Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Coming with a <a href="https://www.smartkarma.com/entities/sony-corp" target="_blank" data-smartkarma-citation="entities:563:1" rel="noopener">Sony Corp (6758 JP)</a><a href="https://www.sony.net/SonyInfo/IR/library/presen/strategy/" target="_blank" rel="noopener">Corporate Strategy Meeting</a>, there was an announcement of a couple of <a href="https://www.sony.net/SonyInfo/News/Press/202005/20-040E/" target="_blank" rel="noopener">Executive Changes</a> based on a <a href="https://www.sony.net/SonyInfo/News/Press/202005/20-039E/" target="_blank" rel="noopener">New Organizational Structure</a> which, for strategic reasons, means that Sony is obliged to announce a Tender Offer to take full control of <a href="https://www.smartkarma.com/entities/sony-financial-holdings-inc" target="_blank" data-smartkarma-citation="entities:564:1" rel="noopener">Sony Financial Holdings (8729 JP)</a>.So.... Sony takes out Sony Financial. This is an event which special situations investors/analysts/traders have speculated on for years, but this takeover is extremely opportunistic.Today's <a href="https://www.sony.net/SonyInfo/IR/news/20200519_02E.pdf" target="_blank" rel="noopener">announcement</a> is the functional equivalent of a 'Dear John' letter to Sony Financial shareholders.<blockquote>
It's not you - it's me. 
And I want to be fair. 
If there's anything else, please talk to my lawyer. 
</blockquote>To be sure, that is not an actual quote from Sony but it might as well be. Takeout price?    It's at a....    [checks notes]...  three month high? For a cash takeover? Surely you must be joking. Don't read the Tender Offer document. It will just get you upset.The Tender Offer Price is 30% higher than the first offer made by Sony. And Sony made the approach with a share exchange proposal, when the SFH/Sony share price ratio was at the lowest level since SFH was listed. Minority protections like Majority of Minority? Nope. Minimum hurdle?  1.6% of shareholders must tender to make it successful. Post-deal recourse? Not much. Shareholder appraisal rights are effectively impaired since the JCOM decision. This is one of the GREAT failings of experts, authorities, and the Court. Is there a chance upset shareholders could block this? There is a theoretical chance, but it is, in my opinion, improbable in the extreme.<hr>This is going to make some people unhappy. This will go down in the books as a situation where SONY parent should have done better. My constant refrain to shareholders in Japan is...<div class="content-highlight">
If you want takeover prices for minorities to be anywhere near appropriate, you need to make yourself heard. 
"The Rules" enable and support management and incumbent/insider abuse of minorities. 
Demand reasonable, fair, and global standard treatment from your independent directors. Make it known to the parent in situations where the shareholder structure allows abuse that you will exercise your rights where and how necessary. 
</div>In the meantime, we have a risk arb situation to trade...

Coming with a Sony Corp (6758 JP)Corporate Strategy Meeting, there was an announcement of a couple of Executive Changes based on a New Organizational Structure which, for strategic reasons, means that Sony is obliged to announce a Tender Offer to take full control of Sony Financial Holdings (8729 JP).So.... Sony takes out Sony Financial. This is an event which special situations investors/analysts/traders have speculated on for years, but this takeover is extremely opportunistic.Today's announcement is the functional equivalent of a 'Dear John' letter to Sony Financial shareholders.
It's not you - it's me. 
And I want to be fair. 
If there's anything else, please talk to my lawyer. 
To be sure, that is not an actual quote from Sony but it might as well be. Takeout price?    It's at a....    [checks notes]...  three month high? For a cash takeover? Surely you must be joking. Don't read the Tender Offer document. It will just get you upset.The Tender Offer Price is 30% higher than the first offer made by Sony. And Sony made the approach with a share exchange proposal, when the SFH/Sony share price ratio was at the lowest level since SFH was listed. Minority protections like Majority of Minority? Nope. Minimum hurdle?  1.6% of shareholders must tender to make it successful. Post-deal recourse? Not much. Shareholder appraisal rights are effectively impaired since the JCOM decision. This is one of the GREAT failings of experts, authorities, and the Court. Is there a chance upset shareholders could block this? There is a theoretical chance, but it is, in my opinion, improbable in the extreme.This is going to make some people unhappy. This will go down in the books as a situation where SONY parent should have done better. My constant refrain to shareholders in Japan is...
If you want takeover prices for minorities to be anywhere near appropriate, you need to make yourself heard. 
"The Rules" enable and support management and incumbent/insider abuse of minorities. 
Demand reasonable, fair, and global standard treatment from your independent directors. Make it known to the parent in situations where the shareholder structure allows abuse that you will exercise your rights where and how necessary. 
In the meantime, we have a risk arb situation to trade...

