TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

Large cap growth stocks have done nothing for 9 months. We think they represent great entry points into 1Q21 earnings. We prefer Facebook and Amazon.<div class="content-highlight">Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  </div>

Large cap growth stocks have done nothing for 9 months. We think they represent great entry points into 1Q21 earnings. We prefer Facebook and Amazon.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  

Whatever Happened to FANG? Why Its Time to Reload on Large Cap Growth

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Thanks to Covid-19 and the more long-term shift to digital shopping, the big three e-commerce platforms, Amazon, Rakuten and Z Holdings, plundered the physical retail sector last year, grabbing a significantly increased share of consumption, but the wider battle for digital dominance isn’t over yet.Z Holdings is just closing on its deal with <a href="https://www.smartkarma.com/entities/line-corp" target="_blank" data-smartkarma-citation="entities:22772:1" rel="noopener">LINE Corp (3938 JP)</a> and following that up with a proposed ¥500 billion investment programme which includes a focus on e-commerce. But <a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Inc (4755 JP)</a> has already responded this week with its breakthrough deal with <a href="https://www.smartkarma.com/entities/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post Holdings (6178 JP), </a><a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> and <a href="https://www.smartkarma.com/entities/walmart-inc" target="_blank" data-smartkarma-citation="entities:11134:1" rel="noopener">Walmart (WMT US).</a>Meanwhile, despite these efforts by the two domestics giants, <a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon.com Inc (AMZN US)</a> remained Japan's largest e-commerce operator in 2020 (by Gross Transaction Values) and doesn't look like giving up its poll position anytime soon.ZHD has a lot of advantages and strengths on the customer capture and marketing side. It has one of the biggest and more alluring datasets of Japanese consumers out there, which is not just social media handles and click data but names and addresses and – adding in Zozo data – body and foot size and, as of last month, skin type.ZHD needs to work hard to integrate all this and if it does so, will have a shot at leadership in digital ecosystems, but to win in e-commerce it must do something about fulfilment where it remains worryingly weak.

Thanks to Covid-19 and the more long-term shift to digital shopping, the big three e-commerce platforms, Amazon, Rakuten and Z Holdings, plundered the physical retail sector last year, grabbing a significantly increased share of consumption, but the wider battle for digital dominance isn’t over yet.Z Holdings is just closing on its deal with LINE Corp (3938 JP) and following that up with a proposed ¥500 billion investment programme which includes a focus on e-commerce. But Rakuten Inc (4755 JP) has already responded this week with its breakthrough deal with Japan Post Holdings (6178 JP), Tencent Holdings (700 HK) and Walmart (WMT US).Meanwhile, despite these efforts by the two domestics giants, Amazon.com Inc (AMZN US) remained Japan's largest e-commerce operator in 2020 (by Gross Transaction Values) and doesn't look like giving up its poll position anytime soon.ZHD has a lot of advantages and strengths on the customer capture and marketing side. It has one of the biggest and more alluring datasets of Japanese consumers out there, which is not just social media handles and click data but names and addresses and – adding in Zozo data – body and foot size and, as of last month, skin type.ZHD needs to work hard to integrate all this and if it does so, will have a shot at leadership in digital ecosystems, but to win in e-commerce it must do something about fulfilment where it remains worryingly weak.

E-Commerce Wars in Japan: How Z Holdings Is Facing off Against Rakuten and Amazon

Alpha-Centric ESG Research

Kyle Rudden

I often note that whilst Asia arrived at the ESG party fashionably late, it is making up for lost time, going from idle to full-throttle often by leapfrogging large patches of middle ground. One apropos example is the recent surge in Chief Sustainability Officer (CSO) hires by Asian companies.Rather than going a typical route – like having someone in Marketing do double-duty for a year or so to delay shelling out big bucks for a proper CSO – companies such as <a href="https://www.smartkarma.com/entities/singapore-exchange-ltd" target="_blank" data-smartkarma-citation="entities:1047:1" rel="noopener">Singapore Exchange (SGX SP)</a> and  <a href="https://www.smartkarma.com/entities/hsbc-holdings-plc" target="_blank" data-smartkarma-citation="entities:516:1" rel="noopener">HSBC Holdings (0005 HK)</a> have recruited some seriously-qualified, executive-level CSOs.Big news, but I wouldn't have bothered with it a few years ago.Until recently, there wasn't much "Chief" or "Officer" to the CSO role. At best, companies hadn't yet figured out what to do with a CSO. At worst, they handed out CSO titles for optics; "greenwashing," as it were. CSOs were idealistic and motivated. Managements and Boards just didn't get it, yet.CSOs have since been excepted as equals into the "C-Suite," having proven their worth and earning a voice in all levels of strategic discourse. Exceptions do exist, the CSO role is varied and continues to evolve, and that "greenwashing" daemon still rears its ugly head every now and again.On the whole, however, CSOs are more influential than ever.From an ESG investing angle, the existence of a CSO has two specific implications: 1) it serves as a barometer of overall ESG commitment, and 2) it is associated with ESG outperformance, and lower ESG risk. For some issuers, it can even portend (portend, not predict) future ESG performance.Recent CSO activity in Asia inspired me to dig deeper. "Deeper" is relative, as the CSO pool in Asia (and elsewhere for that matter) is still very shallow. Nevertheless, this is a comprehensive analysis of the evolving CSO role in Asia – generally, and by cross-sections and topics such as:<ul>
<li>
Results: Correlative or causal, CSOs are linked to better ESG performance and lower risk.</li>
<li>
Country: Singapore and the Philippines have the most CSOs by company-count and size.  </li>
<li>
Sectors: Asian-company CSOs tend to concentrate in large-cap sectors and/or industries.</li>
<li>
Education: CSOs have more advanced degrees, from top universities, than do non-CSOs.</li>
<li>
Gender: Singapore and Thailand have the most female CSOs; Japan and India the least.</li>
</ul>

