Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

<p><br/> The Europe HY Trade Book for December 2020 includes high-conviction trade ideas drawn from our European HY coverage universe, along with relative-value scatter plots and tables by industry.<br/></p>

  The Europe HY Trade Book for December 2020 includes high-conviction trade ideas drawn from our European HY coverage universe, along with relative-value scatter plots and tables by industry. 

Europe HY Trade Book - December 2020 - Lucror Analytics

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

NTT (Nippon Telegraph & Telephone) / Event-Driven

<p>In <a href="https://www.smartkarma.com/insights/ntt-go-big-or-go-home" target="_blank" data-smartkarma-citation="insights:44964" rel="noopener">NTT - Go Big Or Go Home</a> five weeks ago, I suggested that investors really needed to look at the internal arithmetic of the <a href="https://www.smartkarma.com/entities/nippon-telegraph-telephone-corporation" target="_blank" data-smartkarma-citation="entities:623:1" rel="noopener">NTT (Nippon Telegraph &amp; Telephone) (9432 JP)</a> buyout of subsidiary <a href="https://www.smartkarma.com/entities/ntt-docomo-inc" target="_blank" data-smartkarma-citation="entities:1089:1" rel="noopener">NTT Docomo Inc (9437 JP)</a>, which was subsequently completed, and will see the squeezeout take place early. </p><p>The occasion for that insight was the announcement of a large buyback program by NTT. </p><p>There had been a fear that the buy-in of Docomo was a "sign" that NTT was being pressured to fund lower Docomo pricing at the expense of NTT shareholder returns. NTT, however, made VERY clear that the company would look to continue its shareholder return policy AND pay down the ¥4+ trillion debt to be incurred buying out the Docomo minorities. </p><p>The first buyback report came at the beginning of December and the data is interesting. </p><p>Since I wrote that NTT shares are up 13.4% while <a href="https://www.smartkarma.com/entities/kddi-corp" target="_blank" data-smartkarma-citation="entities:639:1" rel="noopener">KDDI Corp (9433 JP)</a> is down slightly and <a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 JP)</a> is up about 8% (though 6% of that has happened in the last few days as news of a "slow-burn" minority buy-in pushes <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> shares.</p><p>It is worth re-iterating the dynamics here and thinking about the timing of buyback pressure, the timing of comp buyback pressure, and when investors will see newsflow on fundamentals.</p>

In NTT - Go Big Or Go Home five weeks ago, I suggested that investors really needed to look at the internal arithmetic of the NTT (Nippon Telegraph &amp; Telephone) (9432 JP) buyout of subsidiary NTT Docomo Inc (9437 JP), which was subsequently completed, and will see the squeezeout take place early. The occasion for that insight was the announcement of a large buyback program by NTT. There had been a fear that the buy-in of Docomo was a "sign" that NTT was being pressured to fund lower Docomo pricing at the expense of NTT shareholder returns. NTT, however, made VERY clear that the company would look to continue its shareholder return policy AND pay down the ¥4+ trillion debt to be incurred buying out the Docomo minorities. The first buyback report came at the beginning of December and the data is interesting. Since I wrote that NTT shares are up 13.4% while KDDI Corp (9433 JP) is down slightly and Softbank Corp (9434 JP) is up about 8% (though 6% of that has happened in the last few days as news of a "slow-burn" minority buy-in pushes Softbank Group (9984 JP) shares.It is worth re-iterating the dynamics here and thinking about the timing of buyback pressure, the timing of comp buyback pressure, and when investors will see newsflow on fundamentals.

Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

<p>Softbank Group shares jumped 5% on news the company is mulling a “slow burn” buyout which apparently consists of ongoing buybacks until CEO Son’s current holdings are enough to squeeze out minorities. At the current share price, which would likely be impossible to maintain absent a market selloff, Softbank could just barely get that done with cash from recent asset sales but there would be no money left over for further investments. We think this is unlikely but a steady buyback policy would be great news in itself.</p>

Softbank Group shares jumped 5% on news the company is mulling a “slow burn” buyout which apparently consists of ongoing buybacks until CEO Son’s current holdings are enough to squeeze out minorities. At the current share price, which would likely be impossible to maintain absent a market selloff, Softbank could just barely get that done with cash from recent asset sales but there would be no money left over for further investments. We think this is unlikely but a steady buyback policy would be great news in itself.

