Category Archives: Thematic Signals

herd-banner---Twitter

Thematic Signals highlights confirming data points and items to watch for our list of investing themes. Whether it’s a news item, video clip, or company commentary, we’ve included this full list of items literally “ripped from the headlines.”

Going cashless may break the law?

Going cashless may break the law?

Here at Tematica, one of the things we like more than anyone of our investing themes is when two or more of them intersect as it forms a super-theme of sorts. We’ve seen numerous examples over the last several quarters, but there are also times when the tailwind of one of our themes presents a headwind for another. We are seeing that unfold between the cashless consumption aspect of our Digital Lifestyle investing theme and our Middle Class Squeeze and Safety & Security ones.

There are benefits to be had with the move by business to digital commerce…

Some retailers are cutting out cash to speed up transactions, reduce the risk of theft and accommodate the increased use of credit and debit cards, as well as digital wallets like Apple Pay and Google Pay, to purchase services and products.

… and there are times when having to pay only by cash can be a hassle, especially if you’ve gotten used to paying with a swipe or a tap. There are also those folks that are tapping their credit cards harder than others as they look to make ends meet. According to the Federal Reserve Bank of New York’s latest Household Debt and Credit Report, consumer household debt balances have been on the rise for five years and quarterly increases continued on a consecutive basis, bringing the second quarter 2019 total to $192 billion.

But as the below excerpts note, not everyone in the entire population is able to participate in cashless consumption be it because they lack a debit or credit card. Others have those but are wary about leaving a digital trail that could be exploited by cyber attackers and compromise their privacy.

But with 6.5% of U.S. households in 2017 not having bank accounts, according to the FDIC, and 18.7% having accounts but also using financial services outside of insured institutions, some are pushing back on the trend

But it’s not just those without credit and debit cards who may balk at being told they can’t use cash. In an era when data breaches have occurred at institutions such as Capital One and credit rating agency Equifax, some consumers worry that cashless payments can infringe on their privacy.

“You do hear a good portion of people saying ‘Once we move to this cashless economy, there is a digital trail for every single one of my purchases, and I’m not entirely comfortable with that,’’’ Santana says. “And there’s a possibility there could be a data breach where your information gets compromised. The probability of a data breach happening is very low, but it is isn’t zero.”

Interestingly enough, despite these headwinds, the tailwind for cashless consumption continues to blow as evidenced by the continued decline in using cash.

Square Inc. found that four years ago, shoppers used cash for 46% of purchases that were less than $20. But this year, shoppers used cash for 37% of transactions in the same price range.

 And while there may be some overlap in the user numbers, earlier this year Paypal’s (PYPL) Venmo reported 40 million users that completed one transaction in the prior 12 months, while Square reported 15 million Square (SQ) Cash App users for “monthly actives (at least one transaction in the past month).” While those numbers are larger than some digital user figures at banks — Bank of America (BAC) reported that its active base of digital users was 37 million in the March 2019 quarter and for the same period Wells Fargo & Co. (WFC) had 29.8 million active digital users – during the June 2019 quarter Apple (AAPL) Apple’s Apple Pay completed nearly 1 billion transactions per month, nearly transaction levels in the year-ago quarter.

What those figures tell us is in today’s increasingly connected world filled with more consumers embracing digital shopping and mobile ordering, for both convenience and in many cases better affordable prices, we will likely see a continued movement away from cash usage… but we may not see the use of cash disappear just yet. In thematic speak, two powerful tailwinds may be impeded by one headwind, but that will likely only slow the impact, not eliminate it. 

As that shift away from cash continues, odds are we will see more companies embrace our Disruptive Innovators tailwind and bring new solutions to market. One such company is Tematica Select List resident USA Technologies (USAT) that is bringing mobile payments to vending machines and unattended retail.

