Asset Manager Investing in Global Technology Sector

We're an asset manager allocating 100% of our capital into public companies and cryptocurrency assets driving disruptive innovation globally. We serve as a family office of an Asia-based HNW family whose key members have made their fortune in the technology industry and are believers in technology as the key enabler of disruptive innovation. We seek to continue the family's legacy in creating and preserving wealth through technology investing.

Our small investment team is made up of diverse professionals who researches, identifies, and executes relevant opportunities. While we are not accepting outside clients and investors at the moment, we occasionally share some of our internal investment memos, market commentaries, and analysis here.

Wednesday, June 17, 2020

Q2.2020 - Recruit Holdings: Exposure To Fast-Growing Glassdoor And Indeed


  • Two of the most well-known global HR sites, Indeed and Glassdoor, are subsidiaries of Recruit Holdings of Japan. Both are reported under the HR Technology business segment.
  • Both businesses have an impressive 30%-50% YoY revenue growth with a double-digit EBITDA margin.
  • Having made up 13% of Recruit's ¥2.3 trillion (~$20 billion) revenue in 2019, Indeed and Glassdoor increasingly look like the future of Recruit's business.


Founded in Japan over 55 years ago, Recruit Holdings (OTCMKTS: OTCPK:RCRUY) (JPX: 6098) is the largest HR (Human Resources) company in Japan. We believe the stock presents an attractive investment opportunity due to its strong growth and profitability, driven by its fast-growing HR technology and profitable staffing and media businesses. We believe that Recruit will continue to benefit from its ownership in Indeed.com and Glassdoor.com, two US-based HR technology companies with strong market share, growth, and brand presence. In our view, both companies are the future of Recruit's business. Furthermore, their resiliences have also helped Recruit weather the pandemic. The stock is currently trading at ¥3,818 (~$35) per share, down by ~15% from YTD-high, given the COVID-19 situation that has modestly impacted its core staffing and media businesses. We think that the current price level provides a good entry point, and as such, we will maintain our overweight rating on the stock.

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Q2.2020 - Asure Software: Bracing For More Impact


  • COVID-19 has hit the business hard given the company's focus on SMBs. We expect no growth for the rest of 2020.
  • We expect any potential M&A, by which the management expects to deliver an additional 10% growth in 2020, to be put on hold.
  • The long-term issue regarding weak positioning remains.


We will remain neutral on Asure Software (ASUR), considering the current pandemic-related headwinds that have severely impacted its business and its SMBs client base. The stock is down ~24% from last December when we published our first coverage on the stock. Back then, we discussed our view of the company’s limited upside potential despite the shift to pure HCM SaaS business. Today, we still hold the same view of the outlook, which is even worsened by the COVID-19.

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Q2.2020 - Salesforce: Platform Adoption Should Reaccelerate Growth


  • Despite having achieved a 30% revenue growth in Q1, Salesforce will guide a lower 17% growth for the full year. However, we expect growth reacceleration beyond 2020.
  • The pandemic allowed the company to enhance its community and culture-building efforts, which also signal its resilience and focus on culture-driven future growth.
  • The 360 platform grew by 62% to drive almost a third of the business in Q1, while enabling Salesforce to land AT&T as a customer, its largest deal to-date.

Salesforce (CRM)’s recent ~10% pullback from its YTD high in light of the softer full-year outlook provides an attractive entry point opportunity. We believe it still has one of the most interesting growth stories in the cloud software market, and we continue to recommend its fair risk/reward profile. The company will continue to benefit from its strong culture, resilient business, comprehensive platform offering, and the increasing penetration of enterprise BI and AI markets.

Q2.2020 - Dynatrace: Driving Outperformance Through Bundling Strategy


  • Product bundling is at the core of Dynatrace's go-to-market approach.
  • The strategy has been successful and remains a differentiating factor, especially in the enterprise segment. Dynatrace has over 2,300 blue-chip enterprise customers.
  • The strategy also drives solid growth and profitability. ARR more than doubled YoY in FY 2020, while the 83% gross margin is best-in-class.
Last October, we discussed the attractive opportunity for long-term tech and growth investors considering Dynatrace’s (NYSE:DT) transition into a SaaS player, highlighting the potential upside driven by the strong ARR growth and enterprise product-market fit. Since then, the share price has almost doubled to ~$37 per share, with the company ending the FY 2020 with an impressive ARR growth of 42% and 2,373 enterprise customers. In this note, we will take a closer look at the company’s unique go-to-market approach, which in our view remains a differentiating factor and a strong value proposition in the enterprise market.

Q2.2020 - Splunk: Cloud Shift Can Accelerate Growth Even More


  • Without the cloud shift, Splunk is already a deep-moat software company with an impressive ~$2 billion ARR that grows +40%.
  • The cloud shift, which enables a higher-velocity sales process, can accelerate growth even more.
  • The cloud free-trial model also enables more effective user journey tracking and analysis, which allows for better pipeline visibility and a more contextual lead qualification process.
The leader in the enterprise log management, Splunk (SPLK) is one of the few companies in the software space we have liked for some time due to its resilient and fast-growing business. Having landed over 90 of the Fortune 100 companies as its clients so far and reaching over $2 billion of annual revenue last year, the company will turn to the SaaS model to accelerate growth further. Upon the complete transition into SaaS, Splunk will benefit from a higher-velocity customer acquisition process and better pipeline visibility as opposed to its historical contract-based model. We will maintain our overweight rating on the stock.

