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

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/abbisko-cayman-limited" target="_blank" data-smartkarma-citation="entities:33511:1" rel="noopener">Abbisko Cayman (ABB HK)</a> is a clinical-stage biopharmaceutical company focused on the discovery and development of innovative and differentiated small molecule oncology therapies. Abbisko has developed a pipeline of 14 candidates focused on oncology, including five candidates at the clinical stage The core products are ABSK091, a pan-FGFR inhibitor licensed from <a href="https://www.smartkarma.com/entities/astrazeneca-plc" target="_blank" data-smartkarma-citation="entities:21824:1" rel="noopener">AstraZeneca PLC (AZN LN)</a> and ABSK011, an FGFR4 inhibitor. Abbisko is pre-marketing an HKEx IPO to raise $300 million, according to press reports. Abbisko has a credible management team with a commendable commercialisation track record. The three co-founders together have made contributions to several discovery programs, several of which led to successful commercialisation. Abbisko also has several blue-chip backers such as Lilly Asia Ventures, Sinopharm Capital, Qiming Venture Capital, GIC, Temasek, <a href="https://www.smartkarma.com/entities/carlyle-group-inc" target="_blank" data-smartkarma-citation="entities:33402:1" rel="noopener">Carlyle Group Inc (CG US)</a>, Lake Bleu Capital and OrbiMed. <div class="content-highlight">While both core products are at an early stage of development, promising results from trials, management’s track record and the exceptional line-up of blue-chip backers suggest that the product candidates have the potential to succeed in a fiercely competitive market. Overall, we believe that Abbisko is worth a closer look. </div>

Abbisko Cayman (ABB HK) is a clinical-stage biopharmaceutical company focused on the discovery and development of innovative and differentiated small molecule oncology therapies. Abbisko has developed a pipeline of 14 candidates focused on oncology, including five candidates at the clinical stage The core products are ABSK091, a pan-FGFR inhibitor licensed from AstraZeneca PLC (AZN LN) and ABSK011, an FGFR4 inhibitor. Abbisko is pre-marketing an HKEx IPO to raise $300 million, according to press reports. Abbisko has a credible management team with a commendable commercialisation track record. The three co-founders together have made contributions to several discovery programs, several of which led to successful commercialisation. Abbisko also has several blue-chip backers such as Lilly Asia Ventures, Sinopharm Capital, Qiming Venture Capital, GIC, Temasek, Carlyle Group Inc (CG US), Lake Bleu Capital and OrbiMed. While both core products are at an early stage of development, promising results from trials, management’s track record and the exceptional line-up of blue-chip backers suggest that the product candidates have the potential to succeed in a fiercely competitive market. Overall, we believe that Abbisko is worth a closer look. 

Abbisko IPO: A Promising but Longer Term Prognosis

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

Thailand has found out an interesting mix of vaccines that is so far safe with a number of Thai as clinical trials that led the government to regain its confidence in the country's reopening. The company's share price has lagged the Thai Index by around 12% and it is currently trading at 7% PBR to its 5 years historical PBR. The downside may come from the slow down in the vaccination drive and also from the potential of further virus mutataion. Nonetheless, Thailand is recovering from the COVID-19 as herd immunity in China is expected to be achieved by end of this year thus a potential for a revenue increment in the next year.

Thailand has found out an interesting mix of vaccines that is so far safe with a number of Thai as clinical trials that led the government to regain its confidence in the country's reopening. The company's share price has lagged the Thai Index by around 12% and it is currently trading at 7% PBR to its 5 years historical PBR. The downside may come from the slow down in the vaccination drive and also from the potential of further virus mutataion. Nonetheless, Thailand is recovering from the COVID-19 as herd immunity in China is expected to be achieved by end of this year thus a potential for a revenue increment in the next year. 

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

Swedish Orphan Biovitrum AB / Event-Driven

A <a href="https://www.smartkarma.com/entities/swedish-orphan-biovitrum-ab" target="_blank" data-smartkarma-citation="entities:22487:1" rel="noopener">Swedish Orphan Biovitrum Ab (SOBI SS)</a> takeover had been rumoured for years. In 2015, SOBI ended talks on a possible offer after reports that Biogen and Pfizer were among interested parties.
On 1 September, Advent International Corporation and GIC Special Investments Pte. Ltd. <a href="https://agnafit-offer.com/app/uploads/2021/09/Offer-announcement-press-release.pdf" target="_blank" rel="noopener">made an offer</a> to acquire SOBI for SEK 69.4 bn, or SEK 235/share. The deal, once completed, could be the largest-ever LBO in Sweden and the largest LBO of a European healthcare company in five years.
The biding consortium is interested in SOBI’s product portfolio and focus on rare diseases.
There are irrevocable undertakings, 43.41% in aggregate, from Investor AB (36.45%) and Fjärde AP-Fonden (6.96%).  However, their agreement would lapse if another bid comes in at SEK 251/share and is recommended by the Board.
There is a minimum acceptance condition of 90% plus one share (necessary to initiate a compulsory acquisition procedure in respect of the remaining shares in the Company under the Swedish Companies Act). This means that the bidding consortium needs acceptances from 82.3% of the float, which although quite high, is achievable. It must be noted that the five largest holders own 58.65% of the share capital, whilst the 100 largest shareholders own 88.7% of the share capital.
<a href="https://www.smartkarma.com/entities/investor-ab-c8e86ae3-ba55-41f0-9edf-fd461533b72b" target="_blank" data-smartkarma-citation="entities:24796:1" rel="noopener">Investor AB (INVEA SS)</a> does not seem overly excited by the offer, unless a competing bid comes north of SEK 251/share.
<div>
SOBI has been consistently trading above the offer price. The shares closed at SEK 242 on 10 September, c. 3% above the offer price.
The offer values SOBI at 15.6x EV/Fwd EBITDA, vs. a median multiple of 30x for takeovers of biotech firms announced over the past year, according to Bloomberg, and a median of 20x for takeovers carried out since 2010, according to data compiled by S&amp;P Market Intelligence.
Median implied valuation across multiples (both LTM and NTM) of SOBI is SEK 246.71/share, c. 5% above the offer price, and just 1.7% below the threshold at which the irrevocable undertakings would cease to apply.
On this basis, I believe that the offer from the bidding consortium may be sweetened; the market thinks alike. Recommendation is long SOBI SS, TP SEK 246.7. Further upside could come from a competing bid.
</div>

