In today’s briefing:
- MSCI May 2022 Index Rebalance: Flow Due to FIF Changes
- Link Risk/Reward Benefits with the Messaging from DND’s Earnings Call
- Base Inc: Shoppers Return to Offline, More Downside Left
- Japan Emerging as Leadership; Actionable Themes: Japan and Defensives
- Shufti Pro: Identity Verification Using AI
- Polen Global SMID Company Growth Q1 2022 Portfolio Manager Commentary
- Sift: Machine Learning to Prevent Fraud
- Hummingbird: A Modern RegTech Platform Not Requiring an Integration
- Polen U.S. Small Company Growth Q1 2022 Portfolio Manager Commentary
- Polen International Small Company Growth Q1 2022 Portfolio Manager Commentary
MSCI May 2022 Index Rebalance: Flow Due to FIF Changes
- There are quite a lot of stocks that have changes to their Foreign Inclusion Factor (FIF) at the May SAIR since MSCI comprehensively assesses the float for stocks.
- The largest passive inflows will be on Tencent, Kuaishou Technology, JD Health, Macquarie Group, Shin Etsu Chemical, Recruit Holdings, Olympus Corp, Naver Corp and Sun Hung Kai Properties.
- Changes to FIFs are tougher to forecast and not very widely tracked, so pre-positions are likely to be lower and the stocks with higher ADV to buy/sell should outperform/underperform.
Link Risk/Reward Benefits with the Messaging from DND’s Earnings Call
- DND’s 3QFY22 last night continued to suggest DND’s commitment to complete the Link Administration Holdings (LNK AU) acquisition.
- DND management’s messaging in the call downplayed the MAC risk of a contract renewal but shifted incrementally more bearish on the ACCC review, in our view.
- The risk-reward calculus is now incrementally more positive. The gross spread is wide at 24.4% with the “deal-break” valuation of A$4.18 (-5% below the last close) limiting downside risk.
Base Inc: Shoppers Return to Offline, More Downside Left
- BASE Inc (4477 JP) is up more than 27% today as the Mothers Index bounced back 4.5% following a steep sell-off during the last one-month period.
- Nevertheless, results were disappointing on both the top line and the bottom line with Q1 revenue and operating loss of ¥2,512m (consensus ¥2,659m) and ¥272m (consensus ¥139.2m) respectively.
- After disappointing the market with a guidance range that was significantly below consensus in 2021, Base Inc has withheld from providing 2022 guidance.
Japan Emerging as Leadership; Actionable Themes: Japan and Defensives
- Downtrends remain intact for Japan’s TOPIX/Nikkei 225, Hong Kong’s Hang Seng, Europe’s EURO STOXX50, Germany’s DAX, China (MCHI-US), and all the MSCI global indexes (ACWI, ACWI ex-US, EM, and EAFE).
- The majority of these indexes are in well-defined downtrends; that means when the downtrends eventually reverse, it will be clear and we will be ready to buy/turn bullish.
- Relative strength on Japan’s TOPIX is reversing topside a 4.5-year downtrend, signaling Japan is emerging as leadership. We highlight buy opportunities in Japan and also in defensive Sectors
Shufti Pro: Identity Verification Using AI
- Shufti Pro (1988739D LN) provides AI-based identification verification solutions offering real-time global identity verification for KYC/AML and KYB compliance.
- In 2020, the company grew its revenue by over 100% due to strong adoption skills and flexibility allowing to capture the growth in demand due to the COVID-19 pandemic.
- While flexibility helps Shufti Pro stand out from competitors, global expansions, growth in identity fraud and a number of strong partnerships would drive company revenues over the medium-term.
Polen Global SMID Company Growth Q1 2022 Portfolio Manager Commentary
- Polen Capital is a high-conviction growth investment manager.
- Over the first quarter of 2022, Polen Global SMID Company Growth Composite Portfolio returned -22.37% gross and – 22.48% net of fees, respectively, versus the -6.41% return of the MSCI ACWI SMID Capitalization Index.
Sift: Machine Learning to Prevent Fraud
- Sift Science (0747031D US) uses machine learning to help companies with detecting fraud, fake accounts and money laundering.
- The company’s business is claimed to have tripled since 2018.
- The growth of internet crime and increasing account takeover fraud will act as drivers for the company.
Hummingbird: A Modern RegTech Platform Not Requiring an Integration
- Hummingbird Technologies (1681343D LN) allows companies without easy access to IT or engineering resources carry out anti-money laundering practices.
- Unmet demand in the AML market, strong partnerships and expansion to new markets are expected to act as key drivers.
- The company claims to allow clients reduce investigation and reporting times by 70-90%.
Polen U.S. Small Company Growth Q1 2022 Portfolio Manager Commentary
- Polen Capital is a high-conviction growth investment manager.
- Over the first quarter, Polen U.S.
- Small Company Growth Composite Portfolio returned -21.98% gross and -22.18% net of fees, respectively, underperforming the -12.63% return of the Russell 2000 Growth Index.
Polen International Small Company Growth Q1 2022 Portfolio Manager Commentary
- Polen Capital is a high-conviction growth investment manager.
- Over the first quarter of 2022, Polen International Small Company Growth Composite Portfolio returned -22.48% gross and – 22.73% net of fees, respectively, versus the -6.
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