Alternative Data - An Evolving Weapon for Active Managers (Fancl and Kao)

Positive FANCL and Kao

We analysed the top five Japanese cosmetics companies predominantly focusing on fundamental investment research principles. Our analysis made us pick FANCL as our number one choice in the entire Japanese cosmetics industry. We are also slightly positive on Kao long-term with a neutral short-term view.

Our long-term views on individual companies are mainly based on fundamental investment research principles and we have used POS data to track any changes in the trends behind our fundamentals based long term view. The frequency of POS data is much higher than traditional IR data and POS also breaks the data into extremely granular levels, meaning the information derived from POS is far more than what the traditional IR provides. Therefore, using POS we have developed systems to monitor the changes in our investment thesis at micro levels and also at a much higher frequency. Furthermore, we have also used POS data to forecast the company performance in its upcoming earnings. Lastly, the analysis of POS data helps us mitigate any surprises and potentially turn trend reversals to our advantage.

We provide our detailed views on Fancl and Kao below.