Another is the cash to debit card ReadyStation kiosk found at the now cashless Mercedes Benz stadium in Atlanta. The kiosk by ReadyCard that converts cash to a prepaid debit card that can be used anywhere VISA is accepted. That is but one solution that could thwart regulatory headwinds, especially if like the ReadyStation kiosk the resulting debit card is fee free.

From Philadelphia to San Francisco, several cities and states have passed or are considering bills that prohibit retailers from refusing to accept cash, a policy they say shuts out the millions of Americans who don’t have a bank account, lack credit cards or don’t have photo identification. 

Another reminder that where there is a pain point, solutions tend to result.

Source: Going cashless? If you do in these cities, you’re breaking the law

More retailers are pivoting to capture the “thrift shift”

More retailers are pivoting to capture the “thrift shift”

When not just one company but a growing number of them make a conscious decision to pivot the merchandise they offer to consumers, to borrow a term from the game of poker, it’s a pretty big tell. The shift we are talking about is the move to selling used clothing, which takes a page right out of the Poshmark playbook and is in tune with our Middle-class Squeeze investing theme.

The more meaningful question is the why as in why are these companies doing this and doing it now?

We at Tematica have been sharing economic and other data that points to not only the continued climb in consumer debt levels but now banks ranging from Citibank to Bank of America, JPMorgan Chase and Capital One have announced rising credit card delinquency rates. We’ve long said that rising debt levels would sap consumer disposable income as interest costs associated with that rising debt level take hold.

At the same time, retailers of apparel and especially department stores remain under attack from digital commerce as well as private label brand initiatives at not only Amazon, but also Walmart and Target.

As we like to say, a pain point generally gives rise to a solution. Sometimes that solution arises quickly and other times not so much. But in the case of the apparel and our Middle-Class Squeeze investing theme, we are seeing several solutions unfold.

Above we mentioned Poshmark, a company that sits at the intersection of our Digital Lifestyle, Digital Infrastructure and Middle-class Squeeze investing themes and while it has garnered a significant user base and following it isn’t the only company looking to attack the market for monetizing one’s wardrobe. Online marketplace Depop counts more than 15 million users that tap into its marketplace to buy and sell clothes. And for those thinking the used clothing market isn’t for higher-end and luxury items, offerings from TheRealReal (REAL) and Farfetch (FTCH) should get you to think again.

Aside from the business pivot, Macy’s, JC Penney and others could also be looking to get a valuation multiple bump by wading into the used clothing market. Shares of Farfetch are trading at more than 3x expected 2019 sales, multiples ahead of the 0.2x price to sales valuation currently accorded to Macy’s shares. And for those wondering, that valuation is even lower at JC Penney. In order to get that multiple pop, Macy’s and JC Penney will both have to cross the digital shopping chasm, something Macy’s has been far more successful at than JC Penney.

Macy’s Inc. and J.C. Penney Co. this past week unveiled partnerships with resale marketplace thredUp Inc. to sell used clothes and accessories in some of their stores. Outdoor brand Patagonia plans to open a temporary store in Boulder, Colo., this fall dedicated to selling pre-owned goods, its first such location.

Thrifting is gaining traction as shoppers have grown more bargain conscious and concerned about the environmental impact of fashion, particularly the throwaway clothing model popularized by fast-fashion chains.

“We looked deeply at Generation Z consumers, and recommerce came up over and over again,” Macy’s Chief Executive Jeff Gennette said in an interview, referring to theburgeoning resale market. “It’s not a downside that something has been preowned.”

Thorsten Weber, chief merchandising officer of Stage Stores Inc.,

Other chains, including Bloomingdale’s, which is owned by Macy’s, Urban Outfitters Inc.and Ann Taylor, are taking a slightly different approach by launching services that let shoppers rent clothes instead of buying them. Customers can even rent home décor at West Elm, which has partnered with Rent The Runway Inc. for the program.

