:11134:1" rel="noopener">Walmart (WMT US)</a> eyes its biggest every India investment of USD 25 billion in Tata Group in order to compete in India's ongoing SuperApp race. </li>
<li>
<a href="https://www.smartkarma.com/entities/reliance-industries-ltd" target="_blank" data-smartkarma-citation="entities:198:1" rel="noopener">Reliance Industries (RIL IN)</a> 's JioMart feels out its subscription commerce model in India.</li>
<li>Smartphones to now cost more in India as the government hikes the import duty on displays.</li>
</ul>

Our objective with this weekly is to highlight notable developments in the India internet and consumer sector focusing on public and private companies. The sub-sectors covered include payment providers, e-commerce retailers,  social media platforms and consumer companies.


Alphabet Inc Cl C (GOOG US) monopoly is challenged. Indian entrepreneurs and application developers are hell bent on developing India's local Appstore which will directly compete with the Google PlayStore and Apple Inc (AAPL US) 's AppStore. 

Walmart (WMT US) eyes its biggest every India investment of USD 25 billion in Tata Group in order to compete in India's ongoing SuperApp race. 

Reliance Industries (RIL IN) 's JioMart feels out its subscription commerce model in India.
Smartphones to now cost more in India as the government hikes the import duty on displays.


India Internet & Consumer Weekly | Indian App Store, Walmart, JioMart

United States

Alphabet, Inc. operates as a holding company. The Company, through its subsidiaries, provides web-based search, advertisements, maps, software applications, mobile operating systems, consumer content, enterprise solutions, commerce, and hardware products.

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Alphabet (GOOG US)

Google Antitrust Lawsuit: The 2020 Election Angle

What, precisely, the U.S. DOJ antitrust case will mean for Google, only time will tell. One thing is certain, however. Politics – particularly the ...

Kyle Rudden

Tencent Holdings – Sliced Bread

Tencent Holdings: AfterPay Is Like The Greatest Thing Since Sliced Bread For Tencent. Not Only Has Tencent Earned 354% On Its Stake But AfterPay...

Thomas J. Monaco

Tencent – Rubbing Two Nickels Together

Tencent Continues To Reap The Benefits Of Its Australian Alliance, With Afterpay Now Getting A Clean Bill Of Health and Increasing Their US Presence

Thomas J. Monaco

Tencent - One If By Land

*Simon Says: In Afterpay’s Touch’s (APT.AU) [Afterpay] latest move, it was announced that it will collaborate with Simon Property Group (SPG.US) in...

Thomas J. Monaco

India Internet & Consumer Weekly | Indian App Store, Walmart, JioMart

Our objective with this weekly is to highlight notable developments in the India internet and consumer sector focusing on public and private...

Pranav Bhavsar

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