Sony FINALLY Takes Out Sony Financial in Tender Offer

David Blennerhassett

<div>
Last Week in Event SPACE ...
</div>
<div>
<ul>
<li>Receiving the full value of <a href="https://www.smartkarma.com/entities/wheelock-co-ltd" target="_blank" data-smartkarma-citation="entities:52:1" rel="noopener">Wheelock (20 HK)</a>'s listed holdings (plus a shade extra above the true ratio) plus cash, is as altruistic as it gets from a HK tycoon.</li>
<li>
<a href="https://www.smartkarma.com/entities/sawada-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:7311:1" rel="noopener">Sawada Holdings (8699 JP)</a> is a play on ownership of the Khan Bank. That is it. But the deal is kind of a mess, and that does not bode well.</li>
<li>BTG Partners need to get ~20% out of the remaining 30% free float in <a href="https://www.smartkarma.com/entities/breadtalk-group-ltd" target="_blank" data-smartkarma-citation="entities:15888:1" rel="noopener">Breadtalk (BREAD SP)</a> to tender - to force suspension - which is no small ask. Expect a small kiss to the Offer if the 90% acceptance level is in reach.</li>
<li>Presumably, bankers and their lawyers know the lay of the land. But Partners Group's Offer for <a href="https://www.smartkarma.com/entities/healius-ltd" target="_blank" data-smartkarma-citation="entities:6296:1" rel="noopener">Healius (HLS AU)</a> looks like A$3.603/share, not $3.40.</li>
<li>
<a href="https://www.smartkarma.com/entities/bangkok-dusit-med-service" target="_blank" data-smartkarma-citation="entities:875:1" rel="noopener">Bangkok Dusit Med Service (BDMS TB)</a>'s Offer for <a href="https://www.smartkarma.com/entities/bumrungrad-hospital-pub-co" target="_blank" data-smartkarma-citation="entities:883:1" rel="noopener">Bumrungrad Hospital Pub Co (BH TB)</a> appears a highly opportunistic bid to build market share when prices are depressed.</li>
<li>If you believe that Temasek has greater strategic imperatives than catching playing footsie with a Partial Offer Price for <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp Ltd (KEP SP)</a>, or pulling it because markets hiccup, then this is probably still a buy.</li>
<li>Plus, other events, CCASS movements and Mood Spins.</li>
<li>Virus and political uncertainty send <a href="https://www.smartkarma.com/entities/genting-bhd" target="_blank" data-smartkarma-citation="entities:14210:1" rel="noopener">Genting Bhd (GENT MK)</a> to a multi-year low.</li>
</ul>
</div>
(This insight covers specific insights &amp; comments involving Stubs, Pairs, Arbitrage, share Classifications, and Events - or SPACE - in the past week)


Last Week in Event SPACE ...



Receiving the full value of Wheelock (20 HK)'s listed holdings (plus a shade extra above the true ratio) plus cash, is as altruistic as it gets from a HK tycoon.

Sawada Holdings (8699 JP) is a play on ownership of the Khan Bank. That is it. But the deal is kind of a mess, and that does not bode well.
BTG Partners need to get ~20% out of the remaining 30% free float in Breadtalk (BREAD SP) to tender - to force suspension - which is no small ask. Expect a small kiss to the Offer if the 90% acceptance level is in reach.
Presumably, bankers and their lawyers know the lay of the land. But Partners Group's Offer for Healius (HLS AU) looks like A$3.603/share, not $3.40.

Bangkok Dusit Med Service (BDMS TB)'s Offer for Bumrungrad Hospital Pub Co (BH TB) appears a highly opportunistic bid to build market share when prices are depressed.
If you believe that Temasek has greater strategic imperatives than catching playing footsie with a Partial Offer Price for Keppel Corp Ltd (KEP SP), or pulling it because markets hiccup, then this is probably still a buy.
Plus, other events, CCASS movements and Mood Spins.
Virus and political uncertainty send Genting Bhd (GENT MK) to a multi-year low.