Source: On Second Thought, Traditional Retailers Make Room for Used Clothes – WSJ

Ep 13 Cleaner Living Solutions with the Degree of Green

Ep 13 Cleaner Living Solutions with the Degree of Green

On this episode of the Thematic Signals podcast, host Chris Versace digs more into Tematica’s Cleaner Living investing theme with Andrew Pace of Degree of Green. Degree of Green was started back in 2007 as a rating system to educate consumers and retailers about the different facets of green.  But today, Degree of Green is an educational portal to teach people how to build healthy AND green.

 

  

On this week’s podcast, you’ll learn how many chemicals dwell inside your home and where there they tend to be most prevalent. You’ll also learn about the varying degrees of what is considered green, with some surprises along the way as we talk about Degree of Green’s proprietary green rating system. If you’re looking to Clean up your existing home or a new one, this is a podcast you won’t want to miss.

Have a topic or a conversation you think we should tackle on the podcast, email me at cversace@tematicaresearch.com

And don’t forget to subscribe to the Thematic Signals Podcast on iTunes!

 

Resources for this podcast:

Almost one-third of Americans say they can’t afford a vacation

Almost one-third of Americans say they can’t afford a vacation

While more than a few GDP forecasts for the current quarter were lifted by the July Retail Sales report that came in ahead of expectations, we’re seeing other signs indicating that not all is well in consumer land. Odds are consumers feeling the pinch of our Middle-class Squeeze investing theme are having to choose what and where they can spend their disposable income dollars.

This is nothing new for some, but it does explain consumer spending strength across certain categories, while others, such as appliances, clothing, sporting goods and vacations, have been declined year over year. The larger issue is in order to make ends meet or to have funds to meet a portion of their spending needs consumers continue to take on more debt. The newest Federal Reserve Bank of New York’s Household Debt and Credit Report shows that exiting the June quarter consumer household debt was  1.2 trillion higher than the peak of $12.68 trillion in 2008.

That’s bound to be a headwind on consumer spending as more discretionary dollars are eaten up by debt servicing. This doesn’t exactly bode well for the year-end holiday shopping…

Americans, crippled by debt and seeing signs of a slowing economy, are sitting out on pricey vacations and everyday leisure activities.

A new Bankrate survey found 42% of Americans decided not to take a vacation over the past year because of the cost. Nearly a third said they can afford a vacation less now than they could have five years ago, though 26% said they can afford to do so more now. More than two-thirds of U.S. adults opted out of a recreational activity due to the cost at some point in the past year, the study found.

You can’t blame them. Trade tensions have economists projecting the likelihood of a recession in the next 12 months at 35%. U.S. student debt is over $1.5 trillion. Almost 40% of Americans think the economy is “not so good” or “poor.”

Source: Americans Say They Can’t Afford a Vacation – Bloomberg

Bad news for Tesla, auto OEMs killing hybrids to focus on EVs

Bad news for Tesla, auto OEMs killing hybrids to focus on EVs

At the heart of our investment themes here at Tematica we tend to find a structural change underway. There are several embodied by our Cleaner Living investing theme with one of the more recognizable happening in the auto market as consumers look for non-gas powered solutions. This began with hybrid models, which in hindsight were a baby step or two away from all-gas powered engines that allowed them to meet regulatory mandates. We are, however, seeing an acceleration in the shift toward electric vehicles (EVs) as both General Motors and Volkswagen close out their hybrid efforts to focus their formidable resources on the EV market.

As we can see below, GM in particular is looking to move in the EV market in a meaningful way over the next four years. As we’ve seen in our Digital Lifestyle investing theme with Netflix, a company can enjoy an early mover advantage for a period of time but as the market opportunity presents itself others, like Disney, Apple, Comcast and others, will look to tap into that growing market.

The same holds for Tesla, and the question investors will need to ponder is how it will fare in a far more competitive EV market? Legacy auto makers like GM, Volkswagen, Ford and others are well versed in the competitive auto market. This will be new ground and an new battle ground for Tesla and Elon Musk, and it doesn’t have a legacy car business to help it out.

