Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Event-Driven

<ul>
<li>May 17th, all eyes on EcoPro Materials for a buzzed-about lockup release. BRV Capital holds 24.5% stake, 17M shares. Lockup ends May 16th; they're free to sell off without constraints.</li>
<li>Apparently, they're eager to cash out, with a profit margin around 30 times and 7 years invested. Many at Yeouido bet they'll sell out once the lockup's over.</li>
<li>We might start building a shorting position with futures targeting this lockup release from April 22nd. This could stir up some weird backwardation, which could give us another trading opportunity.</li>
</ul>


May 17th, all eyes on EcoPro Materials for a buzzed-about lockup release. BRV Capital holds 24.5% stake, 17M shares. Lockup ends May 16th; they're free to sell off without constraints.
Apparently, they're eager to cash out, with a profit margin around 30 times and 7 years invested. Many at Yeouido bet they'll sell out once the lockup's over.
We might start building a shorting position with futures targeting this lockup release from April 22nd. This could stir up some weird backwardation, which could give us another trading opportunity.


May Lockup Release & April SSF Listing May Lead to Weird Trading Dynamics for Ecopro Materials

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>We discuss the strong likelihood of potential selling of EcoPro Materials by BRV Capital Management (the second largest shareholder of Ecopro Materials with a 24.7% stake) in May 2024. </li>
<li>BRV Capital Management's stake in Ecopro Materials is currently worth 3.1 trillion won. In the past seven years, BRV Capital Management has invested about 93 billion won in Ecopro Materials. </li>
<li>On 4 March, Ecopro Materials announced it has entered into a contract to supply precursor to a U.S. auto company. There is some local speculation that this could be Tesla. </li>
</ul>


We discuss the strong likelihood of potential selling of EcoPro Materials by BRV Capital Management (the second largest shareholder of Ecopro Materials with a 24.7% stake) in May 2024. 
BRV Capital Management's stake in Ecopro Materials is currently worth 3.1 trillion won. In the past seven years, BRV Capital Management has invested about 93 billion won in Ecopro Materials. 
On 4 March, Ecopro Materials announced it has entered into a contract to supply precursor to a U.S. auto company. There is some local speculation that this could be Tesla. 


Ecopro Materials: Potential Selling by Second Largest Shareholder Post End of Lockup Period in May

<ul>
<li>TIGER ETF (305540) rebalanced on January 11th, with Ecopro Materials correcting by 4%, contrasting a 20% surge from Jan 8-10. TIGER recorded net purchases aligning with a 2% inclusion weight.</li>
<li>Preemptive positions by local hedge funds were observed from Jan 8-10, closing on the 11th. Despite a KOSPI decline and minimal sector movement, Ecopro Materials exhibited this unusual price pattern.</li>
<li>Observing this pattern implies a potential recurrence during the March rebalancing of KODEX ETF. Notably, local hedge funds may initiate similar preemptive positions. We should consider this in position setup.</li>
</ul>


TIGER ETF (305540) rebalanced on January 11th, with Ecopro Materials correcting by 4%, contrasting a 20% surge from Jan 8-10. TIGER recorded net purchases aligning with a 2% inclusion weight.
Preemptive positions by local hedge funds were observed from Jan 8-10, closing on the 11th. Despite a KOSPI decline and minimal sector movement, Ecopro Materials exhibited this unusual price pattern.
Observing this pattern implies a potential recurrence during the March rebalancing of KODEX ETF. Notably, local hedge funds may initiate similar preemptive positions. We should consider this in position setup.


