Sustainable Future

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The Green New Deal: Climate Change The Nb. 1 Topic For Next US Elections?


  • In the last few weeks, the “Green New Deal” garnered a lot of attention from the US media.
  • The Green New Deal is a broad list of resolutions co-written by senator Ed Markey and representative Alexandria Ocasio-Cortez with the aim to address climate change and economic inequality. The document is highlighting good ideas and goals, is technology agnostic, written in a “wish-list” style, and therefore has no direct policy implications. In other words, it’s a strategical way to bring the climate change topic on the center stage.
  • Democrats chose Climate Change as the main topic that can rally people and spark the interest of constituents for the next US presidential elections in 2020.
  • But what is this Green New Deal about? The answer is: everything (or almost)...


... Read the full article 


To learn more about our investment theme "Sustainable Future", click below:



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Bionics Update: M&A Heating Up In Surgical Robotics, Who's Next? 



  • Yesterday, healthcare giant Johnson & Johnson announced the acquisition for $3.4bn in cash (and additional contingent payments of up to $2.35bn) of Auris Health, a private robotics company focused on detecting and treating lung cancer. Auris’ platform, which received FDA approval last year, uses endoscopy to insert a flexible robot into hard to reach places inside the human body and allows physicians to navigate inside with help from 3D models thanks to video game-style controllers.
  • This deal is a significant addition to Johnson & Johnson’s two robotics assets (Verb in partnership with Google and Orthotaxy) and follows the acquisition last September of surgical robotics company Mazor by Medtronic for $1.6bn, confirming that medtech giants are determined to play a major role in surgery robotics.
  • This is not surprising in light of the rapid adoption of robots by surgeons/patients driven by the accuracy and less invasive nature of procedures and in light of the attractive business models offered by robotics. A robot installed within a hospital will indeed give rise to recurring and highly profitable sales of consumables and/or implants.
  • Even if, for now, most of these competitive initiatives are not aimed at its area of focus, laparoscopic surgery, Intuitive Surgical, the leading medical robot maker will arguably face increased competition in the future. That being said, the company does not stay idle and is also expanding its addressable market through the development of new applications, one of them being… lung cancer detection and treatment, just like Auris.
  • Against this backdrop of strong appetite for surgery robotics assets, we believe that some of the small listed players including TransEnterix ($600m market cap., laparoscopic surgery) and Globus Medical ($4.5bn market cap., orthopedic and spine surgeries), both part of our Bionics portfolio, could consider selling themselves to larger players. While they already received FDA clearance for their robots and have some commercial traction with hospitals, they clearly lack the distribution/sales channels that medtech giants could bring to the table.




Artificial Intelligence & Innovation

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Artificial Intelligence & Innovation Update: Our Stance After The Nvidia Warning 



  • Nvidia was sharply down last night on the heels of a major profit warning (the first one in years), with Q4 revenue outlook cut by 20% and gross margin outlook reduced to 56% from 62.5%. After the cryptocurrency mining weakness in the previous quarter, Nvidia suffered from “deteriorating macroeconomic conditions, particularly in China” in its Gaming division (54% of revenue) and from a “more cautious approach” from data center customers (25% of revenue).
  • The direct impact on our Artificial Intelligence and Innovation portfolios was moderate yesterday (around -50bps) as we materially cut our Nvidia exposure in recent weeks in light of the China and data center risks but, admittedly, the total impact was much larger as Nvidia dragged down many semiconductor stocks that populate the two certificates. That being said, it’s worth reviewing the investment case to figure out if it’s already time to turn more aggressive on the artificial intelligence leader or to exit the position.
  • While the Chinese risk and the datacenter slowdown were well flagged following numerous China-related profit warnings (Apple for instance) and underwhelming figures from datacenter providers such as Intel, the Gaming division’s swing from strong revenue growth in previous quarters to a revenue decline in Q4 came as a shock.
  • We view the current data center slowdown as a speed bump as cloud providers digest massive investments made over recent years and believe that the artificial intelligence revenue opportunity is intact. But we are worried in the short term about the Gaming outlook considering that Nvidia had underestimated the contribution of cryptocurrency mining to the Gaming division last year, that the 2019 lineup of video game blockbusters is poor (and only a few of them will require the ray tracing technology that Nvidia’s graphics cards offer) and that the outcome of trade negotiations between the US and China remains uncertain.
  • Hence, even if Nvidia’s profit-warning clearly resets earnings expectations, there is still downside risk in the very short term (the Q1 guidance is likely to be underwhelming). But as we get closer to the end of the year and to 2020-21, the outlook should gradually improve as comparison bases become easier and as the massive “autonomous driving” catalyst unfolds (a several billion revenue opportunity for the company in the medium term).
  • In all, we’ll stick for now with our small position in Nvidia in light of its leading position in AI and strong fundamentals (pricing power, margin strength) and considering that the focus will soon shift to autonomous driving. But it’s probably a bit too early to aggressively buy the stock and we feel much more comfortable right now in the AI chip space with rivals Xilinx (which benefits from a large telecoms/5G exposure) and AMD (market share gains in the server market at the expense of Intel).