(This insight covers specific insights &amp; comments involving Stubs, Pairs, Arbitrage, share Classifications, and Events - or SPACE - in the past week)

Last Week in Event SPACE: Wheelock, Sawada, Breadtalk, Healius, Bumrungrad, Keppel, Genting

Hitachi Construction Machinery / Event-Driven

With a relatively full slate of large value takeovers in Developed Asia in the past year - often by parents but also by buyout funds - and the availability of significant credit to finance such takeovers, this Smartkarma Original insight looks at what constitutes an attractive target for takeover, and seeks to construct a framework for screening and filtering companies for further study. 
The filtering is conducted across two basic measures which seek to answer two basic questions:
<ol>
<li>What might supply look like?</li>
<li>What might demand look like?</li>
</ol>
The first basic problem with creating such filters is that on the Supply side, using databases to determine whether a controlling shareholder wants to sell is almost a lost cause from the beginning. But the exercise throws up some interesting case studies, and it is important to understand why such screening could lead to interesting results. 
On the demand side, it is a difficult and complicated exercise because financial data moves around, shifting through time and relative price because competitors also shift in time and price. A clear example of a company which might have been "relatively" attractive vs peers a month ago might not be after the market ructions at the end of February 2020 when this was written. Prices were, of course, lower, which means that a good screening process is dynamic, both in relative and absolute measures. It is also somewhat difficult to create a one-size-fits-all screen for attractive targets because in certain countries, certain industries (telecom, airlines, social infrastructure, defence) are covered by foreign ownership limits, other industries (banks, brokers, insurers) rarely see leveraged buyouts, and takeovers in other industries (Chinese homebuilders) are, for lack of a better word, simply off the table at certain times.
In addition, there are lots of ways in which companies might present themselves as attractive targets. If someone controls a company, and wants to sell it cheaply, there are lots of potential buyers who will fall all over themselves to get in line to buy it. But companies can be attractive targets because of the potential for changing profit metrics and multiples through restructuring, asset reorganisation, industry reorganisation, or simply waiting for the cycle to change. 
Using valuation metrics with a cutoff line can be challenging because common multiples such as PER, PCFR, PBR, EV/EBITDA may ignore significant value available from longer-term securities holdings, non-operating real estate assets which are not managed in optimal fashion, etc. 
In short, screening can only go so far. But we try.
At the end, we take a brief look at 10 companies from Developed Asia which show up as a result of our screening efforts. The resulting list is dominated by Japanese companies because some of the companies which show up from other countries fit the "no-go" categories above (airlines, financial companies, defence technology subject to foreign ownership limits, Chinese homebuilders subject to skepticism, etc.). Some are also clearly Emerging Asia businesses with Developed Asia listings. Screening for Emerging Asia got a few companies which are high on anyone's target list, including one which saw an unsolicited takeover approach earlier this week (end-Feb 2020), and another which has been in acquisition mode for years. 
We find the thinking process and screening technology has thrown up some previously less-than-obvious candidates which deserve further work.

With a relatively full slate of large value takeovers in Developed Asia in the past year - often by parents but also by buyout funds - and the availability of significant credit to finance such takeovers, this Smartkarma Original insight looks at what constitutes an attractive target for takeover, and seeks to construct a framework for screening and filtering companies for further study. 
The filtering is conducted across two basic measures which seek to answer two basic questions:

What might supply look like?
What might demand look like?