A Swedish Orphan Biovitrum Ab (SOBI SS) takeover had been rumoured for years. In 2015, SOBI ended talks on a possible offer after reports that Biogen and Pfizer were among interested parties.
On 1 September, Advent International Corporation and GIC Special Investments Pte. Ltd. made an offer to acquire SOBI for SEK 69.4 bn, or SEK 235/share. The deal, once completed, could be the largest-ever LBO in Sweden and the largest LBO of a European healthcare company in five years.
The biding consortium is interested in SOBI’s product portfolio and focus on rare diseases.
There are irrevocable undertakings, 43.41% in aggregate, from Investor AB (36.45%) and Fjärde AP-Fonden (6.96%).  However, their agreement would lapse if another bid comes in at SEK 251/share and is recommended by the Board.
There is a minimum acceptance condition of 90% plus one share (necessary to initiate a compulsory acquisition procedure in respect of the remaining shares in the Company under the Swedish Companies Act). This means that the bidding consortium needs acceptances from 82.3% of the float, which although quite high, is achievable. It must be noted that the five largest holders own 58.65% of the share capital, whilst the 100 largest shareholders own 88.7% of the share capital.
Investor AB (INVEA SS) does not seem overly excited by the offer, unless a competing bid comes north of SEK 251/share.

SOBI has been consistently trading above the offer price. The shares closed at SEK 242 on 10 September, c. 3% above the offer price.
The offer values SOBI at 15.6x EV/Fwd EBITDA, vs. a median multiple of 30x for takeovers of biotech firms announced over the past year, according to Bloomberg, and a median of 20x for takeovers carried out since 2010, according to data compiled by S&amp;P Market Intelligence.
Median implied valuation across multiples (both LTM and NTM) of SOBI is SEK 246.71/share, c. 5% above the offer price, and just 1.7% below the threshold at which the irrevocable undertakings would cease to apply.
On this basis, I believe that the offer from the bidding consortium may be sweetened; the market thinks alike. Recommendation is long SOBI SS, TP SEK 246.7. Further upside could come from a competing bid.


Advent & GIC/SOBI: Awaiting a Sweetened Offer

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

The Hang Seng, EURO STOXX 50, MSCI ACWI ex-US, and MSCI EAFE display bearish short-term inflections. Additionally, 10-year yields in the US and Germany are breaking down below key support. These deteriorating market dynamics raise concerns of a deeper pullback, however other indicators remain largely positive. As a result, we continue to see a mixed, but overall constructive market. Actionable themes highlighted in today's report include Health Care and Real Estate.

The Hang Seng, EURO STOXX 50, MSCI ACWI ex-US, and MSCI EAFE display bearish short-term inflections. Additionally, 10-year yields in the US and Germany are breaking down below key support. These deteriorating market dynamics raise concerns of a deeper pullback, however other indicators remain largely positive. As a result, we continue to see a mixed, but overall constructive market. Actionable themes highlighted in today's report include Health Care and Real Estate.

Global Equity Strategy: Mixed Market Environment Continues As Yields Break Down

United Kingdom

AstraZeneca PLC operates as a holding company. The Company, through its subsidiaries, researches, manufactures, and sells pharmaceutical and medical products. AstraZeneca focuses its operations on eight therapeutic areas, including gastrointestinal, oncology, cardiovascular, respiratory, central nervous system, pain control, anaesthesia, and infection.

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AstraZeneca (AZN SS)

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

Abbisko IPO: A Promising but Longer Term Prognosis

While both core products are at an early stage of development, promising trials, management’s track record and blue-chip backers suggest that the...

Arun George

AOT: Thailand Reopening

Thailand is recovering from the COVID-19 as herd immunity in China is expected to be achieved by end of this year thus a potential for a revenue...

Henry Soediarko

Advent & GIC/SOBI: Awaiting a Sweetened Offer

Median implied valuation across multiples is SEK 246.71/share, c. 5% above offer price. I believe that the offer from the bidding consortium may be...

Jesus Rodriguez Aguilar

Global Equity Strategy: Mixed Market Environment Continues As Yields Break Down

The Hang Seng, EURO STOXX 50, MSCI ACWI ex-US, and MSCI EAFE display bearish short-term inflections and 10-year yields in the US and Germany are...

Vermilion Research

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