Softbank Group - Slow Burn Buyout Unlikely but Helps with the Discount so that Is Good

<p>Softbank Group is trading near recent highs boosted by ¥308bn in share buybacks over the last two months and enthusiasm on ride hailing/food delivery as two Vision Fund investments Uber and DoorDash are on track to deliver $8-9bn in gains this quarter.  Reports that the company will phase out derivative trading in the US did not appear to move sentiment.</p>

Softbank Group is trading near recent highs boosted by ¥308bn in share buybacks over the last two months and enthusiasm on ride hailing/food delivery as two Vision Fund investments Uber and DoorDash are on track to deliver $8-9bn in gains this quarter.  Reports that the company will phase out derivative trading in the US did not appear to move sentiment.

Softbank Group: Buybacks, Optimism on Food Delivery Help Narrow Discount to 41%

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/176/175/original/2020-12-03_05-39-01.png?1606941555" class="editor-image img-responsive" data-smartkarma-image-id="176175"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics </div></section><div><p><strong>FOUR QUADRANTS PICKS</strong> - Our recent series of Insights covering companies that are extreme outliers in our Relative Price Score/Results &amp; Revision Score matrix has featured the following seven companies:-  </p></div><div>
<ul style="list-style-type: disc;">
<li>
<strong>CONTRARIAN BUYS</strong> - <a href="https://www.smartkarma.com/entities/nikon-corp" target="_blank" data-smartkarma-citation="entities:7117:1" rel="noopener">Nikon (7731 JP)</a>, <a href="https://www.smartkarma.com/entities/fuji-media-holdings-inc" target="_blank" data-smartkarma-citation="entities:3191:1" rel="noopener">Fuji Media (4676 JP)</a>, <a href="https://www.smartkarma.com/entities/east-japan-railway-co" target="_blank" data-smartkarma-citation="entities:14271:1" rel="noopener">East Japan Railway (9020 JP)</a> </li>
<li>
<strong>CONTRARIAN SELLS</strong> - <a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener">M3 (2413 JP)</a>, <a href="https://www.smartkarma.com/entities/disco-corp" target="_blank" data-smartkarma-citation="entities:15817:1" rel="noopener">DISCO (6146 JP)</a> </li>
<li>
<strong>TURNAROUND BUYS</strong> - <a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 JP)</a> </li>
<li>
<strong>EX-GROWTH SELLS</strong> - <a href="https://www.smartkarma.com/entities/kao-corp" target="_blank" data-smartkarma-citation="entities:12933:1" rel="noopener">Kao  (4452 JP)</a> </li>
</ul>
<p><strong>2021 HIGH CONVICTION COLLECTION</strong> - For Smartkarma's '2021 High Conviction Collection' we have chosen one of the seven to be our selection. Given the lack of short ideas so far - only two and both in the US - our pick, <a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener">M3 (2413 JP)</a>, is the first Asian, and first Japanese, 'short' to join the Collection.</p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/176/209/original/2020-12-03_10-35-14.png?1606959327" class="editor-image img-responsive" data-smartkarma-image-id="176209"></figure></section><p><a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener"><strong>M3</strong></a>- M3 is the most extreme outlier of the seven stocks we have featured and was recommended as a 'Suga Growth Long in our Smartkarma Original - <a href="https://www.smartkarma.com/insights/japan-in-the-suga-era-policy-priorities-suga-stocks" target="_blank" data-smartkarma-citation="insights:43773" rel="noopener">Japan in the Suga Era - Policy Priorities &amp; 'Suga Stocks'</a>. Since then the stock has appreciated by 40% and by 10% since we published <a href="https://www.smartkarma.com/insights/japan-four-quadrants-contrarian-sells" target="_blank" data-smartkarma-citation="insights:45725" rel="noopener">Contrarian Sells</a>, adding almost ¥2 trillion in market value M3 is Japan's fifteenth largest company with a market value of ¥6.4 trillion, despite having only ¥144 billion in trailing revenues, ¥43 billion in trailing operating income, and just ¥18 billion in trailing CITC. While valuations may be less of a concern in the momentum-driven post-COVID era, we have highlighted several areas of concern regarding the company's margin-diluting diversification, that suggest that M3's tripling in value seen in 2020 will not be repeated. <strong>M3 is our 2021 'High Conviction Sell' </strong>     </p>
</div>