Spotting Position Patterns: TIGER Battery ETF January Review & KODEX ETF's March Rebalancing

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>The review period for the March rebalance of the KOSPI Size Indices started 1 December and will end 29 February. The changes will be implemented at the close 14 March.</li>
<li>We currently see 3 migrations from MidCap to LargeCap, 3 new adds to LargeCap, 6 migrations from LargeCap to MidCap, and 11 migrations from SmallCap to MidCap.</li>
<li>Historically, stocks migrating from SmallCap to MidCap have outperformed stocks that are migrating between other categories.</li>
</ul>


The review period for the March rebalance of the KOSPI Size Indices started 1 December and will end 29 February. The changes will be implemented at the close 14 March.
We currently see 3 migrations from MidCap to LargeCap, 3 new adds to LargeCap, 6 migrations from LargeCap to MidCap, and 11 migrations from SmallCap to MidCap.
Historically, stocks migrating from SmallCap to MidCap have outperformed stocks that are migrating between other categories.


KOSPI Size Indices - The Outperformance Continues

<ul>
<li>In this insight, we discuss the upcoming end of lockup in December for Ecopro Materials and why we believe Ecopro Materials' share price will be much lower in 6-12 months. </li>
<li>A combination of the potential inclusion in KOSPI Fast Entry plus the temporary ban on short selling of stocks in Korea has helped to push up Ecopro Materials' share price.</li>
<li>However, despite this sharp share price run-up, we think the risk-reward is horrible on this stock in terms of bigger downside risk in the next 6-12 months. </li>
</ul>


In this insight, we discuss the upcoming end of lockup in December for Ecopro Materials and why we believe Ecopro Materials' share price will be much lower in 6-12 months. 
A combination of the potential inclusion in KOSPI Fast Entry plus the temporary ban on short selling of stocks in Korea has helped to push up Ecopro Materials' share price.
However, despite this sharp share price run-up, we think the risk-reward is horrible on this stock in terms of bigger downside risk in the next 6-12 months. 


Ecopro Materials: Overshooting Share Price and Upcoming End of Lockup in December

EcoPro Materials (450080 KS)

May Lockup Release & April SSF Listing May Lead to Weird Trading Dynamics for Ecopro Materials

This post delves into the potential impact on trading dynamics for Ecopro Materials, stemming from a significant lockup release in May and the...

Sanghyun Park

Ecopro Materials: Potential Selling by Second Largest Shareholder Post End of Lockup Period in May

We discuss the strong likelihood of potential selling of EcoPro Materials by BRV Capital Management (the second largest shareholder of Ecopro...

Douglas Kim

Spotting Position Patterns: TIGER Battery ETF January Review & KODEX ETF's March Rebalancing

A noteworthy pattern surfaced during the recent quarterly rebalancing of TIGER ETF (305540) held on the second Thursday of the month. In this post,...

Sanghyun Park

KOSPI Size Indices - The Outperformance Continues

We see 34 migrations and 6 new inclusions for the KOSPI Size indices. Stocks migrating higher have outperformed stocks migrating lower. Some stocks...

Brian Freitas

May Lockup Release & April SSF Listing May Lead to Weird Trading Dynamics for Ecopro Materials

This post delves into the potential impact on trading dynamics for Ecopro Materials, stemming from a significant lockup release in May and the...

Sanghyun Park

Ecopro Materials: Potential Selling by Second Largest Shareholder Post End of Lockup Period in May

We discuss the strong likelihood of potential selling of EcoPro Materials by BRV Capital Management (the second largest shareholder of Ecopro...

Douglas Kim

Spotting Position Patterns: TIGER Battery ETF January Review & KODEX ETF's March Rebalancing

A noteworthy pattern surfaced during the recent quarterly rebalancing of TIGER ETF (305540) held on the second Thursday of the month. In this post,...

Sanghyun Park

KOSPI Size Indices - The Outperformance Continues

We see 34 migrations and 6 new inclusions for the KOSPI Size indices. Stocks migrating higher have outperformed stocks migrating lower. Some stocks...

Brian Freitas

Ecopro Materials: Overshooting Share Price and Upcoming End of Lockup in December

KRX announced that it will add Ecopro Materials in KOSPI 200 index effective 15 December to replace K Car due to meeting index fast entry rules....

Douglas Kim