The first basic problem with creating such filters is that on the Supply side, using databases to determine whether a controlling shareholder wants to sell is almost a lost cause from the beginning. But the exercise throws up some interesting case studies, and it is important to understand why such screening could lead to interesting results. 
On the demand side, it is a difficult and complicated exercise because financial data moves around, shifting through time and relative price because competitors also shift in time and price. A clear example of a company which might have been "relatively" attractive vs peers a month ago might not be after the market ructions at the end of February 2020 when this was written. Prices were, of course, lower, which means that a good screening process is dynamic, both in relative and absolute measures. It is also somewhat difficult to create a one-size-fits-all screen for attractive targets because in certain countries, certain industries (telecom, airlines, social infrastructure, defence) are covered by foreign ownership limits, other industries (banks, brokers, insurers) rarely see leveraged buyouts, and takeovers in other industries (Chinese homebuilders) are, for lack of a better word, simply off the table at certain times.
In addition, there are lots of ways in which companies might present themselves as attractive targets. If someone controls a company, and wants to sell it cheaply, there are lots of potential buyers who will fall all over themselves to get in line to buy it. But companies can be attractive targets because of the potential for changing profit metrics and multiples through restructuring, asset reorganisation, industry reorganisation, or simply waiting for the cycle to change. 
Using valuation metrics with a cutoff line can be challenging because common multiples such as PER, PCFR, PBR, EV/EBITDA may ignore significant value available from longer-term securities holdings, non-operating real estate assets which are not managed in optimal fashion, etc. 
In short, screening can only go so far. But we try.
At the end, we take a brief look at 10 companies from Developed Asia which show up as a result of our screening efforts. The resulting list is dominated by Japanese companies because some of the companies which show up from other countries fit the "no-go" categories above (airlines, financial companies, defence technology subject to foreign ownership limits, Chinese homebuilders subject to skepticism, etc.). Some are also clearly Emerging Asia businesses with Developed Asia listings. Screening for Emerging Asia got a few companies which are high on anyone's target list, including one which saw an unsolicited takeover approach earlier this week (end-Feb 2020), and another which has been in acquisition mode for years. 
We find the thinking process and screening technology has thrown up some previously less-than-obvious candidates which deserve further work.

If you want to skip the background and go straight to the nitty gritty, scroll down to the thin red line.<h2>The Background</h2>In the early to mid Noughties, the Japanese paper industry was in virtual turmoil, with a few large entities having merged to create champions, but many smaller companies remaining at the margins, running overcapacity in the industry. There was a limited amount of guidance from Bureaucratic Japan, which could hint at desired outcomes, but not force companies to collude to reduce capacity together so that pricing would stabilise. And of course, the companies could not collude on their own as the JFTC was feeling its recently gained strength. From mid-Q1 to summer in 2006, the Number One paper company in Japan, Oji Paper, negotiated  #6 Hokuetsu Paper, with Oji wanting to merge with Hokuetsu and Hokuetsu wanting to stay independent. This was done CEO to CEO, with letters and occasional meetings. This was triggered because in the depths of the doldrums for an industry rife with overcapacity, Hokuetsu was rumored to be trying to increase capacity again. Oji wanted better industry self-control over industry prospects. Hokuetsu wanted to stay independent. Concurrent with these talks, as later became apparent, Hokuetsu was negotiating for a capital injection by Mitsubishi Corp on behalf of Mitsubishi Paper, with which Hokuetsu had once had an alliance, and might again, after Mitsubishi's failed attempt at an alliance the year before with another paper maker.In summer 2006. things started getting hotter and heavier. In early July Oji Paper Chairman Suzuki visited Hokuetsu to propose a merger again, and Hokuetsu president Miwa "instantly refused" according to media coverage which came out later. Two weeks later, Hokuetsu proposed a poison pill, and two days after the poison pill proposal, announced a third party allotment of 50,000,000 shares to Mitsubishi Corp which, if paid within two weeks, would result in Mitsubishi Corp owning 24.44% of Hokuetsu.<div>
The same day Oji announced that it intended to launch a tender offer for Hokuetsu if Hokuetsu withdrew the share issuance plan. This was brand new. And exciting. A corporate-on-corporate hostile tender offer was quite rare, and because Oji Paper's banker was Nomura Securities, this made it all the more surprising. Bankers just didn't support hostile action. 
The next day Hokuetsu said Oji's proposal in early July was just an "informal inquiry" and they had no intention of stopping the share issuance.
A few days later Oji officially launched its Tender Offer for 50.1% of Hokuetsu Paper, saying it would pay ¥800/share, or ¥860/share if Hokuetsu cancelled the share issuance to Mitsubishi Paper (which was done at ¥607/share).
Two days later, #2 paper company in Japan Nippon Paper said Oji's move "disturbed the industry" and announced plans to buy up to 10% of Hokuetsu (which combined with Mitsubishi's 24.4% would create a negative control position of more than 33.4%). 
Mitsubishi Corp made payment on the 7th of August. Nippon Paper announced the next day they owned 8.85%, and on the same day, Hokuetsu's independent committee recommended taking anti-takeover measures against Oji. 
Oji's tender offer failed.
There were small buybacks in 2010-2015 to offset some of that dilution. Annual revenues at Hokuetsu are up 80% and OP is up 49% in the 13 years since March 2006. Annual Net Income is up 180+%. But it took 9 years, until 2015, for Hokuetsu Paper shares to get back to the ¥800/share level and the shares have spent a sum total of 12 weeks above that level since. I note that Mitsubishi Corp sold 15.1mm shares of its position in Hokuetsu to lower it to 36.6mm shares in December 2013. 
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/119/524/original/Screenshot%202020-02-24%20at%2011.35.45%20PM.png?1582558566" class="editor-image img-responsive" data-smartkarma-image-id="119524"></figure><div style="text-align: left;" class="content-caption">source: tradingview.com, Quiddity</div>
<hr>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/119/525/original/ThinRedLine%20v4.png?1582558999" class="editor-image img-responsive" data-smartkarma-image-id="119525"></figure><h2>The New News</h2>
</div>On Friday 21 February, <a href="https://www.smartkarma.com/entities/hokuetsu-kishu-paper-co-ltd" target="_blank" data-smartkarma-citation="entities:7802:1" rel="noopener">Hokuetsu Corporation (3865 JP)</a> announced a <a href="http://www.hokuetsucorp.com/pdf/OSIRASE/20200221_release02.pdf" target="_blank" rel="noopener">Secondary Share Sale</a> by Mitsubishi Corp for up to 26.5mm shares, and a <a href="http://www.hokuetsucorp.com/pdf/OSIRASE/20200221_release01.pdf" target="_blank" rel="noopener">ToSTNeT-3 Buyback</a> of up to 23 million shares (12.13%) for up to JPY 14 billion on either the 26th or 27th of February. That is the end of the 13.5 year period where Mitsubishi Corp acted as defensive white knight against a potential raid by Oji Paper. It was dodgy governance at best back then. It is a bit shameful it took Hokuetsu 13.5 years to unwind it.The dynamics here are slightly complicated, and the timing suggests there could be some fun in the next few days. It is strongly reminiscent of the flow dynamics around the <a href="https://www.smartkarma.com/entities/japan-post-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:840:1" rel="noopener">Japan Post Insurance (7181 JP)</a> Secondary Offering of April 2019.

