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 Bottom-Up

<ul><li>Visa Inc.</li><li>has had a solid start to fiscal year 2024, reporting in their latest earnings call a first quarter year-on-year increase in payments volume by 8%.</li><li>Key themes have included consistently providing excellent service to customers, seeking new partnerships, delivering innovative solutions and exploring new ways to amplify their brand to support their partners.</li></ul>

Visa Inc.has had a solid start to fiscal year 2024, reporting in their latest earnings call a first quarter year-on-year increase in payments volume by 8%.Key themes have included consistently providing excellent service to customers, seeking new partnerships, delivering innovative solutions and exploring new ways to amplify their brand to support their partners.

Visa Inc.: Strong Cross-Border Business Performance To Set Off US Slowdown! - Major Drivers

Global Commodities, Mint Finance

Srinidhi Raghavendra

Global Commodities

Deep Fundamental Analysis

Mint Finance

Mint Finance's investment research blends deep fundamental analysis with technical & quant insights. Investment strategies straddle across multiple asset classes with risk management embedded into every trade to deliver an outsized reward-to-risk ratio.

Mint Finance's research is centered around three key themes. First, energy transition and climate change. Second, artificial intelligence. Third, shifting world order with its impact across politics and monetary economics.

Cross Asset Strategy

<ul>
<li>Markets raced to 52-week highs across US equity benchmarks with rally in tech stocks contributing to much of these gains. Nikkei raced to print another 34-year high.</li>
<li>Oil &amp; Copper ticked higher while other major commodities trended downwards last week. Beans and Corn marked their lowest price prints over the last 52-weeks.</li>
<li>Life is too short to be spent writing for an echo chamber and rewriting to meet the often arbitrary demands of a reviewer, writes Dr Damodaran.</li>
</ul>


Markets raced to 52-week highs across US equity benchmarks with rally in tech stocks contributing to much of these gains. Nikkei raced to print another 34-year high.
Oil &amp; Copper ticked higher while other major commodities trended downwards last week. Beans and Corn marked their lowest price prints over the last 52-weeks.
Life is too short to be spent writing for an echo chamber and rewriting to meet the often arbitrary demands of a reviewer, writes Dr Damodaran.


[TW2] US & JPN Equities on Steroids While China Remains Shaky on Deflation Fears (W/E 19th Jan 24)

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

<ul>
<li>In 2H23 our longs Visa and PagSeguro delivered positive returns, whilst PayPal was in negative territory; among our shorts, Kakao Pay was modestly successful, DLocal and Affirm continued to appreciate</li>
<li>We retain card network megacap Visa as a core holding, and keep PagSeguro and PayPal adding Cielo to the buy list</li>
<li>We keep our negative views on DLocal and Affirm, and remove Kakao Pay from the sell list for its less marked price-to-sales multiple valuation</li>
</ul>


In 2H23 our longs Visa and PagSeguro delivered positive returns, whilst PayPal was in negative territory; among our shorts, Kakao Pay was modestly successful, DLocal and Affirm continued to appreciate
We retain card network megacap Visa as a core holding, and keep PagSeguro and PayPal adding Cielo to the buy list
We keep our negative views on DLocal and Affirm, and remove Kakao Pay from the sell list for its less marked price-to-sales multiple valuation


Payment Companies – Our High Conviction Calls for 1H 2024

Fundamental Principles of the Stock Market, From 0 to 1 in the Stock Market

From 0 to 1 in the Stock Market

Fundamental Principles of the Stock Market

Fundamental principles of the stock market, earnings reviews and research. My name is Giuliano Mana, I’m 23 years old. I have a B.A Degree in Finance and I’m a Master’s candidate at Brandeis IBS. I’ve been thoroughly going over huge amounts of reading material regarding the stock market and hope to transmit some insights here.

<ul>
<li>The last twelve months were, market-wise, interesting. Multiple things have happened that contributed to changes in my thinking-process.</li>
<li>Refining thoughts and the mental mechanism I utilize to approach portfolio management should lead to success, or at least that is my hypothesis.</li>
<li>Continuous learning allows for building more solid premises. Given time, compound interest sharpens them to the point where chances of error are minimum.</li>
</ul>


The last twelve months were, market-wise, interesting. Multiple things have happened that contributed to changes in my thinking-process.
Refining thoughts and the mental mechanism I utilize to approach portfolio management should lead to success, or at least that is my hypothesis.
Continuous learning allows for building more solid premises. Given time, compound interest sharpens them to the point where chances of error are minimum.


