Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Ito En Ltd Preferred Shares / Event-Driven

<ul>
<li>This is always a tough subject, but every now and then I throw myself on the mercy of the ho-humming crowd and write about the Ito En Prefs (25935 JP).</li>
<li>No strong catalyst. Limited capacity for strongly better governance. Even less apparent corporate interest in good governance. </li>
<li>But we have a mini-catalyst, and it has been a while, and I think there IS a good way to think about this stock, so here's another crack at it.</li>
</ul>


This is always a tough subject, but every now and then I throw myself on the mercy of the ho-humming crowd and write about the Ito En Prefs (25935 JP).
No strong catalyst. Limited capacity for strongly better governance. Even less apparent corporate interest in good governance. 
But we have a mini-catalyst, and it has been a while, and I think there IS a good way to think about this stock, so here's another crack at it.


Itoen Pref (25935 JP) - Big Discount, Big Buyback, No Big Governance Change

<ul>
<li>Today, <a href="https://www.smartkarma.com/entities/rakuten-group-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Group (4755 JP)</a> announced it would propose an amendment to its Articles at the AGM (28 March) to issue "Bond-Type Class Shares."   First reaction: You wot, mate?</li>
<li>The company states it wants to "strengthen its financial base through reducing interesting-bearing debt by equity-related financings and conduct proactive control of debt maturity schedule, etc."
</li>
<li>Now it wants to issue listed bond-type shares. Dividends not interest. The last Japanese issuer of something similar was NEC in 2001. Few will remember, so we study the situation.</li>
</ul>


Today, Rakuten Group (4755 JP) announced it would propose an amendment to its Articles at the AGM (28 March) to issue "Bond-Type Class Shares."   First reaction: You wot, mate?
The company states it wants to "strengthen its financial base through reducing interesting-bearing debt by equity-related financings and conduct proactive control of debt maturity schedule, etc."

Now it wants to issue listed bond-type shares. Dividends not interest. The last Japanese issuer of something similar was NEC in 2001. Few will remember, so we study the situation.


Rakuten's New "Bond-Type Share" Issuance - Quite Quirky to Quantulate Rakuten's Quisquous New Quoz

David Blennerhassett

<ul>
<li>A holistic view of the three different documents here suggests the <a href="https://www.smartkarma.com/entities/denso-corp" target="_blank" data-smartkarma-citation="entities:18703:1" rel="noopener">Denso Corp (6902 JP)</a> buyback, indeed, "It was a trap".</li>
<li>3D Investment Partners raised its stake in <a href="https://www.smartkarma.com/entities/sapporo-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14085:1" rel="noopener">Sapporo Holdings (2501 JP)</a>,  suggesting the activist investor is optimistic about successfully advancing their proposals.</li>
<li>A firm merger proposal is expected for <a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation Technologies (HOLI US)</a> in the next couple of weeks. Time to buy.</li>
</ul>


A holistic view of the three different documents here suggests the Denso Corp (6902 JP) buyback, indeed, "It was a trap".
3D Investment Partners raised its stake in Sapporo Holdings (2501 JP),  suggesting the activist investor is optimistic about successfully advancing their proposals.
A firm merger proposal is expected for Hollysys Automation Technologies (HOLI US) in the next couple of weeks. Time to buy.


Last Week in Event SPACE: Denso, Sapporo, Hollysys, PCCW, Origin Energy

<ul>
<li>The January 2023 TOPIX FFW Trade was announced today. The two-way trade is worth about ¥325bn. </li>
<li>There are four ADDs previously discussed: <a href="https://www.smartkarma.com/entities/sun-inc" target="_blank" data-smartkarma-citation="entities:36668:1" rel="noopener">Sun* (4053 JP)</a>, <a href="https://www.smartkarma.com/entities/appier-group-inc" target="_blank" data-smartkarma-citation="entities:32165:1" rel="noopener">Appier Group (4180 JP)</a>, <a href="https://www.smartkarma.com/entities/chubu-steel-plate-co-ltd" target="_blank" data-smartkarma-citation="entities:18535:1" rel="noopener">Chubu Steel Plate (5461 JP)</a>, and <a href="https://www.smartkarma.com/entities/chubu-steel-plate-co-ltd" target="_blank" data-smartkarma-citation="entities:18535:1" rel="noopener">Chubu Steel Plate (5461 JP)</a>. </li>
<li>There are 57 downweights, 11 upweights (but only seven FFW buys). The rest is reverse funding to buy. There are 10 names with &gt;$10mm AND &gt;3 days ADV to sell.</li>
</ul>