If you want to skip the background and go straight to the nitty gritty, scroll down to the thin red line.The BackgroundIn the early to mid Noughties, the Japanese paper industry was in virtual turmoil, with a few large entities having merged to create champions, but many smaller companies remaining at the margins, running overcapacity in the industry. There was a limited amount of guidance from Bureaucratic Japan, which could hint at desired outcomes, but not force companies to collude to reduce capacity together so that pricing would stabilise. And of course, the companies could not collude on their own as the JFTC was feeling its recently gained strength. From mid-Q1 to summer in 2006, the Number One paper company in Japan, Oji Paper, negotiated  #6 Hokuetsu Paper, with Oji wanting to merge with Hokuetsu and Hokuetsu wanting to stay independent. This was done CEO to CEO, with letters and occasional meetings. This was triggered because in the depths of the doldrums for an industry rife with overcapacity, Hokuetsu was rumored to be trying to increase capacity again. Oji wanted better industry self-control over industry prospects. Hokuetsu wanted to stay independent. Concurrent with these talks, as later became apparent, Hokuetsu was negotiating for a capital injection by Mitsubishi Corp on behalf of Mitsubishi Paper, with which Hokuetsu had once had an alliance, and might again, after Mitsubishi's failed attempt at an alliance the year before with another paper maker.In summer 2006. things started getting hotter and heavier. In early July Oji Paper Chairman Suzuki visited Hokuetsu to propose a merger again, and Hokuetsu president Miwa "instantly refused" according to media coverage which came out later. Two weeks later, Hokuetsu proposed a poison pill, and two days after the poison pill proposal, announced a third party allotment of 50,000,000 shares to Mitsubishi Corp which, if paid within two weeks, would result in Mitsubishi Corp owning 24.44% of Hokuetsu.
The same day Oji announced that it intended to launch a tender offer for Hokuetsu if Hokuetsu withdrew the share issuance plan. This was brand new. And exciting. A corporate-on-corporate hostile tender offer was quite rare, and because Oji Paper's banker was Nomura Securities, this made it all the more surprising. Bankers just didn't support hostile action. 
The next day Hokuetsu said Oji's proposal in early July was just an "informal inquiry" and they had no intention of stopping the share issuance.
A few days later Oji officially launched its Tender Offer for 50.1% of Hokuetsu Paper, saying it would pay ¥800/share, or ¥860/share if Hokuetsu cancelled the share issuance to Mitsubishi Paper (which was done at ¥607/share).
Two days later, #2 paper company in Japan Nippon Paper said Oji's move "disturbed the industry" and announced plans to buy up to 10% of Hokuetsu (which combined with Mitsubishi's 24.4% would create a negative control position of more than 33.4%). 
Mitsubishi Corp made payment on the 7th of August. Nippon Paper announced the next day they owned 8.85%, and on the same day, Hokuetsu's independent committee recommended taking anti-takeover measures against Oji. 
Oji's tender offer failed.
There were small buybacks in 2010-2015 to offset some of that dilution. Annual revenues at Hokuetsu are up 80% and OP is up 49% in the 13 years since March 2006. Annual Net Income is up 180+%. But it took 9 years, until 2015, for Hokuetsu Paper shares to get back to the ¥800/share level and the shares have spent a sum total of 12 weeks above that level since. I note that Mitsubishi Corp sold 15.1mm shares of its position in Hokuetsu to lower it to 36.6mm shares in December 2013. 
source: tradingview.com, Quiddity

