Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

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

Event-Driven

<ul>
<li>Street’s wrongly assuming only 1% of total shares can exercise appraisal rights, but under Korean law, pre-meeting dissent suffices — today’s vote tells us nothing about actual buyback risk.</li>
<li>Focus is on pre-dissent size — local checks point to 20% of SO, 4x the 40B KRW cap. With stock 40% below appraisal price, merger break risk looks real.</li>
<li>Market’s treating deal break as bearish, deterring some from exercising appraisal despite being in the money. With spread this wide, swap leg offers high-risk, high-reward setup worth watching.</li>
</ul>


Street’s wrongly assuming only 1% of total shares can exercise appraisal rights, but under Korean law, pre-meeting dissent suffices — today’s vote tells us nothing about actual buyback risk.
Focus is on pre-dissent size — local checks point to 20% of SO, 4x the 40B KRW cap. With stock 40% below appraisal price, merger break risk looks real.
Market’s treating deal break as bearish, deterring some from exercising appraisal despite being in the money. With spread this wide, swap leg offers high-risk, high-reward setup worth watching.


The HLB Merger Swap Turned into a Messier Trading Setup with Layered Dynamics in Play

<ul>
<li>We go long on HLB LS, short on HLB Inc, and close the short once HLB LS converts. If the deal falls through, there’s potential for extra profits.</li>
<li>The view that the merger’s worse for HLB LS is gaining support, making it likely the spread could go negative, though there’s risk, the chances are pretty high.</li>
<li>The 4% spread is the floor for arb profit, and cancellation risk could add extra gains. This angle deserves serious consideration right now.</li>
</ul>


We go long on HLB LS, short on HLB Inc, and close the short once HLB LS converts. If the deal falls through, there’s potential for extra profits.
The view that the merger’s worse for HLB LS is gaining support, making it likely the spread could go negative, though there’s risk, the chances are pretty high.
The 4% spread is the floor for arb profit, and cancellation risk could add extra gains. This angle deserves serious consideration right now.


HLB Merger Arb Setup: How Cancellation Risk Could Lead to Extra Profits

Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hlb-life-science-co-ltd" target="_blank" data-smartkarma-citation="entities:9830:1" rel="noopener">HLB Life Science (067630 KS)</a> shares lost ~20% since March 20 to trade near five-year lows after a group company, Elevar Therapeutics faced setback regarding a new cancer drug application.</li>
<li>FDA has rejected Elevar’s new drug application of its lead proprietary drug candidate, rivoceranib in combination with camrelizumab as a therapy for advanced or metastatic hepatocellular carcinoma.</li>
<li>This is the second time that the FDA declined to approve the drug combo. Elevar plans to promptly supplement the trial result and apply for reapproval to the FDA.</li>
</ul>



HLB Life Science (067630 KS) shares lost ~20% since March 20 to trade near five-year lows after a group company, Elevar Therapeutics faced setback regarding a new cancer drug application.
FDA has rejected Elevar’s new drug application of its lead proprietary drug candidate, rivoceranib in combination with camrelizumab as a therapy for advanced or metastatic hepatocellular carcinoma.
This is the second time that the FDA declined to approve the drug combo. Elevar plans to promptly supplement the trial result and apply for reapproval to the FDA.


HLB Life Science (067630 KS): FDA Rejects Oncology Drug AGAIN; What Lies Ahead

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyzed the changes in short interest of KRX stocks as of Nov 28th. The aggregated short interest was USD11.5bn.</li>
<li>We tabulate league tables for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.</li>
<li>We highlight short interest changes in Hanwha Ocean, SK Hynix, kakaopay, NAVER, HD HYUNDAI HEAVY INDUSTRIES.</li>
</ul>


We analyzed the changes in short interest of KRX stocks as of Nov 28th. The aggregated short interest was USD11.5bn.
We tabulate league tables for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.
We highlight short interest changes in Hanwha Ocean, SK Hynix, kakaopay, NAVER, HD HYUNDAI HEAVY INDUSTRIES.


KRX Short Interest Weekly (Nov 28th): Hanwha Ocean, SK Hynix, Kakaopay, NAVER

<ul>
<li>Some local desks think the company pushed the timeline back to align with a potential FDA Class 1 approval for Rivoceranib expected by July.</li>
<li>No word yet if it’s Class 1 or 2; Class 2 means November decision. Despite risks, local hedge desks are building arb plays, betting on the July FDA timing dynamics.</li>
<li>No FDA decision by July means Class 2 and a sell-off, hitting HLB Co. hardest. Class 1 approval boosts both stocks, cuts cancellation risk, and sets the 8% spread floor.</li>
</ul>


Some local desks think the company pushed the timeline back to align with a potential FDA Class 1 approval for Rivoceranib expected by July.
No word yet if it’s Class 1 or 2; Class 2 means November decision. Despite risks, local hedge desks are building arb plays, betting on the July FDA timing dynamics.
No FDA decision by July means Class 2 and a sell-off, hitting HLB Co. hardest. Class 1 approval boosts both stocks, cuts cancellation risk, and sets the 8% spread floor.


HLB Merger Arb's Unique Timing Dynamics for a Juicy 8% Swap Spread

South Korea

HLB Life Science Co., Ltd. wholesales and distributes pharmaceutical drugs. The Company through its subsidiaries provides targeted therapy, cell therapy, new drug development, medical devices production, and other related services. HLB Life Science also offers solar, geothermal, and other renewable energy engineering services.

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HLB Life Science (067630 KS)

The HLB Merger Swap Turned into a Messier Trading Setup with Layered Dynamics in Play

HLB merger received approval from HLB LS shareholders today. This post explores how the HLB merger swap has developed into a more complex trading...

Sanghyun Park

HLB Merger Arb Setup: How Cancellation Risk Could Lead to Extra Profits

This post explores the angle where cancellation risk in the HLB merger swap arb setup could actually turn into extra profits.

Sanghyun Park