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

<ul>
<li>Founded in Chennai, India in 2010 with the idea of creating a “fresh” helpdesk product Freshworks has assembled a one-stop-shop for SMB customers for customer service, ITSM and CRM tools.</li>
<li>Its approach is to provide enterprise grade products at a ~25% discount to larger competitors.</li>
<li>The company has a similar approach to software as SolarWinds, which remains one of the most profitable software companies. </li>
</ul>


Founded in Chennai, India in 2010 with the idea of creating a “fresh” helpdesk product Freshworks has assembled a one-stop-shop for SMB customers for customer service, ITSM and CRM tools.
Its approach is to provide enterprise grade products at a ~25% discount to larger competitors.
The company has a similar approach to software as SolarWinds, which remains one of the most profitable software companies. 


Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/braze-inc" target="_blank" data-smartkarma-citation="entities:34773:1" rel="noopener">Braze Inc (BRZE US)</a> , leader in mobile engagement automation and cross-channel campaign management, plans to raise ~$385 million at midpoint of the price range at $57.50 per share, implying a market cap of ~$5.2 billion, up from last private round valuation of ~$850 million in October of 2018. Selling stockholders are offering additional 1.3 million Class A shares, according to updated S-1/A. Following the IPO, early VC investors Bullpen Capital and InterWest Partners exit selling a part of their shares. Braze granted the underwriters an option to purchase up to 800,000 Class A shares. We will use a discounted valuation methodology based on estimated bull, base and bear long-term growth scenarios for Braze to set a 12-month price target. Moreover, in our insight we will examine a group of comparable SaaS companies and use EV/Revenue valuation methodology with a focus on calendar year 2022.

Braze Inc (BRZE US) , leader in mobile engagement automation and cross-channel campaign management, plans to raise ~$385 million at midpoint of the price range at $57.50 per share, implying a market cap of ~$5.2 billion, up from last private round valuation of ~$850 million in October of 2018. Selling stockholders are offering additional 1.3 million Class A shares, according to updated S-1/A. Following the IPO, early VC investors Bullpen Capital and InterWest Partners exit selling a part of their shares. Braze granted the underwriters an option to purchase up to 800,000 Class A shares. We will use a discounted valuation methodology based on estimated bull, base and bear long-term growth scenarios for Braze to set a 12-month price target. Moreover, in our insight we will examine a group of comparable SaaS companies and use EV/Revenue valuation methodology with a focus on calendar year 2022.

<a href="https://www.smartkarma.com/entities/braze-inc" target="_blank" data-smartkarma-citation="entities:34773:1" rel="noopener">Braze Inc (BRZE US)</a> , the leading customer engagement platform and cloud-based SaaS unicorn, filed for a $100 million placeholder IPO with Goldman Sachs, J.P. Morgan and Barclays leading the offering. The company applied to list Class A common stock on the Nasdaq Global Select Market under the ticker “BRZE”. Braze will have two classes of common stock: Class A shares and Class B shares, the so-called dual class structure of common stock. The company’s high profile customer list includes Delivery Hero, Grubhub, Burger King, DraftKings, IBM, Deliveroo, Intuit, and PayPal, among others. We have favorable view of the technology and Braze is well positioned to change how mobile marketing platforms approach customer engagement.

Braze Inc (BRZE US) , the leading customer engagement platform and cloud-based SaaS unicorn, filed for a $100 million placeholder IPO with Goldman Sachs, J.P. Morgan and Barclays leading the offering. The company applied to list Class A common stock on the Nasdaq Global Select Market under the ticker “BRZE”. Braze will have two classes of common stock: Class A shares and Class B shares, the so-called dual class structure of common stock. The company’s high profile customer list includes Delivery Hero, Grubhub, Burger King, DraftKings, IBM, Deliveroo, Intuit, and PayPal, among others. We have favorable view of the technology and Braze is well positioned to change how mobile marketing platforms approach customer engagement.

Braze IPO Preview: A World-Class Mobile Marketing Platform

Value Investing

Vladimir Dimitrov, CFA

<ul><li>The unprecedented amount of liquidity is having profound implications for high growth tech companies.</li><li>Expected topline growth rate has become the number one business valuation driver in the cloud space.</li><li>The hidden risk of rising interest rates and fading momentum trade is often left unaccounted for, which could soon create serious problems.</li></ul>

The unprecedented amount of liquidity is having profound implications for high growth tech companies.Expected topline growth rate has become the number one business valuation driver in the cloud space.The hidden risk of rising interest rates and fading momentum trade is often left unaccounted for, which could soon create serious problems.

The Cloud Space In Numbers: What Matters The Most

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

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)

Recent IPO Insights: Freshworks

Freshworks has assembled a one-stop-shop for SMB customers looking for customer service , ITSM and CRM tools priced at a ~25% discount to larger...

Aaron Gabin

Braze IPO Valuation Analysis

Our 12-month price target of $97.00 implies ~69% upside potential to IPO valuation of ~$5.2 billion at midpoint of the price range and we have...

Andrei Zakharov

Braze IPO Preview: A World-Class Mobile Marketing Platform

Mobile marketing technology unicorn Braze filed its S-1 with the SEC to go public as revenue growth accelerated and ARR surpassed $200M

Andrei Zakharov

The Cloud Space In Numbers: What Matters The Most

The unprecedented amount of liquidity is having profound implications for high growth tech companies. Expected topline growth rate has become the...

Vladimir Dimitrov, CFA

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

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