The New News
On Friday 21 February, Hokuetsu Corporation (3865 JP) announced a Secondary Share Sale by Mitsubishi Corp for up to 26.5mm shares, and a ToSTNeT-3 Buyback of up to 23 million shares (12.13%) for up to JPY 14 billion on either the 26th or 27th of February. That is the end of the 13.5 year period where Mitsubishi Corp acted as defensive white knight against a potential raid by Oji Paper. It was dodgy governance at best back then. It is a bit shameful it took Hokuetsu 13.5 years to unwind it.The dynamics here are slightly complicated, and the timing suggests there could be some fun in the next few days. It is strongly reminiscent of the flow dynamics around the Japan Post Insurance (7181 JP) Secondary Offering of April 2019. 

End of an Era Marked by Hokuetsu Paper Buyback And Offering

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Quantitative Analysis

• RELATIVE PRICE SCORE •<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/098/178/original/2019-09-06_09-42-35.png?1567730614" class="editor-image img-responsive" data-smartkarma-image-id="98178"></figure><div class="content-caption">Source: Japan Analytics</div>INTRODUCTION - The Relative Price Score (RPS) is a measure of stock price performance relative to TOPIX calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices. As all companies are thus on a comparable scale, 'Overbought' and 'Oversold' outliers and changes in scoring can reveal short-term and longer-term trading opportunities. Company outlier thresholds are set at +4 &amp; -2 and equate to the top and bottom first-to-second percentiles of historical observations from which mean reversion takes a matter of months. RPS outliers with a Score of greater than 10.0 are rare outside of the 2000 tech 'bubble'. <a href="https://www.smartkarma.com/entities/lasertec-corp" target="_blank" data-smartkarma-citation="entities:4126:1" rel="noopener">Lasertec (6920 JP)</a> has just joined <a href="https://www.smartkarma.com/entities/goldwin-inc" target="_blank" data-smartkarma-citation="entities:410:1" rel="noopener">Goldwin (8111 JP)</a> in being only the second large-cap RPS 'ten-baggers' in the last twenty years. <div class="content-highlight">This insight updates our list of Overbought and Oversold companies, reviews the best and worst-performing companies in terms of RPS over the last three months and adds some specific comments on stocks on each category.</div><div></div><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/098/046/original/2019-09-05_12-46-46.png?1567655232" class="editor-image img-responsive" data-smartkarma-image-id="98046"></figure><div class="content-caption">Source: Japan Analytics</div>STATISTICS - Currently, of the 3,706 listed companies for which monthly RPS data is available, 81 companies are 'Overbought', and 133 are 'Oversold' - 2.45% and 3.8%, respectively of the total. For the 737 companies with a market capitalisation of over ¥100b, there are 44 'Overbought' and 37 'Oversold' companies, 6% and 5%, respectively.<hr>• RELATIVE PRICE SCORE 'TOPS' •<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/098/055/original/2019-09-05_13-06-30.png?1567656423" class="editor-image img-responsive" data-smartkarma-image-id="98055"></figure><div class="content-caption">Source: Japan Analytics</div>RPS 'TOPS' - In the last two years, 388 companies have achieved an RPS of '4' or more and the average Overbought 'persistence' is 42 days. 1.26% of the total of 1.94 million traded stock days were by companies with an RPS of over 4. For companies with a market capitalisation higher than ¥100b, the numbers are 95 companies and 74 days - demonstrating the superior persistence of large capitalisation companies in this regard. The chart above highlights the track record of all 95 large caps which are some point were Overbought in the last twenty-four months and illustrates the extreme outlier status of Goldwin and Lasertec.RPS NEGATIVE MEAN REVERSION - Some examples of RPS mean reversion in the last three months have been <a