Source for all charts &amp; tables: Japan Analytics FOUR QUADRANTS PICKS - Our recent series of Insights covering companies that are extreme outliers in our Relative Price Score/Results &amp; Revision Score matrix has featured the following seven companies:-  


CONTRARIAN BUYS - Nikon (7731 JP), Fuji Media (4676 JP), East Japan Railway (9020 JP) 

CONTRARIAN SELLS - M3 (2413 JP), DISCO (6146 JP) 

TURNAROUND BUYS - Softbank Corp (9434 JP) 

EX-GROWTH SELLS - Kao  (4452 JP) 

2021 HIGH CONVICTION COLLECTION - For Smartkarma's '2021 High Conviction Collection' we have chosen one of the seven to be our selection. Given the lack of short ideas so far - only two and both in the US - our pick, M3 (2413 JP), is the first Asian, and first Japanese, 'short' to join the Collection.
M3- M3 is the most extreme outlier of the seven stocks we have featured and was recommended as a 'Suga Growth Long in our Smartkarma Original - Japan in the Suga Era - Policy Priorities &amp; 'Suga Stocks'. Since then the stock has appreciated by 40% and by 10% since we published Contrarian Sells, adding almost ¥2 trillion in market value M3 is Japan's fifteenth largest company with a market value of ¥6.4 trillion, despite having only ¥144 billion in trailing revenues, ¥43 billion in trailing operating income, and just ¥18 billion in trailing CITC. While valuations may be less of a concern in the momentum-driven post-COVID era, we have highlighted several areas of concern regarding the company's margin-diluting diversification, that suggest that M3's tripling in value seen in 2020 will not be repeated. M3 is our 2021 'High Conviction Sell'      


2021 High Conviction 🇯🇵 Sell M3 (2413 JP)

Japan

SoftBank Group Corp provides telecommunication services.  The Company also operates ADSL (Asymmetric Digital Subscriber Line) and fiber optic high-speed Internet connection, e-Commerce businesses, and Internet based advertising and auction businesses.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Softbank Group (ADR) (SFTBY US)

Europe HY Trade Book - December 2020 - Lucror Analytics

The Europe HY Trade Book for December 2020 includes high-conviction trade ideas drawn from our European HY coverage universe, along with...

Lucror Analytics

NTT - Still Going Big, Not Going Home

NTT is under-appreciated - March 2022 forecasts still do not include accretion of the NTT Docomo minority into EPS. The company has responded to...

Travis Lundy

Softbank Group - Slow Burn Buyout Unlikely but Helps with the Discount so that Is Good

Softbank shares jumped 5% on news it is mulling a “slow burn” buyout which consists of ongoing buybacks without a formal offer. This seems unlikely...

Kirk Boodry

Softbank Group: Buybacks, Optimism on Food Delivery Help Narrow Discount to 41%

Softbank Group is trading near recent highs boosted by share buybacks and enthusiasm on ride hailing/food delivery as Vision Fund investments are...

Kirk Boodry

2021 High Conviction 🇯🇵 Sell M3 (2413 JP)

2021 HIGH CONVICTION COLLECTION - For Smartkarma's '2021 High Conviction Collection' we have chosen one of our seven RPS/RRS outliers to be our...

Campbell Gunn

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)