Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

Softbank Group shares fell 5% which seems like an outsize move relative to the overall markets (TOPIX -2%, NASDAQ -0.5%) but that does come off a record low discount (-16%). And whilst that has expanded to 20% it remains far better than the 27% discount when the company reported Q3 results on 8 Feb. One big difference is the Coupang IPO filing which implies at least $10bn in upside for Vision Fund based on aspirational pricing. If tech sentiment decidedly turns, the lost potential is probably as relevant for Softbank shares as today’s absolute downside for Vision Fund (-$1bn) and Alibaba (-2%, ~$2bn).

Softbank Group shares fell 5% which seems like an outsize move relative to the overall markets (TOPIX -2%, NASDAQ -0.5%) but that does come off a record low discount (-16%). And whilst that has expanded to 20% it remains far better than the 27% discount when the company reported Q3 results on 8 Feb. One big difference is the Coupang IPO filing which implies at least $10bn in upside for Vision Fund based on aspirational pricing. If tech sentiment decidedly turns, the lost potential is probably as relevant for Softbank shares as today’s absolute downside for Vision Fund (-$1bn) and Alibaba (-2%, ~$2bn).

Softbank Group: Jitters in a Frothy Market

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.

Palantir Technologies  / Equity Bottom-Up

Palantir generated $93M more revenues this quarter then a year ago. From that $93M, the company generated $174M more in operating income, which swung its EBIT margins from (31%) to 32% YoY…adjusted EBITDA margins of course (there was $1B in incremental SBC). In any case, that is some sort of remarkable business. Especially for a software company that is building a direct sales force and theoretically needs to be investing heavily in R&amp;D to keep up with the competition. Palantir talks about generating insight through the fog of war, but in our short time analyzing this company, we can’t find our way through the fog.<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>

Palantir generated $93M more revenues this quarter then a year ago. From that $93M, the company generated $174M more in operating income, which swung its EBIT margins from (31%) to 32% YoY…adjusted EBITDA margins of course (there was $1B in incremental SBC). In any case, that is some sort of remarkable business. Especially for a software company that is building a direct sales force and theoretically needs to be investing heavily in R&amp;D to keep up with the competition. Palantir talks about generating insight through the fog of war, but in our short time analyzing this company, we can’t find our way through the fog.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.

Palantir 4Q20 Earnings: The Greatest Operating Leverage Story Ever Told

As expected, the IPO of DoorDash and a recovery in sentiment for Uber drove huge gains for Vision Fund in Q3 as that investment segment came roaring back. The asset management business, which handles proceeds from asset sales, posted less impressive results however with another quarter of close to $3bn (¥285bn) in losses from derivative trading. Softbank reiterated today that it is an investment company and bright talk on Vision Fund 2 probably means that has more to with new ideas and less with its own shares or a “slow-burn” MBO. Investors bidding up shares to a new 21-year high before the report after the market close were probably looking for more.

As expected, the IPO of DoorDash and a recovery in sentiment for Uber drove huge gains for Vision Fund in Q3 as that investment segment came roaring back. The asset management business, which handles proceeds from asset sales, posted less impressive results however with another quarter of close to $3bn (¥285bn) in losses from derivative trading. Softbank reiterated today that it is an investment company and bright talk on Vision Fund 2 probably means that has more to with new ideas and less with its own shares or a “slow-burn” MBO. Investors bidding up shares to a new 21-year high before the report after the market close were probably looking for more.    

Softbank Group Q3 20 Results: Well-Flagged VF Gains but Derivative Losses Remain a Drag

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Alibaba Group Holding  / Equity Capital Markets

2020 marked our second full year of operations as an Independent Research Company, and our fifth year covering Equity Capital Markets (ECM). While the year started off on a precarious note for ECM, it ended with very strong momentum. Even as IPOs have hogged the limelight in 2020, we actually ended up covering more than twice the number of placements as IPOs. We ended 2020 with an accuracy rate of 72.7% across 88 IPOs that we covered and 70.1% across 174 placements. While our placements hit rate improved, our IPO hit rate took a dip from 2019.For those not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific (ex-Korea), including China ADRs.

2020 marked our second full year of operations as an Independent Research Company, and our fifth year covering Equity Capital Markets (ECM). While the year started off on a precarious note for ECM, it ended with very strong momentum. Even as IPOs have hogged the limelight in 2020, we actually ended up covering more than twice the number of placements as IPOs. We ended 2020 with an accuracy rate of 72.7% across 88 IPOs that we covered and 70.1% across 174 placements. While our placements hit rate improved, our IPO hit rate took a dip from 2019.For those not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific (ex-Korea), including China ADRs.

Aequitas 2020 IPOs and Placements Performance - IPOs in the Limelight but Placements Stole the Show

A healthy amount of share buybacks and a solid return for Vision Fund’s public holdings have taken the holding company discount back below 30% for the first time since the WeWork debacle. The improvement comes despite weakness for Alibaba which has fallen 26% since late October on regulatory concerns. Holding the discounted value of Alibaba steady, the discount on the remaining assets has fallen to the mid-teens. With Q3 now in the books, quarterly results should be solid thanks to upside in the public share portfolio boosted by new listings like DoorDash and Opendoor. The next big event will be management comments at Q3 results in early February and absent a tech sell-off, the same positive Vision Fund sentiment and buyback support that helped shares get this far should keep the discount from widening.

A healthy amount of share buybacks and a solid return for Vision Fund’s public holdings have taken the holding company discount back below 30% for the first time since the WeWork debacle. The improvement comes despite weakness for Alibaba which has fallen 26% since late October on regulatory concerns. Holding the discounted value of Alibaba steady, the discount on the remaining assets has fallen to the mid-teens. With Q3 now in the books, quarterly results should be solid thanks to upside in the public share portfolio boosted by new listings like DoorDash and Opendoor. The next big event will be management comments at Q3 results in early February and absent a tech sell-off, the same positive Vision Fund sentiment and buyback support that helped shares get this far should keep the discount from widening. 

Softbank Group -  Buybacks and New Listings Have Narrowed Discount to Two-Year Peak

United States

DoorDash, Inc. provides restaurant food delivery services. The Company develops technology to connect customers with merchants through an on-demand food delivery application. DoorDash serves customers in the United States.

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DoorDash (DASH US)

Softbank Group: Jitters in a Frothy Market

Tech jitters hit Softbank shares which dropped 5% v -1% for NASDAQ. We think the gap is partially explained by the Coupang IPO and low visibility...

Kirk Boodry

Palantir 4Q20 Earnings: The Greatest Operating Leverage Story Ever Told

Palantir's quarter, much like the rest of the company was perplexing. We believe the stock is overvalued even in the high 20s, and the coming...

Aaron Gabin

Softbank Group Q3 20 Results: Well-Flagged VF Gains but Derivative Losses Remain a Drag

Softbank posted robust profits thanks to Vision Fund gains from DoorDash and Uber but public market investments lost money again after another...

Kirk Boodry

Aequitas 2020 IPOs and Placements Performance - IPOs in the Limelight but Placements Stole the Show

2020 marked our second year of operations as an Independent Research Company, and our fifth year covering ECM. In 2020 we had an accuracy rate of...

Sumeet Singh

Softbank Group - Buybacks and New Listings Have Narrowed Discount to Two-Year Peak

A healthy amount of share buybacks and a solid return for Vision Fund’s public holdings have taken the holding company discount back below 30% for...

Kirk Boodry

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