Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Quantitative Analysis

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When Japanese small-cap stocks listed on JASDAQ, MOTHERS, and the Second Section of the Tokyo Stock Exchange aim at the big leagues and apply for reassignment to the First Section of the Tokyo Stock Exchange and are accepted, it causes significant events to occur.
This triggers inclusion into the TOPIX Index which means passive funds tracking TOPIX need to buy on an inclusion event. This opens up several interesting trading opportunities for investors. 
In this insight, I have provided performance updates for 3 "Live" event stocks which have announced their TSE1 move in  October 2020 and 5 "Post" event stocks that completed their Inclusion Events today and some Pre-event trades involving stocks that are likely to become TSE1-promotion candidates in the near future. 
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When Japanese small-cap stocks listed on JASDAQ, MOTHERS, and the Second Section of the Tokyo Stock Exchange aim at the big leagues and apply for reassignment to the First Section of the Tokyo Stock Exchange and are accepted, it causes significant events to occur.
This triggers inclusion into the TOPIX Index which means passive funds tracking TOPIX need to buy on an inclusion event. This opens up several interesting trading opportunities for investors. 
In this insight, I have provided performance updates for 3 "Live" event stocks which have announced their TSE1 move in  October 2020 and 5 "Post" event stocks that completed their Inclusion Events today and some Pre-event trades involving stocks that are likely to become TSE1-promotion candidates in the near future. 


Tachiaigai Bunbai Offerings are the most common "Pre-event" indicators for TOPIX Inclusion Events. A tachiaigai bunbai Offering is where a company sells newly issued or secondary shares (usually from a controlling shareholder) to the public (Off-market), with a limit placed on the maximum quantity per subscriber, most often with the intention of increasing the number of shareholders, public float percentage, and/or the market capitalization of the public float in order to meet TSE1 Section Transfer requirements.In June 2020, I published an insight (<a href="https://www.smartkarma.com/insights/topix-inclusion-pre-events-recent-tachiaigai-bunbai-round-up" target="_blank" data-smartkarma-citation="insights:40509" rel="noopener">TOPIX Inclusion Pre-Events: Recent "Tachiaigai Bunbai" Round-Up</a>) covering a list of stocks that had made announcements relating to tachiaigai bunbai offerings in the 30 days leading to the date of publication. Since then, 30 companies have made announcements relating to tachiaigai bunbai offerings. In this insight, we take a look at the details of these offerings, the likelihood of these candidates being promoted to TSE1, and the upside potential of these events.

Tachiaigai Bunbai Offerings are the most common "Pre-event" indicators for TOPIX Inclusion Events. A tachiaigai bunbai Offering is where a company sells newly issued or secondary shares (usually from a controlling shareholder) to the public (Off-market), with a limit placed on the maximum quantity per subscriber, most often with the intention of increasing the number of shareholders, public float percentage, and/or the market capitalization of the public float in order to meet TSE1 Section Transfer requirements.In June 2020, I published an insight (TOPIX Inclusion Pre-Events: Recent "Tachiaigai Bunbai" Round-Up) covering a list of stocks that had made announcements relating to tachiaigai bunbai offerings in the 30 days leading to the date of publication. Since then, 30 companies have made announcements relating to tachiaigai bunbai offerings. In this insight, we take a look at the details of these offerings, the likelihood of these candidates being promoted to TSE1, and the upside potential of these events. 

