Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

Over 50% of allocations are in the US with the bulk of the remainder split between Japan, China &amp; HK and the major European nations.  The EMEA overweight is comprised mainly of the UK, Netherlands, France and Germany, with active managers running underweights in the US, China &amp; HK, Australia and Japan.UK allocations hover around their lowest levels in history, though managers remain stubbornly overweight compared to the MSCI AC World index.  A total of 62% of managers are overweight the UK at an average +1.88% above benchmark.  Global Value investors are approaching their largest ever overweight in UK stocks of 3.64% above benchmark.Another month, another slump in Japan exposure.  Average weights in Japan stand at an all-time low of 5.06% with 85.5% of funds exposed (another low). <a href="https://www.smartkarma.com/entities/sony-corp" target="_blank" data-smartkarma-citation="entities:563:1" rel="noopener">Sony Corp (6758 JP)</a> and <a href="https://www.smartkarma.com/entities/kddi-corp" target="_blank" data-smartkarma-citation="entities:639:1" rel="noopener">KDDI Corp (9433 JP)</a> are the most widely held stocks, with 23% and 21% of funds holding a position.Tech exposure is at record highs, though this is matched by a record underweight of -0.47%.  Indeed, the percentage of funds who are overweight technology has fallen to below 50% for the first time since the end of 2018, a sign that Global managers are tilting their portfolios away from Tech.German Industrials allocations have hit a 4-year high as more Global investors add exposure to the sector. <a href="https://www.smartkarma.com/entities/deutsche-post-ag" target="_blank" data-smartkarma-citation="entities:21608:1" rel="noopener">Deutsche Post AG (DPW GR)</a> and <a href="https://www.smartkarma.com/entities/siemens-ag" target="_blank" data-smartkarma-citation="entities:21713:1" rel="noopener">Siemens AG (SIE GR)</a> were the key stocks behind the move, with 4.2% and 2.4% of funds adding exposure over the last 6-months.Alibaba has seen closures by some of the larger holders in our analysis, led by American Funds Capital World Fund (-$1.1bn) and New Economy Fund (-$451m).  Though closures have dominated, selected funds have opened exposure during this period of volatility, including Invesco's Global Focus Fund and Liontrust's Global Income Fund.

Over 50% of allocations are in the US with the bulk of the remainder split between Japan, China &amp; HK and the major European nations.  The EMEA overweight is comprised mainly of the UK, Netherlands, France and Germany, with active managers running underweights in the US, China &amp; HK, Australia and Japan.UK allocations hover around their lowest levels in history, though managers remain stubbornly overweight compared to the MSCI AC World index.  A total of 62% of managers are overweight the UK at an average +1.88% above benchmark.  Global Value investors are approaching their largest ever overweight in UK stocks of 3.64% above benchmark.Another month, another slump in Japan exposure.  Average weights in Japan stand at an all-time low of 5.06% with 85.5% of funds exposed (another low). Sony Corp (6758 JP) and KDDI Corp (9433 JP) are the most widely held stocks, with 23% and 21% of funds holding a position.Tech exposure is at record highs, though this is matched by a record underweight of -0.47%.  Indeed, the percentage of funds who are overweight technology has fallen to below 50% for the first time since the end of 2018, a sign that Global managers are tilting their portfolios away from Tech.German Industrials allocations have hit a 4-year high as more Global investors add exposure to the sector. Deutsche Post AG (DPW GR) and Siemens AG (SIE GR) were the key stocks behind the move, with 4.2% and 2.4% of funds adding exposure over the last 6-months.Alibaba has seen closures by some of the larger holders in our analysis, led by American Funds Capital World Fund (-$1.1bn) and New Economy Fund (-$451m).  Though closures have dominated, selected funds have opened exposure during this period of volatility, including Invesco's Global Focus Fund and Liontrust's Global Income Fund.

Global Fund Positioning Update:  Japan Lows, US Highs, UK Value Rotation, Tencent & Alibaba Exit

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

In between earnings seasons, we are trying to catch up on the flurry of TMT IPOs over the past few months that have caught our eye. Why Digital Ocean? We're pretty big Amazon bulls cause of AWS, so when we heard there was this mini-AWS that the developer community swears by, had 30%+ EBITDA margins, was accelerating growth by growing dollar retention rates and ARPUs...we had to learn more. Strikes us at the type of business that could be a 5 to 10-bagger over the next year or two. <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>

In between earnings seasons, we are trying to catch up on the flurry of TMT IPOs over the past few months that have caught our eye. Why Digital Ocean? We're pretty big Amazon bulls cause of AWS, so when we heard there was this mini-AWS that the developer community swears by, had 30%+ EBITDA margins, was accelerating growth by growing dollar retention rates and ARPUs...we had to learn more. Strikes us at the type of business that could be a 5 to 10-bagger over the next year or two. 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.