Auto makers for two decades have leaned on hybrid vehicles to help them comply with regulations on fuel consumption and give customers greener options in the showroom. Now, two of the world’s largest car manufacturers say they see no future for hybrids in their U.S. lineups.

General Motors Co. and Volkswagen AG are concentrating their investment on fully electric cars, viewing hybrids—which save fuel by combining a gasoline engine with an electric motor—as only a bridge to meeting tougher tailpipe-emissions requirements, particularly in China and Europe.

GM plans to launch 20 fully electric vehicles world-wide in the next four years, including plug-in models in the U.S. for the Chevy and Cadillac brands. Volkswagen has committed billions to producing more battery-powered models, including introducing a small plug-in SUV in the U.S. next year and an electric version of its minibus around 2022.

Last week, Continental AG, one of the world’s biggest car-parts makers, said it would cut investment in conventional engine parts because of a faster-than-expected fall in demand—yet another sign the industry is accelerating the shift to electric vehicles.

Source: GM, Volkswagen Say Goodbye to Hybrid Vehicles – WSJ

Cleaner Living cleans up in July

Cleaner Living cleans up in July

July was a bit of a roller coaster ride for the domestic stock market, as it grappled with the ongoing U.S.-China trade war, economic data that points to a slowing global economy and the expected interest-rate cut by the Federal Reserve at the end of the month. For the month in full, each of the major stock market indexes finished higher month-over-month, adding to their gains for the year, but exited the month below their July highs. The same was true for the Tematica Research Cleaner Living Index, which rose 1.2% in July, continuing its sharp June rebound. 

Driving the July performance for the Cleaner Living Index were shares of Beyond Meat (BYND) and Primo Water Corp. (PRMW), both of which climbed more than 20% during the month. Those moves reflect the continued expansion of Beyond Meat’s meatless protein products, a growing number of partnerships and expanding consumer awareness of water quality. That last topic was a key conversation point in our recent Thematic Signals podcast conversation with Dr. Roy Speiser. The index’s July performance also benefitted from double-digit gains at Simply Good Foods (SMPL), the company that leverages the Atkins brand in the healthy snack market, Trex (TREX) and Fresh del Monte Produce (FDP). 

Offsetting those gains were continued declines at Tenneco Inc. (TEN). The company’s clean air solutions have been impacted by the combination of a slowing global economy, a weakening of the auto market and on-going US-China trade concerns. Other notable decliners with the index for the month of July included Sprouts Farmers Markets (SAFM) and Renewable Energy Group (REGI). Sprouts continues to confront the traditional grocery chains expanding their natural, organic and healthier for you product offerings. Cleaner fuel company Renewable Energy Group on the other hand is facing falling oil prices, making competing solutions increasingly affordable. 

As we are starting to wind down the 2019 June-quarter earnings season, coming into this week more than three-quarters of the S&P 500 group of companies had reported those quarterly figures. Tallying those results, we’ve seen earnings-per-share expectations for the current quarter fall. The result is that full year 2019 earnings per share expectations for that cohort of 500 companies has risen just 2.7%, compared to 2018. Before too long, investors will begin to focus on 2020 growth prospects, and current expectations have the S&P 500 group of companies growing their collective earnings by 10.8% year over year in 2020. 

By comparison, the Cleaner Living index constituent base is slated to grow its collective earnings by nearly 30% in 2020. That’s significantly faster than the expected year over year EPS growth of 6%-12% in 2020 for the consumer discretionary, consumer staple and utility segments tallied by FactSet. Arguably the difference in those EPS growth rates reflects the accelerating shift by consumers toward natural, organic and healthier for you solutions that speaks to the structural shift captured by Tematica’s Cleaner Living investment theme and index. 