TOPIX Inclusion Pre-Events: Recent “Tachiaigai Bunbai” Round-Up (October 2020) - Two Stocks To Buy

In late July 2020, the Tokyo Stock Exchange issued Revisions to Listing Rules to Enhance Functions for Raising Funds through the Capital Market. These were discussed by <a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" data-smartkarma-citation="accounts:25" rel="noopener">Travis Lundy</a> in <a href="https://www.smartkarma.com/insights/the-tse-s-listing-criteria-revisions-part-i" target="_blank" data-smartkarma-citation="insights:43150" rel="noopener">The TSE's Listing Criteria Revisions - Part I</a>.These revisions have very important implications to Pre-event trades in the TOPIX Inclusions Universe as fewer candidates will be able to meet these more-stringent new requirements. In this insight, we take a look at how these new requirements will influence our Pre-event trades. In addition, I have also provided performance updates for 5 "Live" events which have announced their TSE1 move in September 2020 and 6 "Post" events that involves stocks which have already had their Inclusion events in August 2020. As noted last month, unusually there were no inclusions for September due to section/segment reassignment.As always, there is more below the fold.

In late July 2020, the Tokyo Stock Exchange issued Revisions to Listing Rules to Enhance Functions for Raising Funds through the Capital Market. These were discussed by Travis Lundy in The TSE's Listing Criteria Revisions - Part I.These revisions have very important implications to Pre-event trades in the TOPIX Inclusions Universe as fewer candidates will be able to meet these more-stringent new requirements. In this insight, we take a look at how these new requirements will influence our Pre-event trades. In addition, I have also provided performance updates for 5 "Live" events which have announced their TSE1 move in September 2020 and 6 "Post" events that involves stocks which have already had their Inclusion events in August 2020. As noted last month, unusually there were no inclusions for September due to section/segment reassignment.As always, there is more below the fold. 

Event-Driven

<a href="https://www.smartkarma.com/entities/gremz-inc" target="_blank" data-smartkarma-citation="entities:1858:1" rel="noopener">Gremz Inc (3150 JP)</a> announced (<a href="https://ssl4.eir-parts.net/doc/3150/tdnet/1883186/00.pdf" target="_blank" rel="noopener">J-only</a>) a tachiaigai bunbai (equity offering) today stating that they intend to work towards achieving the Section Transfer requirements to move from TSE2 to TSE1. The shares for sale will be coming from controlling shareholder Masaomi Tanaka's holdings.  The Offering will place up to 878,000 shares with a maximum limit of 800 shares per buyer. The Offering is scheduled to take place from 25th September to 2nd October 2020. The Offer Price will be set at a discount to the last close prior to the Offer Date. Usually the Offer Date is the first day in the period.As always, there is more below the fold.

Gremz Inc (3150 JP) announced (J-only) a tachiaigai bunbai (equity offering) today stating that they intend to work towards achieving the Section Transfer requirements to move from TSE2 to TSE1. The shares for sale will be coming from controlling shareholder Masaomi Tanaka's holdings.  The Offering will place up to 878,000 shares with a maximum limit of 800 shares per buyer. The Offering is scheduled to take place from 25th September to 2nd October 2020. The Offer Price will be set at a discount to the last close prior to the Offer Date. Usually the Offer Date is the first day in the period.As always, there is more below the fold. 

TOPIX Inclusion Pre-Event Trade (3150 JP): Tachiaigai Bunbai Announced. It's GREEN.

Japan

gremz,Inc. provides energy cost reducing consultation. The Company offers electric cost-effective products and services. Ubiquitous Energy provides environmentally friendly consulting services.

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Gremz Inc (3150 JP)

TOPIX Inclusion Trade Summary: Oct 2020

TOPIX Inclusion Trade summary for October 2020. "Live" events, "Completed" events, and the unwind of the Post-IPO Basket Trade Strategy due to TSE...

Janaghan Jeyakumar, CFA

TOPIX Inclusion Pre-Events: Recent “Tachiaigai Bunbai” Round-Up (October 2020) - Two Stocks To Buy

In June 2020, I

Janaghan Jeyakumar, CFA

TOPIX Inclusion Trade Summary: Sep 2020

The Tokyo Stock Exchange will be introducing new requirement

Janaghan Jeyakumar, CFA

TOPIX Inclusion Pre-Event Trade (3150 JP): Tachiaigai Bunbai Announced. It's GREEN.

Since we started tracking

Janaghan Jeyakumar, CFA

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