Founder at Stock Spin-off Investing, Stock Spin-Off Investing

Richard Howe

Founder at Stock Spin-off Investing

Stock Spin-Off Investing

Generate attractive returns by taking advantage of inefficiencies in the stock spin-off market.

Stock Spin-offs

Equity Bottom-Up

<ul>
<li>Some of my favorite situations are international spin-offs because they fly under the radar. Hamee has not been written up on VIC, Seeking Alpha or Twitter (I found one writeup on Substack).</li>
<li>The company is 3 months away from breaking up into two separate companies which both look attractive. It is currently classified as a Specialty Retail company but will spin off a high growth, high margin, SaaS company in November that I estimate is worth more than the entire company’s market cap today.</li>
<li>The stock looks compelling on an absolute basis (5.1x NTM EBITDA) and SOTP basis. I see 31% to 117% upside over the next 6 months as the break up is completed.</li>
</ul>


Some of my favorite situations are international spin-offs because they fly under the radar. Hamee has not been written up on VIC, Seeking Alpha or Twitter (I found one writeup on Substack).
The company is 3 months away from breaking up into two separate companies which both look attractive. It is currently classified as a Specialty Retail company but will spin off a high growth, high margin, SaaS company in November that I estimate is worth more than the entire company’s market cap today.
The stock looks compelling on an absolute basis (5.1x NTM EBITDA) and SOTP basis. I see 31% to 117% upside over the next 6 months as the break up is completed.


Asia Pac ECM and Index Rebal, DZT Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyzed the changes in margin trading positions of JPX stocks as of Mar 6th. The aggregated net margin trading position is USD25,673m.</li>
<li>We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.</li>
<li>We highlight net margin buy/sell changes in Mitsubishi UFJ Financial, Kioxia, IHI, Fujikura, Toyota Motor, Kawasaki Heavy Industries, Fast Retailing, Nintendo, Sumitomo Mitsui Financial, SoftBank.</li>
</ul>


We analyzed the changes in margin trading positions of JPX stocks as of Mar 6th. The aggregated net margin trading position is USD25,673m.
We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.
We highlight net margin buy/sell changes in Mitsubishi UFJ Financial, Kioxia, IHI, Fujikura, Toyota Motor, Kawasaki Heavy Industries, Fast Retailing, Nintendo, Sumitomo Mitsui Financial, SoftBank.


JPX Margin Trading Weekly (Mar 6th): Mitsubishi UFJ Financial, Kioxia, IHI, Fujikura, Toyota Motor

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation.</li>
<li>For companies with "low liquidity" the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation.</li>
<li>Every April, the application of this liquidity factor is reviewed by the TSE. In this insight, we take an early look at what could happen in April 2024.</li>
</ul>


The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation.
For companies with "low liquidity" the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation.
Every April, the application of this liquidity factor is reviewed by the TSE. In this insight, we take an early look at what could happen in April 2024.


TOPIX "Big April Basket" 2024 Expectations: More High-Conviction Names; Better Trade Ideas

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

<ul>
<li>The TOPIX October Free Float Weight Review details are out. This is the biggest FFW review of the year. This year, it's $11.3bn a side. </li>
<li>As discussed in <a href="https://www.smartkarma.com/insights/japan-post-bank-7182-the-october-topix-ffw-adjustment" target="_blank" data-smartkarma-citation="insights:110290" rel="noopener">Japan Post Bank (7182) - The October TOPIX FFW Adjustment</a>, JPB is the big buy. $2bn/23d of ADV. There is $2bn to buy of trading cos too.</li>
<li>There are lots of large names to trade in both directions. If you have interests to sell the buys and vice versa, it is good to know the flows.</li>
</ul>


The TOPIX October Free Float Weight Review details are out. This is the biggest FFW review of the year. This year, it's $11.3bn a side. 
As discussed in Japan Post Bank (7182) - The October TOPIX FFW Adjustment, JPB is the big buy. $2bn/23d of ADV. There is $2bn to buy of trading cos too.
There are lots of large names to trade in both directions. If you have interests to sell the buys and vice versa, it is good to know the flows.


October 2023 TOPIX Free Float Review - $22.6bn to Trade and JPB (7182) The Biggie

David Blennerhassett

<ul>
<li>Should the nominated directors, to be voted on by <a href="https://www.smartkarma.com/entities/eoflow-co-ltd" target="_blank" data-smartkarma-citation="entities:36100:1" rel="noopener">EOFlow (294090 KS)</a>'s shareholders at the November EGM, include <a href="https://www.smartkarma.com/entities/medtronic-plc" target="_blank" data-smartkarma-citation="entities:14982:1" rel="noopener">Medtronic Plc (MDT US)</a> executives, then game on.</li>
<li>
<a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a> STILL has a Nikkei 225 problem, which means it probably has to underperform Nikkei 225 slightly between now and the Base Date (31 July 2024).</li>
<li>
<a href="https://www.smartkarma.com/entities/jmdc-inc" target="_blank" data-smartkarma-citation="entities:28673:1" rel="noopener">JMDC (4483 JP)</a> has been one of the more annoying partial tenders out there. Even post-facto, it is tough to know what the disposition was. This is extraordinarily vexing.</li>
</ul>


Should the nominated directors, to be voted on by EOFlow (294090 KS)'s shareholders at the November EGM, include Medtronic Plc (MDT US) executives, then game on.

Fast Retailing (9983 JP) STILL has a Nikkei 225 problem, which means it probably has to underperform Nikkei 225 slightly between now and the Base Date (31 July 2024).

JMDC (4483 JP) has been one of the more annoying partial tenders out there. Even post-facto, it is tough to know what the disposition was. This is extraordinarily vexing.


Last Week In Event SPACE: EOFlow, Fast Retailing, JMDC, Origin Energy

Japan

I-ne CO.,LTD. operates as a cosmetics company. The Company produces and sells cosmetics, beauty appliances, beauty products, and other products. I-ne provides electronic commerce services.

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I-NE (4933 JP)

Buy Hamee Corp

Some of my favorite situations are international spin-offs because they fly under the radar. Hamee has not been written up on VIC, Seeking Alpha...

Richard Howe

JPX Margin Trading Weekly (Mar 6th): Mitsubishi UFJ Financial, Kioxia, IHI, Fujikura, Toyota Motor

We analyzed JPX margin trading positions report for the past week and highlighted Mitsubishi UFJ Financial (8306 JP), Kioxia (285A JP), IHI (7013...

Ke Yan, CFA, FRM

TOPIX "Big April Basket" 2024 Expectations: More High-Conviction Names; Better Trade Ideas

The TOPIX 0.75x LF removal results were announced after the close on Friday. There will be 22 LF removals. All 18 names in the High Conviction...

Janaghan Jeyakumar, CFA

October 2023 TOPIX Free Float Review - $22.6bn to Trade and JPB (7182) The Biggie

The TOPIX FFW trade approaches. 4+ trading days left. So far the Top 40 Buys vs Sells are +1+% since I wrote two weeks ago. Shin-Etsu/Ibiden is...

Travis Lundy

Last Week In Event SPACE: EOFlow, Fast Retailing, JMDC, Origin Energy

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

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