The January 2023 TOPIX FFW Trade was announced today. The two-way trade is worth about ¥325bn. 
There are four ADDs previously discussed: Sun* (4053 JP), Appier Group (4180 JP), Chubu Steel Plate (5461 JP), and Chubu Steel Plate (5461 JP). 
There are 57 downweights, 11 upweights (but only seven FFW buys). The rest is reverse funding to buy. There are 10 names with &gt;$10mm AND &gt;3 days ADV to sell.


January TOPIX FFW Review - Some Big Sells

<ul>
<li>As designed, the JPX-Nikkei400 Index is something of a disaster. It aims to be slightly 'smart' vs other cap-weighted indices like TOPIX, but tracking error vs TOPIX is de minimus.</li>
<li>This year, in week 1, the ADD vs DELETE performance is positive. If we sector-hedge the ADDs vs DELETEs, it's doing even better.</li>
<li>This is probably due to relatively low pre-positioning, and cares. Momentum suggests one could be long ADDs vs DELETEs. And there is the perennial trade to watch out for.</li>
</ul>


As designed, the JPX-Nikkei400 Index is something of a disaster. It aims to be slightly 'smart' vs other cap-weighted indices like TOPIX, but tracking error vs TOPIX is de minimus.
This year, in week 1, the ADD vs DELETE performance is positive. If we sector-hedge the ADDs vs DELETEs, it's doing even better.
This is probably due to relatively low pre-positioning, and cares. Momentum suggests one could be long ADDs vs DELETEs. And there is the perennial trade to watch out for.


2022 JPX Nikkei 400 Rebal Update - Going the Right Way

Japan

ITO EN, LTD. produces various types of Japanese tea and canned beverages.

Ito En Ltd (2593 JP)

Itoen Pref (25935 JP) - Big Discount, Big Buyback, No Big Governance Change

The Itoen Pref Shares (25935 JP) are the only listed preferred share in Japan. They are illiquid. But they trade at a very wide discount to the...

Travis Lundy

Last Week in Event SPACE: Denso, Sapporo, Hollysys, PCCW, 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

January TOPIX FFW Review - Some Big Sells

The TOPIX January 2023 FFW trade was announced today. 57 down-weights, 11 FFW up-weights. The Phased Weight Reduction has its second leg. Total to...

Travis Lundy

2022 JPX Nikkei 400 Rebal Update - Going the Right Way

JPX Nikkei 400 rebalance is going the right way in the 6 trading days so far, and it wasn't done on Day1 (which was lacklustre). It may be under...

Travis Lundy

Itoen Pref (25935 JP) - Big Discount, Big Buyback, No Big Governance Change

The Itoen Pref Shares (25935 JP) are the only listed preferred share in Japan. They are illiquid. But they trade at a very wide discount to the...

Travis Lundy

Rakuten's New "Bond-Type Share" Issuance - Quite Quirky to Quantulate Rakuten's Quisquous New Quoz

Rakuten (4755) today announced they would seek shareholder approval to issue "Bond-Type Shares". MILES better than Toyota's AA Shares. But odd....

Travis Lundy

Last Week in Event SPACE: Denso, Sapporo, Hollysys, PCCW, 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

January TOPIX FFW Review - Some Big Sells

The TOPIX January 2023 FFW trade was announced today. 57 down-weights, 11 FFW up-weights. The Phased Weight Reduction has its second leg. Total to...

Travis Lundy

2022 JPX Nikkei 400 Rebal Update - Going the Right Way

JPX Nikkei 400 rebalance is going the right way in the 6 trading days so far, and it wasn't done on Day1 (which was lacklustre). It may be under...

Travis Lundy