Fintech & Mobile Payments

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Fintech & Mobile Payments Update: M&A Is Back​

  • After the M&A frenzy of summer 2017, it looks like big M&A is back in the payment processing space with the $22.7bn takeover of First Data by Fiserv announced on January 16, 2019, following a string of multi-billion transactions completed in recent months in the non-listed space, including the acquisitions of iZettle and SIX Payments Services by PayPal and Worldline, respectively, and the merger of Nets with Concardis.
  • The transaction multiples are clearly not fancy (13.5x 2019 P/E, well below peers) but this is justified by First Data’s weak fundamentals, as the company is a legacy player (meaning it has a low exposure to online/mobile) growing much less than its rivals (around 5% vs. 10-30% revenue growth on average).
  • Anyway, this transaction could kick off a new wave of consolidation in the industry which is perfectly suited for M&A in our view as it enjoys secular revenue growth (digital payments - credit/debit cards, online and mobile payments - gradually replace cash) and is highly fragmented and scalable (increased volumes allow to better leverage high fixed costs).
  • Despite the initial negative reaction on Fiserv (part of our Mobile Payments and Fintech portfolios), it’s worth noting that the financial rationale of the deal is a no-brainer with Fiserv expecting the acquisition to be more than 20% EPS-enhancing in year one and 40% EPS-enhancing once the full $900m in cost synergies are achieved in five years. Hence, we believe that other companies with sufficient financial firepower will try to expand their digital capabilities and geographic footprint and show off the scalability of their business model through acquisitions.
  • Against this backdrop, European players are likely to attract the most interest in our view in light of their rather small size in an industry where scalability is key (their average market cap. is around EUR10bn vs. $25bn for US players) and of their respective positionings. While Worldline is a pure play on Europe that could appeal to global legacy players, Adyen and Wirecard’s large digital exposure have probably already caught the attention of many processors.
  • In all, we stick to our large exposure to payment processors in our Mobile Payments and Fintech portfolios with a mix of US, European, Asian and South American names, considering that they offer strong growth prospects driven by the digitization of payments, a low-risk profile (strong visibility, high margins and cash-flows), reasonable valuation multiples (P/E around 18x for double digit EPS growth) and M&A potential.



What’s going on and what about 2019?

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What’s going on and what about 2019?


  • Since October, equity markets have been in a tailspin. While until the end of September we were on buy on dips mode, all of a sudden everything changed to a sell on a rally mode. But what has really changed? What was the trigger that made these markets all of a sudden volatile and so unpredictable?
  • While we were on the “a correction might come but not a major sell-off” camp, our comments might be taken with a bit of salt. This crisis reminds pretty much the one we had in 2015, when China started to devaluate his currency. At the time, the US equity markets sold off 10% on average, US high-yield corporate yields soared from 6.5% to over 10% and the 10-Year US Government bonds yields went from 2.5% to 1.5% in just six months.


For more details, please download the full article on the right.




Tech Sector Update

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Tech Sector Update: It's Definitely Not Time To Throw In The Towel 


  • The valuation of Tech stocks and more specifically of semiconductor players (12x 2019 EPS) is close to factoring in a brutal economic slowdown…
  • While a scenario of softer but still robust growth in 2019 is more likely
  • This valuation multiple leaves little scope for hope of a settlement between the US and China or for a reacceleration of the industry growth following the current softening while secular growth drivers are well in place with Tech taking over massive industries (auto, financial services, healthcare)
  • Any temporary revenue growth slowdown and valuation multiple compression could be used as an opportunity to increase exposure to a Tech industry whose weight in global GDP will arguably keep rising over the years


For more details, please download the full article on the right.




Bionic Ears

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Bionic Ears: New Hope For Hearing Loss


Today, Hearing loss affects nearly 5% of the global population and, by 2050, this number is expected to double, mostly driven by a growing aging population and an increasing life expectancy.

The treatment options include Hearing Aids and Cochlear Implants.

Hearing aids are devices typically fitted in or behind a wearer’s ear, designed to amplify the sound. 