Semiconductor & Technology Specialist, Ingenuity

William Keating

Semiconductor & Technology Specialist

Ingenuity

Our focus is exclusively on in-depth research & consulting in the broader semiconductor industry. We focus on the key players, namely Intel, Micron, Qualcomm, Apple, Samsung, NVIDIA, AMD, TSMC & Global Foundries - as well as some of the lesser known, but nonetheless critical, companies such as ASML (for EUV), Mellanox, Cavium, Xilinx etc. We specialise in their products, roadmaps, process technologies, competitive advantages & threats etc. We also help our clients understand the implications of new and emerging technologies, e.g. 3D X-Point, 3D NAND, Carbon Nanotubes, Autonomous Driving, Graphene, Silicon Photonics, Wafer-Level Optics, Artificial Intelligence, FPGA, GPU, ASIC etc. 

Semiconductor Analysis & Research

Thematic (Sector/Industry)

Since its emergence as the technology underpinning Bitcoin over a decade ago, blockchain has captured the imagination of technologists, investors and charlatans in roughly equal measure. Blockchain has been portrayed by its advocates as the solution to some of the most fundamental challenges facing modern-day society including free and fair elections, the protection of identity records and title deeds, supply chain integrity and, of course, enabling all manner of exotic cryptocurrencies. Little wonder then that we experienced a wave of blockchain mania which coincided with a similar level of cryptocurrency mania in late 2017. During that time, companies were adding "Blockchain" to their names and seeing their share prices soar by many multiples within weeks. Just as the crypto bubble burst in early 2018, so too did the blockchain bubble. Share prices of so-called blockchain companies collapsed just as quickly as they had risen. Testifying before a US senate committee in October 2018, professor of economics Nouriel Roubini was scathing in his criticism of blockchain <a href="https://www.banking.senate.gov/imo/media/doc/Roubini%20Testimony%2010-11-18.pdf" target="_blank" rel="noopener">referring</a> to it as  “The most over-hyped technology ever, no better than a spreadsheet/database”.
 Now, as the dust settles and the mania fades, we witness the emergence of a new class of enterprise-grade blockchain implementations led by the likes Hyperledger, Corda and various customisations of Ethereum. While the blockchain technologies supporting the likes of Bitcoin and Ethereum are public in so far as the data they contain is accessible by anybody who wishes to view it, these enterprise blockchain implementations are private, a necessary prerequisite for their potential deployment at major corporations and financial institutions. This distinction, along with a number of other important differences, means that enterprise blockchain represents a significant departure from the original public blockchain concept.
Today, enterprise blockchain is being deployed to tackle challenges across a swathe of verticals thanks to the likes of the Big Four consulting firms striving to position it at the heart of their business process reengineering practices. From Maersk to Walmart, they are convincing some of the world's biggest conglomerates to tackle age-old issues relating to outdated, inefficient, labor intensive business practices, all in the name of  blockchain.
It's not just the Big Four that are cashing in on enterprise blockchain. Professional services firm Accenture is investing heavily in its blockchain consulting practice. Blockchain as a Service (BaaS) solutions are available from enterprise software giants <a href="https://www.smartkarma.com/entities/intl-business-machines-corp" target="_blank" data-smartkarma-citation="entities:1064:1" rel="noopener">Intl Business Machines</a>, <a href="https://www.smartkarma.com/entities/oracle-corp" target="_blank" data-smartkarma-citation="entities:1065:1" rel="noopener">Oracle</a>,  <a href="https://www.sap.com/hk/index.html" target="_blank" rel="noopener">SAP</a> and <a href="https://www.smartkarma.com/entities/microsoft-corp" target="_blank" data-smartkarma-citation="entities:15273:1" rel="noopener">Microsoft </a>and more recently from China’s <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba </a>and <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu</a>. <a href="https://www.smartkarma.com/entities/intel-corp" target="_blank" data-smartkarma-citation="entities:16764:1" rel="noopener">Intel </a>wants to ensure that enterprise blockchains runs best on its servers while Microsoft and <a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon </a>want to host them on their clouds. It's little surprise then that enterprise and government spending on blockchain is expected to reach $2.9 billion in 2019, an increase of 89% over the previous year according to <a href="https://www.idc.com/getdoc.jsp?containerId=prUS44898819" target="_blank" rel="noopener">IDC</a>. Furthermore, they predict that spending on enterprise blockchain will reach $$ja12.4 billion by 2022.
In common with Roubini, our belief has long been that blockchain as a technology offers little that was not already available elsewhere and before. Enterprise blockchains bear little resemblance to the technical ingenuity that gave us Bitcoin, but which is otherwise largely useless. The populist mantra that enterprise blockchain has the ability to transform the business processes of major corporations, key industry verticals and governments is a largely a delusion in our opinion. <a href="https://www.mckinsey.com/industries/financial-services/our-insights/blockchains-occam-problem" target="_blank" rel="noopener">This</a> recent report from McKinsey further supports our perspective, noting that blockchain has yet to become the game-changer some expected and recommending that it should only be considered when it is the simplest solution available.
Paradoxically, if the allure of blockchain can be leveraged as the motivating factor to undertake the much-needed digital transformation and business process re-engineering required to modernize outdated, legacy practices and procedures, then it may indeed have some inherent, albeit unintended, value. Furthermore, our interviews with the CEOs of two small, privately held startups clearly indicated that they are actually finding important, albeit niche, use cases for blockchain technologies in their solution stacks.  In this context, it makes sense to view blockchain as an emerging technology actively seeking real-world use cases and likely to be strongly promoted by its proponents in the coming years.
Against this backdrop, how should investors think about the investment opportunities for blockchain? For starters, venture capital interest grew significantly in 2018 with some $5.4 billion invested in blockchain related startups, up from $1.5 billion the previous year according to <a href="https://next.autonomous.com/thoughts/crypto-blockchain-lands-at-24b-in-2018-funding-1b-in-stos-coming" target="_blank" rel="noopener">Autonomous Research</a>. Nonetheless, our analysis of multiple categories of companies with blockchain exposure reveals a harsh reality. Neither their blockchain related revenues nor any cost savings directly attributable to the technology are significant enough to have any meaningful impact on their valuations from a fundamentals perspective, a situation we do not expect to change any time soon. The same holds true for the blockchain-related ETFs and hedge funds we examined.
On a more positive note, there are some excellent companies doing exciting things with blockchain and related technologies. Privately held GuardTime and Digital Assets should be on investors watch lists for funding rounds and IPOs. We expect publicly listed <a href="https://www.garage.co.jp/en/" target="_blank" rel="noopener">Digital Garage</a> and <a href="https://www.broadridge.com/intl/" target="_blank" rel="noopener">Broadridge Financial Solutions</a> to continue to perform well and feel that they should be considered as part of a broader fintech portfolio. By the same token, we are positive on the growth opportunities of blockchain-associated multinationals such as <a href="https://www.microsoft.com/en-hk" target="_blank" rel="noopener">Microsoft</a>, <a href="https://www.ibm.com/hk-en" target="_blank" rel="noopener">IBM</a>, <a href="https://www.visa.com.hk/en_HK" target="_blank" rel="noopener">Visa</a>, <a href="https://www.mastercard.us/en-us.html" target="_blank" rel="noopener">Mastercard</a> etc, albeit for reasons that have little to do with blockchain.