I often note that whilst Asia arrived at the ESG party fashionably late, it is making up for lost time, going from idle to full-throttle often by leapfrogging large patches of middle ground. One apropos example is the recent surge in Chief Sustainability Officer (CSO) hires by Asian companies.Rather than going a typical route – like having someone in Marketing do double-duty for a year or so to delay shelling out big bucks for a proper CSO – companies such as Singapore Exchange (SGX SP) and  HSBC Holdings (0005 HK) have recruited some seriously-qualified, executive-level CSOs.Big news, but I wouldn't have bothered with it a few years ago.Until recently, there wasn't much "Chief" or "Officer" to the CSO role. At best, companies hadn't yet figured out what to do with a CSO. At worst, they handed out CSO titles for optics; "greenwashing," as it were. CSOs were idealistic and motivated. Managements and Boards just didn't get it, yet.CSOs have since been excepted as equals into the "C-Suite," having proven their worth and earning a voice in all levels of strategic discourse. Exceptions do exist, the CSO role is varied and continues to evolve, and that "greenwashing" daemon still rears its ugly head every now and again.On the whole, however, CSOs are more influential than ever.From an ESG investing angle, the existence of a CSO has two specific implications: 1) it serves as a barometer of overall ESG commitment, and 2) it is associated with ESG outperformance, and lower ESG risk. For some issuers, it can even portend (portend, not predict) future ESG performance.Recent CSO activity in Asia inspired me to dig deeper. "Deeper" is relative, as the CSO pool in Asia (and elsewhere for that matter) is still very shallow. Nevertheless, this is a comprehensive analysis of the evolving CSO role in Asia – generally, and by cross-sections and topics such as:

Results: Correlative or causal, CSOs are linked to better ESG performance and lower risk.

Country: Singapore and the Philippines have the most CSOs by company-count and size.  

Sectors: Asian-company CSOs tend to concentrate in large-cap sectors and/or industries.

Education: CSOs have more advanced degrees, from top universities, than do non-CSOs.

Gender: Singapore and Thailand have the most female CSOs; Japan and India the least.


The Rise of the Chief Sustainability Officer in Asia

Crowdstrike continues to put up impressive quarterly results and guidance that blows away even heightened expectations. The two high profile cyber hacks in the past few months have given a major tailwind to FY2022...and despite guiding 1000bps ahead of consensus revenue growth, we expect 50% growth to be conservative. We remain long. <div class="content-highlight">Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  </div>

Crowdstrike continues to put up impressive quarterly results and guidance that blows away even heightened expectations. The two high profile cyber hacks in the past few months have given a major tailwind to FY2022...and despite guiding 1000bps ahead of consensus revenue growth, we expect 50% growth to be conservative. We remain long. Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  

President, Vision Research

Robert C Prather Jr

President

Vision Research

Vision Research was formed in 2004 with the vision of generating the best possible fundamental analysis and investment research for smid cap US equities. In 2008, we broadened our coverage to include mid/large cap US stocks.  After researching a  few ideas outside the US each year for a number of years, we launched a dedicated non-US equity product at the end of 2015.  This was followed by the introduction of a product focused on IPOs in mid-2017.

Fundamental Insight

<a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon.com Inc (AMZN US) </a>officially launched its business in Poland this month, posing significant competition for Allegro.eu (also amidst increasing competition from <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a> ) and causing Allegro.eu to provide muted guidance for 2021 in early March.  Subsequently, on March 16th, insiders announced the sale of approximately $1.3bn in shares at a discount to the current price and just ahead of the April 2021 IPO lock up expiration.

Amazon.com Inc (AMZN US) officially launched its business in Poland this month, posing significant competition for Allegro.eu (also amidst increasing competition from Alibaba Group (9988 HK) ) and causing Allegro.eu to provide muted guidance for 2021 in early March.  Subsequently, on March 16th, insiders announced the sale of approximately $1.3bn in shares at a discount to the current price and just ahead of the April 2021 IPO lock up expiration.

Allegro.eu (ALE PW): Insiders Dump $1.3bn Ahead of Lockup Expiration and After Amazon Entry

United States

Amazon.com, Inc. is an online retailer that offers a wide range of products. The Company's products include books, music, videotapes, computers, electronics, home and garden, and numerous other products.  Amazon offers personalized shopping services, Web-based credit card payment, and direct shipping to customers.

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Amazon (AMZN US)

Whatever Happened to FANG? Why Its Time to Reload on Large Cap Growth

Macro tends to control the market in between earnings seasons, when fundamental performance matters less. As we approach 1Q21 earnings in a few...

Aaron Gabin

E-Commerce Wars in Japan: How Z Holdings Is Facing off Against Rakuten and Amazon

2020 boosted the fortunes of the big 3 e-commerce platforms in Japan but Z Holdings remains far behind Amazon Japan and Rakuten in sales volume and...

Michael Causton

The Rise of the Chief Sustainability Officer in Asia

Chief Sustainability Officers can impact ESG performance and risk-adjusted returns. CSOs are becoming more common anong Asian companies, which are...

Kyle Rudden

Crowdstrike 4Q21: Scaling the Heights

Crowdstrike retains its place as the highest quality high valuation software company, once again beating and raising by a wide margin.

Aaron Gabin

Allegro.eu (ALE PW): Insiders Dump $1.3bn Ahead of Lockup Expiration and After Amazon Entry

Why are insiders dumping stock at a discount prior to the IPO lock-up expiration and shortly after Amazon's official entry?

Robert C Prather Jr

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