A key focus of the WCM Quality Global Growth portfolio is to find quality global companies with durable, strengthening economic moats and corporate cultures aligned to this growth. An example of a company that demonstrates these characteristics is Bengo4.com Inc (Bengo4).
In Japan, signing contracts digitally was met with scepticism before the Coronavirus. Since the pandemic, companies are starting to embrace digital signatures creating a tailwind for businesses operating in the space.1 Bengo4 is a Japanese tech and software company offering a range of services including a cloud e-signature product called CloudSign.
In this ‘Stock in Focus’ Brian Huerta, Client Portfolio Manager at WCM Investment Management (WCM) discusses how Bengo4 built a reputation for a high-quality product that can be trusted, the company’s adaptability of culture and the advantages it has over its competitors.
Tom Hickey (TH): Hello and welcome to this ‘Stock in Focus’ update for the WCM International Small Cap Growth fund. Today I’m joined by Brian Huerta. How are you, Brian?
Brian Huerta (BH): I’m doing well, Tom. How are you?
TH: Very well, thank you. Today we’re talking about a stock called Bengo4, can you tell us a bit about what it does?
BH: This is an exciting company for us. This is a tech and software company out of Japan best known for its cloud sign product, which is an e-signature product. So, consider them the DocuSign of Japan.
Here’s an amazing statistic – about 1%, and actually less than that, of contracts that are delivered in Japan are signed electronically. We just see an enormous runway of growth ahead of the company. As the country and the economy in Japan is suffering from a labour shortage and are looking for ways to automate workflows, we think its cloud sign is an excellent tool to do that.
TH: You mentioned DocuSign, is that a competitive space? What are the advantages Bengo4 have over its competitors?
BH: They have years of working with the legal and accounting industry. A little bit of history, this is a company that originally started as a marketplace for accountant and lawyer referrals. It is well entrenched with these two big verticals and are expanding out to the government vertical as well. Over the years, it has built up a reputation for a high-quality product that can be trusted. It’s really important Bengo4 continue to invest in the brand and expand their competitive advantages versus other competitors.
TH: What’s the culture like at the firm, and how does that support the moat trajectory?
BH: Bengo4 is one of these emerging Japanese tech companies that is no longer saddled with the legacy issues that you might find with some of the bigger Japanese companies. It’s a very flat organisation, a very merit-based culture.
It’s attracting all the right people, keeping those people at the organisation. It’s the opposite of what you might think – it’s a very nimble company. That evolution that I described earlier; that pivot from being a simple marketplace referral system for accountants and lawyers to a very nimble tech company that’s providing e-signatures, it’s an excellent example of the adaptability of the culture.
TH: Thanks for your time, Brian.
BH: Thank you, Tom.
DISCLAIMER: Past performance is not a predictor of future returns. This update has been prepared for information purposes only. Any figures provided in this document are unaudited and approximate. This post does not contain investment recommendations nor provide investment advice.
You are strongly encouraged to obtain detailed professional advice and to read any relevant offer document in full before making any investment decision. This is not an offer to invest in any security or financial product.
© 2021 Contango Asset Management Limited.
WCM Small Cap Stock in Focus | Royal Unibrew: Keeping Ahead of the Curve by Staying Close to its Customers
WCM Small Cap Stock in Focus | Wizz Air: How a Structural Cost Advantage Supports a Growing Economic Moat