Since its emergence as the technology underpinning Bitcoin over a decade ago, blockchain has captured the imagination of technologists, investors and charlatans in roughly equal measure. Blockchain has been portrayed by its advocates as the solution to some of the most fundamental challenges facing modern-day society including free and fair elections, the protection of identity records and title deeds, supply chain integrity and, of course, enabling all manner of exotic cryptocurrencies. Little wonder then that we experienced a wave of blockchain mania which coincided with a similar level of cryptocurrency mania in late 2017. During that time, companies were adding "Blockchain" to their names and seeing their share prices soar by many multiples within weeks. Just as the crypto bubble burst in early 2018, so too did the blockchain bubble. Share prices of so-called blockchain companies collapsed just as quickly as they had risen. Testifying before a US senate committee in October 2018, professor of economics Nouriel Roubini was scathing in his criticism of blockchain referring to it as  “The most over-hyped technology ever, no better than a spreadsheet/database”.
 Now, as the dust settles and the mania fades, we witness the emergence of a new class of enterprise-grade blockchain implementations led by the likes Hyperledger, Corda and various customisations of Ethereum. While the blockchain technologies supporting the likes of Bitcoin and Ethereum are public in so far as the data they contain is accessible by anybody who wishes to view it, these enterprise blockchain implementations are private, a necessary prerequisite for their potential deployment at major corporations and financial institutions. This distinction, along with a number of other important differences, means that enterprise blockchain represents a significant departure from the original public blockchain concept.
Today, enterprise blockchain is being deployed to tackle challenges across a swathe of verticals thanks to the likes of the Big Four consulting firms striving to position it at the heart of their business process reengineering practices. From Maersk to Walmart, they are convincing some of the world's biggest conglomerates to tackle age-old issues relating to outdated, inefficient, labor intensive business practices, all in the name of  blockchain.
It's not just the Big Four that are cashing in on enterprise blockchain. Professional services firm Accenture is investing heavily in its blockchain consulting practice. Blockchain as a Service (BaaS) solutions are available from enterprise software giants Intl Business Machines, Oracle,  SAP and Microsoft and more recently from China’s Alibaba and Baidu. Intel wants to ensure that enterprise blockchains runs best on its servers while Microsoft and Amazon want to host them on their clouds. It's little surprise then that enterprise and government spending on blockchain is expected to reach $2.9 billion in 2019, an increase of 89% over the previous year according to IDC. Furthermore, they predict that spending on enterprise blockchain will reach $$ja12.4 billion by 2022.
In common with Roubini, our belief has long been that blockchain as a technology offers little that was not already available elsewhere and before. Enterprise blockchains bear little resemblance to the technical ingenuity that gave us Bitcoin, but which is otherwise largely useless. The populist mantra that enterprise blockchain has the ability to transform the business processes of major corporations, key industry verticals and governments is a largely a delusion in our opinion. This recent report from McKinsey further supports our perspective, noting that blockchain has yet to become the game-changer some expected and recommending that it should only be considered when it is the simplest solution available.
Paradoxically, if the allure of blockchain can be leveraged as the motivating factor to undertake the much-needed digital transformation and business process re-engineering required to modernize outdated, legacy practices and procedures, then it may indeed have some inherent, albeit unintended, value. Furthermore, our interviews with the CEOs of two small, privately held startups clearly indicated that they are actually finding important, albeit niche, use cases for blockchain technologies in their solution stacks.  In this context, it makes sense to view blockchain as an emerging technology actively seeking real-world use cases and likely to be strongly promoted by its proponents in the coming years.
Against this backdrop, how should investors think about the investment opportunities for blockchain? For starters, venture capital interest grew significantly in 2018 with some $5.4 billion invested in blockchain related startups, up from $1.5 billion the previous year according to Autonomous Research. Nonetheless, our analysis of multiple categories of companies with blockchain exposure reveals a harsh reality. Neither their blockchain related revenues nor any cost savings directly attributable to the technology are significant enough to have any meaningful impact on their valuations from a fundamentals perspective, a situation we do not expect to change any time soon. The same holds true for the blockchain-related ETFs and hedge funds we examined.
On a more positive note, there are some excellent companies doing exciting things with blockchain and related technologies. Privately held GuardTime and Digital Assets should be on investors watch lists for funding rounds and IPOs. We expect publicly listed Digital Garage and Broadridge Financial Solutions to continue to perform well and feel that they should be considered as part of a broader fintech portfolio. By the same token, we are positive on the growth opportunities of blockchain-associated multinationals such as Microsoft, IBM, Visa, Mastercard etc, albeit for reasons that have little to do with blockchain.
  