Cochlear implants are surgically implanted devices addressed to people with severe to profound sensorineural hearing loss.

The low penetration rate of these devices may represent a strong growth opportunity…



Tech sell-off: Threat Or Opportunity?

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Tech sell-off: Threat Or Opportunity?


The Technology sell-off of the last few days has been quite brutal even if a correction had been in the air for quite a long time with many investors quoting spectacular gains in 2017 and high valuations (we disagree on this) as the main reasons for taking profits or not investing in Technology.

In our view, such a move points to a healthy market and will ease market exuberance concerns as some investors lock in profits and switch to investments towards other strategies they deem more attractive on a risk/return basis and as some others, who were waiting for a correction, will take the opportunity to enter into the space or increase their exposure.

What’s of utter importance when investing, especially in high-growth sectors like the ones we cover at AtonRâ Partners, is to always have a perfect view of catalysts and triggers in order to have a competitive edge.




AtonRâ Bionics Update

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The FDA Move A Breakthrough Moment For Bionics


Contrary to what one might think, governments across the world are gradually becoming supportive  of the Technology and Digital industry and political decisions in the last 12 months have had a tremendous and positive impact on many tech segments.



Innovation and Artificial Intelligence Update

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Electric Vehicles At An Inflexion Point


We have long been playing the electric car & autonomous driving theme in our Innovation and Artificial Intelligence portfolios through positions in specific semiconductor companies and car manufacturer Tesla, considering that the Tesla Model 3 release would lead traditional carmakers to accelerate their pace of innovation and the shipment of electric and smart cars for the mass market.



AtonRâ Fintech Update

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Things Are Moving Fast As Square Applies For A Banking License


Payment processor Square (SQ US) announced last week it would apply for a banking license in the US. Following similar moves from private startups SoFi and Varo Money, this is the first time a listed fintech tries to get the banking status since the US administration’s decision late last year to open up a specific bank charter to fintech companies.



M&A heating up in the Mobile Payment Space

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We have long been saying that the payment processing market (or, more basically, the handling of electronic payment transactions) is highly fragmented and that companies with sufficient financial firepower will try to expand their geographic footprint and show off the scalability of their business model through EPS-enhancing acquisitions.


Trumpxit - And Now?

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Following Donald Trump's election we assess the political and financial consequences and more specifially the implications for our different themes and certificates.


Biotech And Pharma Madness

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After huge pressure on the Pharma and Biotechnology names in October (including our Biotech actively-managed-certificate), the first week of November did not give any sign of relief.


AMD: Remaining upbeat after the Equity Offering

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The headline dilution numbers, as well as the surprisingly high discount on the offering price ($6 vs. a $7.30 price prior to the announcement), arguably drove the stock price pressure. That said, we view this balance sheet repair positively, both on financial and strategic grounds.


Nvidia's Ludicrous Mode

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Impressive revenue acceleration confirms that Nvidia has entered into a new, massive growth cycle. We believe the recent price run does not fully capture the company’s earnings power and that multiple expansion and earnings upside could drive Nvidia’s valuation 25-30% higher.


GOPRO: Beat And Raise Cycle In The Making

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Consensus’ expectation of a 10% growth in GoPro’s action camera segment in the second half of the year (driven by the HERO5 launch) appears extremely conservative in light of similar refresh cycles undertaken by other tech companies. In our view, GoPro is likely to reach the high-end of its guidance (or even exceed it), pointing to at least 9% revenue upside.


Zynga: Margins On The Right Track

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While the market was again disappointed by Zynga’s declining user numbers, we believe that this issue could be fixed soon as Zynga released in early Q3 “CSR2, a racing game which ranks among the top grossing apps on iOS and Google Play in the U.S., and will launch “Farmville: Tropic Escape” in late Q3 and “Dawn of Titans” in Q4. With profitability on the right track, we stick to our view that the company's earnings are at an inflection point.


EA: Gunning For A Strong Holiday Season

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EA’s focus on GAAP guidelines for Q2 and FY17 is likely to create some confusion among investors who have historically handled non-GAAP numbers. That being said, investors should mainly pay attention to management’s high level of confidence about the company’s outlook during the conference call, suggesting that the risk is skewed to the upside. A detailed analysis of the company's product lineup points to 5% revenue upside for FY17.


AMD: Q3 & Q4 Expectations Offer Significant Upside

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For the second quarter in a row, AMD delivered a solid revenue and earnings beat. Investors are likely to shift their focus from AMD's weak balance sheet to the company's numerous growth opportunities and long-term earnings power.