100X: Exponential Innovators in the H.E.R.O.’s Journey to Navigate the Volatile World
Escalating trade war has melted away the traditional “safe haven” sentiment-driven tactical trades such as dividend stocks and yield plays, whipsawed cashed-up bargain-hunters in “cheap stocks” that turned out to be risky cheap-gets-cheaper value traps – and the volatile uncertain market has positively benefited a selected group of winners.
There is a distinct value opportunity in a selected group of under-the-radar Asian SMID-cap tech stocks who are exceptional exponential innovators in their respective fields with unique, scalable, recurring-revenue and high-profitability business models run by high-integrity, honorable and far-sighted entrepreneurs with a higher purpose in solving high-value problems for their customers and society whom we call H.E.R.O. - Honorable. Exponential. Resilient. Organization.
Consider these resilient innovators:
• An artificial intelligence-powered medical diagnostics imaging software SaaS (software-as-a-service) innovator (operating profit margin 46.9%, ROE 37%) that let radiologists view and manipulate the increasingly large and complex medical images, which is up over 8% since the trade war escalated from 6 May 2019, extending its year-to-date 2019 gains to over 90%, and it is up 27X in the recent five years;
• A highly-profitable global leader (operating profit margin 16.2%, ROE 42.4%) powering our AI voice assistant Amazon’s Alexa in specialized data solutions and services for AI applications that helps the AI to interpret and write speech in almost any language, including tone, different accents, local idioms etc, and get more intelligent over time with machine learning, and is up over 6% since the trade war escalated from 6 May, extending its 2019 YTD gains to over 100%, and it is up 46X in the recent five years.
One of our focused portfolio stocks, a Korean-listed SMID-cap tech innovator with dominant 80% domestic market leadership in recurring information & big data services, remains resiliently positive since 6 May 2019. Since we highlighted this Korean firm about three months ago to one of our advisory clients, a business owner/CIO of an established Asia ex-Japan value fund management company in Singapore who manages sovereign wealth and pension/endowment money, the stock is up over 40% to a market value of US$740m. We are grateful to be able to deliver our recently operationalized bespoke investment solution for family offices, UNHW, corporates and long-term institutional investors with satisfactory results to this wise business owner/CIO client whom we like and respect and care for.
Farsighted investors and our clients are experiencing first-hand and benefitting from the flight-to-quality effect in the market to quality listed innovators that are most relevant in this exponential world, because each time the market corrects, the stronger hands of longer-term farsighted investors will accumulate more and more of these quality innovators, while the weaker short-term opportunistic hands sell out, creating a resiliency effect in these stocks. Listed profitable SMID-cap tech innovators with non-linear exponential growth potential are the most relevant and mispriced multi-year investment trend and opportunity.
Outline and Key Benefits:
• DISCOVER why Asian H.E.R.O. innovators outperform to create value regardless of macroeconomic potholes and bumps and the innovations they introduce to make the bumps work for them.
• LEARN the H.E.R.O. framework to distinguish between the true innovators and the swarming imitators, between the devoted missionaries forging a greater purpose and the promotional arbitrage-based mercenaries worming into riches-recognition.
• APPLY the “Catapult” 4Cs framework in business model analysis in going beyond the usual economic moat analysis to systematically identify how exponential innovators create extraordinary value.