href="https://www.smartkarma.com/entities/suzuken-co-ltd" target="_blank" data-smartkarma-citation="entities:14996:1" rel="noopener">Suzuken (9987 JP)</a>, <a href="https://www.smartkarma.com/entities/infomart-corp" target="_blank" data-smartkarma-citation="entities:1301:1" rel="noopener">Infomart (2492 JP)</a>, <a href="https://www.smartkarma.com/entities/nichirei-corp" target="_blank" data-smartkarma-citation="entities:7168:1" rel="noopener">Nichirei (2871 JP)</a>, and <a href="https://www.smartkarma.com/entities/fancl-corp" target="_blank" data-smartkarma-citation="entities:15862:1" rel="noopener">Fancl (4921 JP)</a>. <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/098/096/original/2019-09-05_16-25-39.png?1567668352" class="editor-image img-responsive" data-smartkarma-image-id="98096"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/098/097/original/2019-09-05_16-27-09.png?1567668441" class="editor-image img-responsive" data-smartkarma-image-id="98097"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/098/098/original/2019-09-05_16-28-42.png?1567668548" class="editor-image img-responsive" data-smartkarma-image-id="98098"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/098/099/original/2019-09-05_16-30-29.png?1567668640" class="editor-image img-responsive" data-smartkarma-image-id="98099"></figure><div class="content-caption">Source: Japan Analytics</div><hr>• RELATIVE PRICE SCORE 'BOTTOMS' •<div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/098/056/original/2019-09-05_13-12-52.png?1567656806" class="editor-image img-responsive" data-smartkarma-image-id="98056"></figure><div class="content-caption">Source: Japan Analytics</div>
</div>RPS 'BOTTOMS' - 259 companies have seen their RPS fall to '-2' or below in the last two years, and the average Oversold 'persistence' is 83 days. 1.46% of the total of 1.94 million traded stock days were by companies with an RPS of less than -2.  For larger capitalisation companies, the numbers are 79 companies and 94 days. The chart above highlights the track record of the 79 large caps which are some point were Oversold in the last twenty-four months and illustrates the strong recovery in the REITs Sector and the continuing demise of Regional Banks.RPS POSITIVE MEAN REVERSION - Some recent examples of positive RPS mean reversions are <a href="https://www.smartkarma.com/entities/otsuka-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:12292:1" rel="noopener">Otsuka Holdings (4578 JP) </a>and <a href="https://www.smartkarma.com/entities/line-corp" target="_blank" data-smartkarma-citation="entities:22772:1" rel="noopener">LINE (3938 JP)</a>.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/098/100/original/2019-09-05_16-35-47.png?1567668972" class="editor-image img-responsive" data-smartkarma-image-id="98100"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/098/102/original/2019-09-05_16-36-50.png?1567669047" class="editor-image img-responsive" data-smartkarma-image-id="98102"></figure><div class="content-caption">Source: Japan Analytics</div>As we noted in our June <a href="https://www.smartkarma.com/insights/japan-relative-price-scores-overbought-oversold-companies-june-2019" target="_blank" data-smartkarma-citation="insights:30393" rel="noopener">Insight: -</a><blockquote><a href="https://www.smartkarma.com/entities/line-corp" target="_blank" data-smartkarma-citation="entities:22772:1" rel="noopener">LINE (3938 JP)</a>- Line has performed poorly since being featured in last year's Sohn Conference and has had negative and worsening Operating Income for each of the previous five quarters. Although there is a possibility of a double-bottom RPS 'bounce' and the company is now the most-Oversold non-financial large-cap over one year, there are no fundamental reasons to own the shares.   </blockquote>In the DETAIL section below, we list the current Very Overbought (RPS&gt;5), Too-Late-To-Buy (RPS &gt;4&lt;5) and Oversold (RPS &lt;-2) stocks as well as the most substantial three-month positive and negative changes in RPS.

