Jay Kahn, Flight Deck Capital - Stock pick: Bengo4

Jay Kahn of Flight Deck Capital has pitched Nikkei-listed Bengo4 as his stock pick for this year’s Sohn Hearts & Minds conference, following the recent acceptance of the electronic signature in Japan due to the Covid-19 pandemic.
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Japan’s version of DocuSign, Bengo4 already holds much of the market, Mr Kahn told the conference attendees.
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“Bengo4 operates in a market where over the last decade it was illegal to use electronic signatures to certify a legal document, a mortgage document or bank document.
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“When COVID hit over the last year and a half, the Hanko stamp (traditionally used) was tremendously inefficient and a bottleneck to getting business done in Japan.”
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Earlier this year, the Japanese government said it would allow electronic signature as an official form of certification for government documents.
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Japan was woefully under penetrated in terms of e-commerce and software as a service, Mr Kahn, who launched Flight Deck in May, said.
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“In terms of software, Japan only has four companies worth more than $5bn in the SAAS space traded on the Nikkei. We think that’s nonsensical and not sustainable. And over the next 10 years, we think there will be multiple multibillion-dollar software companies created in Japan.
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“We are very much in the early stages of the J curve penetration in terms of the rapid adoption of the new signature in Japan over time.”

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The market in Japan could grow to be worth $US3.2bn, up from its current $90m, he said.

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“This company Bengo4 is attacking this market aggressively and is a breakaway leader. The document signature market is not one where 10 to 15 players end up succeeding, it is winner take most.

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“As a result, we think that Bengo4 has the potential to be a multi bagger from here.”

This article was originally posted by The Australian here.

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