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Capital Markets

Salesforce.Com Inc / Equity Capital Markets

<ul><li>Salesforce experienced a phenomenal top and bottom-line performance in the second quarter of 2021.</li><li>The company saw strong demand across all of their products, regions and customer sizes.</li><li>Their revenue grew by a staggering 23% year-over-year in the recent quarter and around 21% in constant currency with a 20.4% operating margin and strong cash flow generation.</li></ul>

Salesforce experienced a phenomenal top and bottom-line performance in the second quarter of 2021.The company saw strong demand across all of their products, regions and customer sizes.Their revenue grew by a staggering 23% year-over-year in the recent quarter and around 21% in constant currency with a 20.4% operating margin and strong cash flow generation.

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<a href="https://www.smartkarma.com/entities/freshworks-inc" target="_blank" data-smartkarma-citation="entities:34147:1" rel="noopener">Freshworks (FRSH US)</a> announced its <a href="https://www.pymnts.com/news/ipo/2021/freshworks-aims-to-go-public-with-9b-valuation/" target="_blank" rel="noopener">IPO price range</a> of $28 to $32 per share and it is selling 28.5 million shares. At the high end of this price range, the company would raise $912 million and it would be valued at nearly <a href="https://goodwordnews.com/what-to-think-of-freshworks-first-ipo-price-range-techcrunch/" target="_blank" rel="noopener">$9.6 billion</a> (assuming fully diluted shares outstanding of 300 million).<div class="content-highlight">
Our base case valuation of Freshworks is implied market cap of US$13.5 billion or US$45 per share, which is 41% higher than the high end of the IPO price range (US$32). Given the solid upside, we have a POSITIVE view of this IPO. 
Our valuation of Freshworks is based on an EV/S multiple of 22.6x using our estimated sales of $546 million in 2022. The EV/S multiple of 22.6x is based on 30% premium to the average multiple of the comps in 2022.
</div>

Freshworks (FRSH US) announced its IPO price range of $28 to $32 per share and it is selling 28.5 million shares. At the high end of this price range, the company would raise $912 million and it would be valued at nearly $9.6 billion (assuming fully diluted shares outstanding of 300 million).
Our base case valuation of Freshworks is implied market cap of US$13.5 billion or US$45 per share, which is 41% higher than the high end of the IPO price range (US$32). Given the solid upside, we have a POSITIVE view of this IPO. 
Our valuation of Freshworks is based on an EV/S multiple of 22.6x using our estimated sales of $546 million in 2022. The EV/S multiple of 22.6x is based on 30% premium to the average multiple of the comps in 2022.


Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

<a href="https://www.smartkarma.com/entities/freshworks-inc" target="_blank" data-smartkarma-citation="entities:34147:1" rel="noopener">Freshworks (FRSH US)</a> , a leading provider of cloud-based customer engagement software, filed for a $100 million placeholder IPO. Form S-1 starts with a founder letter, where Mr. Girish Mathrubootham describes the vision of a company: “What if we can create an iPhone moment in business software by blending existing technology with unified, intuitive, and delightful experiences? Just as the iPhone freed users from the hassles of carrying separate devices, we envision a new product experience that breaks down data silos and creates unified experiences”. Freshworks has applied to list shares of Class A common stock on the Nasdaq Global Select Market under the symbol “FRSH”. Morgan Stanley, J.P. Morgan and Bank of America are lead underwriters on the IPO.

Freshworks (FRSH US) , a leading provider of cloud-based customer engagement software, filed for a $100 million placeholder IPO. Form S-1 starts with a founder letter, where Mr. Girish Mathrubootham describes the vision of a company: “What if we can create an iPhone moment in business software by blending existing technology with unified, intuitive, and delightful experiences? Just as the iPhone freed users from the hassles of carrying separate devices, we envision a new product experience that breaks down data silos and creates unified experiences”. Freshworks has applied to list shares of Class A common stock on the Nasdaq Global Select Market under the symbol “FRSH”. Morgan Stanley, J.P. Morgan and Bank of America are lead underwriters on the IPO.

Freshworks IPO Preview. India’s First SaaS Unicorn

United States

salesforce.com, inc. provides software on demand. The Company supplies a customer relationship management service to businesses worldwide providing a technology platform for customers and developers to build and run business applications. Clients use salesforce.com to manage their customer, sales and operational data.

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Salesforce.Com Inc (CRM US)

Global Fund Positioning Update: Japan Lows, US Highs, UK Value Rotation, Tencent & Alibaba Exit

A detailed look at investor positioning among 380 active Global strategies, covering the major themes in country, sector and stock exposure.

Steven Holden

Recent IPO Insights: Digital Ocean

Why Digital Ocean? When we heard there was this mini-AWS that the developer community swears by, had 30%+ EBITDA margins, was accelerating net...

Aaron Gabin

Salesforce.com Inc.. - Investment Thesis

Salesforce experienced a phenomenal top and bottom-line performance in the second quarter of 2021. The company saw strong demand across all of...

Baptista Research

Freshworks IPO Valuation Analysis

Our base case valuation of Freshworks is market cap of US$13.5 billion or US$45 per share, which is 41% higher than the high end of the IPO price...

Douglas Kim

Freshworks IPO Preview. India’s First SaaS Unicorn

We expect the high investor demand for Freshworks IPO as SaaS unicorn may disrupt CRM market by breaking down the silos of marketing, sales, and...

Andrei Zakharov

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