• RELATIVE PRICE SCORE •Source: Japan AnalyticsINTRODUCTION - The Relative Price Score (RPS) is a measure of stock price performance relative to TOPIX calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices. As all companies are thus on a comparable scale, 'Overbought' and 'Oversold' outliers and changes in scoring can reveal short-term and longer-term trading opportunities. Company outlier thresholds are set at +4 &amp; -2 and equate to the top and bottom first-to-second percentiles of historical observations from which mean reversion takes a matter of months. RPS outliers with a Score of greater than 10.0 are rare outside of the 2000 tech 'bubble'. Lasertec (6920 JP) has just joined Goldwin (8111 JP) in being only the second large-cap RPS 'ten-baggers' in the last twenty years. This insight updates our list of Overbought and Oversold companies, reviews the best and worst-performing companies in terms of RPS over the last three months and adds some specific comments on stocks on each category.Source: Japan AnalyticsSTATISTICS - Currently, of the 3,706 listed companies for which monthly RPS data is available, 81 companies are 'Overbought', and 133 are 'Oversold' - 2.45% and 3.8%, respectively of the total. For the 737 companies with a market capitalisation of over ¥100b, there are 44 'Overbought' and 37 'Oversold' companies, 6% and 5%, respectively.• RELATIVE PRICE SCORE 'TOPS' •Source: Japan AnalyticsRPS 'TOPS' - In the last two years, 388 companies have achieved an RPS of '4' or more and the average Overbought 'persistence' is 42 days. 1.26% of the total of 1.94 million traded stock days were by companies with an RPS of over 4. For companies with a market capitalisation higher than ¥100b, the numbers are 95 companies and 74 days - demonstrating the superior persistence of large capitalisation companies in this regard. The chart above highlights the track record of all 95 large caps which are some point were Overbought in the last twenty-four months and illustrates the extreme outlier status of Goldwin and Lasertec.RPS NEGATIVE MEAN REVERSION - Some examples of RPS mean reversion in the last three months have been Suzuken (9987 JP), Infomart (2492 JP), Nichirei (2871 JP), and Fancl (4921 JP). Source: Japan Analytics• RELATIVE PRICE SCORE 'BOTTOMS' •
Source: Japan Analytics
RPS 'BOTTOMS' - 259 companies have seen their RPS fall to '-2' or below in the last two years, and the average Oversold 'persistence' is 83 days. 1.46% of the total of 1.94 million traded stock days were by companies with an RPS of less than -2.  For larger capitalisation companies, the numbers are 79 companies and 94 days. The chart above highlights the track record of the 79 large caps which are some point were Oversold in the last twenty-four months and illustrates the strong recovery in the REITs Sector and the continuing demise of Regional Banks.RPS POSITIVE MEAN REVERSION - Some recent examples of positive RPS mean reversions are Otsuka Holdings (4578 JP) and LINE (3938 JP).Source: Japan AnalyticsAs we noted in our June Insight: -LINE (3938 JP)- Line has performed poorly since being featured in last year's Sohn Conference and has had negative and worsening Operating Income for each of the previous five quarters. Although there is a possibility of a double-bottom RPS 'bounce' and the company is now the most-Oversold non-financial large-cap over one year, there are no fundamental reasons to own the shares.   In the DETAIL section below, we list the current Very Overbought (RPS&gt;5), Too-Late-To-Buy (RPS &gt;4&lt;5) and Oversold (RPS &lt;-2) stocks as well as the most substantial three-month positive and negative changes in RPS.

🇯🇵 Japan • September Relative Price Scores - Life at the Poles Part 2: Companies

Japan

Japan Post Insurance Co. Ltd. operates life insurance business. The Company offers whole life insurance, education endowment, ordinary endowment, medical insurance, and special endowment insurance. Japan Post Insurance provides services for individuals and businesses throughout Japan.

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Japan Post Insurance (7181 JP)

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🇯🇵 Japan • September Relative Price Scores - Life at the Poles Part 2: Companies

• RELATIVE PRICE SCORE •INTRODUCTION - The Relative Price Score (RPS) is a measure of stock price performance relative to TOPIX calculated by...

Campbell Gunn

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