While we very much like the overall vector and velocity of the Cleaner Living constituent base and the collective earnings-per-share growth to be had in the coming quarters, we recognize at least in the near-term the overall market and subsequently the Cleaner Living index will likely be impacted by U.S.-China trade developments, the speed of the global economy and changes in monetary policy from the world’s major central banks.

Signals for Tematica’s Cleaner Living investment theme & the Cleaner Living Index


Performance for the Tematica Research Cleaner Living Index (CLNR) is available through Bloomberg, Reuters, FactSet, and other data aggregators, as well as the Tematica Research website. The index is currenty available for licensing for the use in a variety of exchange traded products or as a data overlay in portfolio screening and management. The Tematica Research Cleaner Living Index is being calculated by Indxx.

Expect a victim or two in the coming streaming video-on-demand war

Expect a victim or two in the coming streaming video-on-demand war

The cover story on the August 5, 2019 issue of Bloomberg Businessweek features some colorful helmets from Netflix (NFLX), Disney (DIS), Amazon (AMZN), HBO (T) and Hulu (which is essentially a part of Disney now) with the headline “It’s showtime.” The issue and the ensuing article are of course talking about the ensuing video streaming war to be had, which could likely change the playing field for that aspect of our Digital Lifestyle investing theme.

If like me you managed to find an actual print copy of the issue, on page 11 the title of the corresponding article is “All over but the streaming” and the authors correctly call out the coming streaming video war as resembling The Hunger Games.

Here’s how the article starts:

Anyone who wants to watch a dramatic, treacherous race in the months ahead should check out the escalating competition in the world of streaming video-on-demand TV. It promises to be the media industry’s equivalent of the Badwater Ultramarathon, the annual spectacle in which a steely group of endurance athletes gather in the arid lowlands of California and race uphill on foot for 135 miles. In the summertime. In Death Valley.

By this time next year, AT&T’s WarnerMedia division, Comcast’s NBCUniversal, Walt Disney, and Apple will all have released sinewy new streaming video services, taking on the existing ones from Amazon.com, CBS, Hulu, and Netflix. It’s unlikely that any of these media and tech giants will escape this looming showdown unscathed.

As I see it, there are really several things going on:

  • No question about it, the competitive landscape is tightening, and it means more choices for consumers.
  • More choices mean we are likely facing a content war that will in all likelihood result in lower quality content being created simply to fill the streams.
  • A content war means we can expect more content to head back to those that created or own it. Disney is doing this with its Marvel movies and Netflix, NBC Universal is doing this ahead of launching its own streaming service. Time Warner is starting to do this with its DC Comics content that has aired on the CW and enjoyed a close relationship with Netflix… and so on. More content removed, means more money needs to be spent on replacing it.
  • A content war also means good content will get more expensive, and with Apple reportedly spending up to $15 million per episode for some of its programming, it means a company will need a big budget to compete.
  • That’s the big question as all these service roll out, and the initial Disney+ price point of $6.99 per month caught many off guard, especially since it is substantially lower than Netflix.
  • A number of streaming entrants have businesses other than streaming, which should allow them to invest as well as compete in the streaming market. AT&T has its core mobile business; Amazon has its retail juggernaut and Amazon Web Services; Disney has its parks, licensing and content business as well as a robust character library. Netflix has…. Netflix, which means that unlike the others it relies entirely on its streaming video service to compete and to fund its content creation.

And those are just the obvious points.

Do I think Netflix’s days are over? Will it become the Myspace of streaming video services?

Hard to tell, but I think we can agree Netflix will face far tougher days ahead compared to the ones it has already seen, while the newcomers enjoy a valuation reset should their streaming video services capture subscribers.

Make no mistake it will be a tricky battleground that will require continual reinvestment. I say this given the following findings from Park Associates:

Not bound by long-term contracts, streaming subscribers can easily be lured away. In surveys, Parks Associates found that 28% of consumers said they have subscribed to a streaming service to check out just a single title.