The Blockchain Delusion. A (Mostly) Bearish Investment Thesis.

United States

Visa Inc. operates a retail electronic payments network and manages global financial services.  The Company also offers global commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses and government entities.

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Visa (V US)

Visa Inc.: Strong Cross-Border Business Performance To Set Off US Slowdown! - Major Drivers

Visa Inc. has had a solid start to fiscal year 2024, reporting in their latest earnings call a first quarter year-on-year increase in payments...

Baptista Research

[TW2] US & JPN Equities on Steroids While China Remains Shaky on Deflation Fears (W/E 19th Jan 24)

Animal spirits were back in charge last week as market sentiments rose high. US and Japanese equity markets continue to set record highs. Are we...

Mint Finance

Payment Companies – Our High Conviction Calls for 1H 2024

In payments, we stick with Visa, PayPal and PagSeguro, adding Cielo to the buy list; we remain negative on DLocal and Affirm, removing Kakao Pay...

Victor Galliano

2023 Shareholder Letter

The last twelve months were, market-wise, interesting. Multiple things have happened that contributed to changes in my thinking-process.

From 0 to 1 in the Stock Market

The Blockchain Delusion. A (Mostly) Bearish Investment Thesis.

Back when I wrote this, Blockchain was all the rage, but I struggled to see the true value proposition, felt there was a huge amount of hype...

William Keating

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