Friday, June 5, 2020

Q2.2020 - Asos: Targeted Approach Can Drive Long-Term Profitability


  • Asos is an attractive opportunity in eCommerce due to its strong focus on the young adult segment and dominant presence in the UK, where competitor Zalando has a weaker footprint.
  • Gross and operating margin have been slightly better than Zalando, driven by its targeted go-to-market approach and a simpler business model.
  • Price could have been more attractive than 0.8x P/S, given the weak execution in recent times, negative cash flow situation, and COVID-19 impact.

The London-based Asos (OTCMKTS: ASOMY) (LON: ASC) is one of the eCommerce names we have been taking a closer look at for some time. The company has over 22 million active customers, with 70% of the €2.7 billion of revenue concentrated in the EU and UK, while the US made up 13% of the revenue. The company has differentiated itself by targeting the young adult segment, allowing the company to leverage a targeted go-to-market approach. Top-line growth and operating profitability have been steady over the last five years, though the business saw some operational challenges in 2019. While we believe that the long-term prospect as a +20% grower remains intact, we will maintain our neutral rating on the stock, for now, considering the potential near-term slowdown in operating and investing activities due to the COVID-19 situation.

Q2.2020 - Amadeus: Eyeing A Rebound Opportunity


  • Amadeus is a global market leader in high-barrier and mission-critical airline GDS and IT sectors. Most world major airlines are customers.
  • It generated a €3.1 billion of revenue from its airline GDS business in 2019, having processed over 646 million of air bookings globally.
  • The COVID-19 impact on the travel industry has temporarily weakened its fundamentals and shares price, which creates a good entry point.

Amadeus (OTCMKTS: AMADY) (BME: AMS) is a global leader in the travel and tourism Global Distribution System/GDS space. The GDS is a computer reservation system that sources real-time travel inventory data such as flights or room availability from travel providers (airlines, hotels, and others), which will then be consumed by the travel sellers (online/offline travel agents, metasearch, and others). The company has a strong moat and fundamentals. Almost all of the major online travel and hospitality players around the world are Amadeus' clients, and given the ~ €10 billion of TAM opportunity, the company's latest +€5.6 billion of revenue means it has secured over 50% of the market. Profitability has been strong as earnings, EPS (Earnings Per Share), and DPS (Dividend Per Share) growth have been consistent.

Q2.2020 - Rapid7: Comprehensive And Top-Of-Mind Offering


  • Despite the slowdown in 2020, the comprehensive offering will reaccelerate growth to +30%.
  • Metasploit remains a hidden asset that will consistently drive long-term awareness.
  • Given the profitability and cash-flow-positive guidance in Q4 and 2021, Rapid7 is undervalued at ~7x P/S.

We maintain our overweight position in Rapid7 (RPD). In our most recent coverage about Rapid7 last December, we highlighted the company's strong growth in its VRM (Vulnerability Risk Management) business and its open-source Metasploit project, which will continue to be a long-term hidden asset as Rapid7 navigates the rapidly-changing cloud security industry. In Q1 2020, Rapid7 continued maintaining its solid growth despite the near-term slowdown due to the COVID-19 situation, and it will guide towards profitability and being cash-flows positive beyond Q4 and 2020. In our view, Rapid7 will remain as a top-of-mind choice in the cloud cybersecurity market longer term, due to its strength across all core categories and the continuing global awareness of its offerings driven by the Metasploit project.

Q2.2020 - Rakuten: Attractive Bet On Mobile


  • Rakuten is now officially the 4th telecom operator in Japan after SoftBank, NTT, and KDDI.
  • As a new entrant with no legacy debt, it has a competitive advantage, which allows leveraging the latest cloud-based virtual network technology from the start.
  • Rakuten has partnered with KDDI to launch an offering at 50% cheaper price than SoftBank and NTT. KDDI has a bleeding market share and will be very incentivized to win.
  • At 1x P/S, Rakuten is an attractive buy. The stock has received a lot of pressure in the last few years, potentially due to the volatile profit margins and perception of over-expansion.
  • Rakuten is still the largest eCommerce player in Japan by far. Core business still grows at +18%, while it also has enough scale and capital to enter virtually any market.

Rakuten (OTCPK:RKUNY) is the largest eCommerce company in Japan. At ¥1.3 trillion (~$12 billion) of revenue in 2019, it is roughly 8 times smaller than SoftBank (OTCPK:SFTBY). Given its success in eCommerce, the company has diversified its business by expanding into fintech, media, logistics, and more through M&As, organic, and also minority investments in the last decade. Despite consolidated revenue consistently growing at +15% and even accelerating to ~18% in recent times, net income and ROE have been quite volatile.

Q2.2020 - Gravity: Consistency Is The Next Test


  • Having achieved exponential growth over the last three years due to the major success with RMEL, the stock will now be priced based on its consistency in sustaining growth.
  • Anticipating the second wave of success through the launch of strategic RMEL updates in Taiwan and Southeast Asia/SEA in June, we upgrade our neutral rating to buy.
  • Taiwan and SEA are Gravity's largest markets. Both made up almost half of the business in 2019.

We had been cautious about Gravity (GRVY), the developer of the famous Ragnarok game franchise. Back when we covered the stock last October, the stock was trading at ~0.7x P/S despite the business being on track to generate its highest ever annual revenue. Since last October, the share price has jumped by ~55%, while revenue has been in a solid upward trend over the last few years, driven by the success of the RMEL (Ragnarok M: Eternal Love) game. Given the consistency in business performance as of Q1 and the potential catalysts going into the second half, we will upgrade our neutral rating to buy.