This of course raises the question over Netflix lacking other businesses to drive profits and cash flow so it too can continually reinvest in its streaming content library. If Netflix has to respond with subscription price cuts, it more than likely means tapping its balance sheet yet again, which will impede profits from falling to the bottom line.

It’s going to get tricky, but most changing landscapes usually are.

Source: The Streaming Video-on-Demand War Is Going to Get Bloody – Bloomberg

Other signals the Tematica Team has been reading:

Ep 10 Beyond Meat – The Next Tesla or the Next Palm?

Ep 10 Beyond Meat – The Next Tesla or the Next Palm?





We are just back from vacation and hitting the ground running during arguably one of the busiest weeks of the year. In addition to the usual end of the month, start of the month economic data, we’ve got more than 1,000 companies reporting quarterly earnings; the Fed’s next FOMC meeting; and the next Democratic presidential debate. And that’s what we know about. We dig into all and share where we think the market could be capped if the trend in earnings continues. We also share our thoughts on Cleaner Living company Beyond Meat, whose shares have been nothing short of a rocket ship ride, but is that rise likely to continue? We discuss just that and much more on this podcast episode. 

Have a topic or a conversation you think we should tackle on the podcast, email me at cversace@tematicaresearch.com

And don’t forget to subscribe to the Thematic Signals Podcast on iTunes!

 

Resources for this podcast:

Ep. 9: How the Tapestry of Earnings is Coming Together

Ep. 9: How the Tapestry of Earnings is Coming Together

A look at the thematic outlook we can piece together from the flow of earnings reports we’ve received thus far.

On this episode of the Thematic Signals podcast, we find ourselves in the thick of earnings season and Tematica’s Chris Versace not only provides an overview for how all of these reports are coming together to form a larger picture, he shares a thematic look at what’s moving several stocks, including Amazon (AMZN), Apple (AAPL), International Airlines Group (ICAGY), IBM (IBM), Netflix (NFLX), Skyworks Solutions (SWKS) and the impact of spending on cybersecurity. In thematic speak, it’s the Digital Lifestyle, Digital Infrastructure, Disruptive Innovators, and the Safety & Security themes, with an added dash of privacy. Of particular note, Chris is really excited about one of the latest signals for Tematica’s Cleaner Living investing theme as Nestle SA has found a way to dramatically reduce the sugar content of its KitKat bar. Why? Because it and other food and beverage companies are under pressure from consumers and governments alike to make healthier products amid rising obesity and diabetes rates. If Nestle keeps this up maybe one day it could land in the Tematica Research Cleaner Living Index.

Have a topic or a conversation you think we should tackle on the podcast, email me at cversace@tematicaresearch.com

And don’t forget to subscribe to the Thematic Signals Podcast on iTunes!

Resources for this podcast:

“Follow the Money” is always a good Thematic Investing Strategy

“Follow the Money” is always a good Thematic Investing Strategy

In the 1976 motion picture, All the President’s Men, the catchphrase “Follow the Money” was coined. It was the advice given by the Deep Throat character as reporters Woodward and Bernstein looked to uncover the scandal that came out of the Watergate break-in. When it comes to thematic investing, the same advice should be heeded.

Very recently an interesting stat came across my desk in an article on MarketingLand.com that sheds light directly on our Safety & Security investment theme. The article covers a survey of over 4,000 adults in the U.S. and the United Kingdom with regards to their sharing behavior online:

Asked whether Cambridge Analytica and other data and privacy scandals had impacted their online behavior, 78% of respondents said yes. Among that group, 74% said they are sharing less information online. For those whose behavior has not changed, the survey found that “they were already highly protective of their information, or that they had accepted a lack of privacy when engaging online.”

Source: Most consumers believe online privacy is impossible, survey finds – Marketing Land

Further into the article, an even more concerning stat reveals that consumers have no hope of achieving a level of privacy anymore:

Compared with the 2018 survey, consumers in the U.S. and U.K. now overwhelmingly believe [online privacy is not achievable]. The “online privacy is possible” respondents have declined from 61% in 2018 to 32% in 2019.

Impact of the Change in Online Behavior

One would think that with all of the cyber scams, data hacks and “fake news” pervading social media, and even the internet as a whole, we would see most of the internet darlings taking it on the chin.

Nope.

Such negative effects from consumers’ evaporation in confidence of online privacy are not readily apparent — at least in the near term — when we look at the likes of social media giants Facebook (FB) and Twitter (TWTR). By all accounts, Facebook knocked it out of the park in its latest earnings report, which was released back in April 2019 and summarized the company’s first quarter of 2019. Mark Zuckerberg’s empire produced revenue for the quarter that soared 26% and net income per share that came in at $1.89 versus expectations of $1.62.  Twitter (TWTR) too killed it in the first quarter with $787 million in revenue and first-quarter earnings per share of 37 cents, compared with analyst estimates of $776.1 million and 15 cents per share.

The longer-term impact, however, of consumers sharing less and less, and lacking trust in online sites with their data is that the level of user engagement begins to wain.

Why log into Facebook five . . . six . . . ok 24 times per day, if none of your friends are sharing anything worth looking at?

That “Fear of Missing Out” (FOMO) quickly goes away when all you are missing out on is your friend’s latest cat photos or the toddler video you’ve seen 17 times. If the content isn’t fresh and refreshed, at some point, you and your  attention span will move to where it is, which will be something to watch for Netflix (NFLX) as Apple (AAPL), Disney (DIS), AT&T (T) push into the video streaming market tapping our Digital Lifestyle investing theme.

So we’ll be on the look out for any confirming data points on this when Facebook (FB) announces its Q2 earnings on July 24, 2019 and Twitter’s on July 26, 2019.

Regulation and Fines Also Keeping CEO’s Up at Night

Losing the engagement of a customer base for privacy concerns can be terrible, but actual missteps in the handling of customer data and privacy can come along with some hefty costs as well.

We already have the European Union’s GDPR regulation, which British Airways (BA) has run afoul of and hit with a $230 million fine and Marriott (MAR) as well with a $123 million fine. Additionally, the State of California’s California Consumer Privacy Act (CCPA) is to take effect in January of 2020 and we also have rumblings of Congress taking steps to impose GDPR-like regulations on a federal level.

So is Silicon Valley and the rest of Corporate America and beyond  concerned about this?

While we can’t peak into the sleeping patterns of CEO’s and CIO’s of these  companies, these kinds of concerns are being revealed when we . . . you guessed it . . . follow the money.

Yesterday, OneTrust, a privately held company focused providing tools and services to help companies comply with GDPR and assess their risk levels announced a $200 million Series A investment, which equals a not-to0-shabby $1.3 billion valuation for a company that is just three years old.

The OneTrust series A round came on the heels of a $70 million D round closed by San Francisco-based TrustArc. That latest round brings the total amount raised by TrustArc to over $100 million.  In an article on VentureBeat.com covering the TrustArc news, the size of the privacy and compliance market as described as:

TrustArc competes to an extent with StandardFusion, LogicGate, Iubenda, and Netwrix Auditor, all of which are vying for a slice of enterprise governance, risk, and compliance market that’s estimated to be worth $64.62 billion by 2025. Bregal Sagemont partner Daniel Kim isn’t terribly concerned about rivals, though — he points out that TrustArc has engaged with over 10,000 customers to date across its client base of more than 1,000 clients.

Getting back to following the money, these are developments we monitor as we develop our themes where we look to identify those companies riding the tailwinds of a theme as reflected in operating profit or sales. In the case of privacy and compliance, it’s a key component of our Safety & Security investment theme and the planned release of a new index to go along with our Cleaner Living Index that was launched in June of 2019.