Research on International Stock Ideas, Value Punks

Value Punks

Research on International Stock Ideas

Value Punks’ mission is to deliver institutional-grade research on international stock ideas in a digestible, reader-friendly format.

At Value Punks, we blend our background in traditional value-investing with an openness to embrace a constantly and rapidly evolving investment and business landscape.

Institutional-Grade Research

Equity Bottom-Up

Berkshire Hathaway Inc Cl B / Equity Bottom-Up

This is Part 1 of our exclusive deep dive on “Sogo Shosha”, or Japanese trading companies.We’ve decided to break this deep dive into two parts given its length.Part 1 will build the foundation and covers the business, history, and a discussion of Berkshire’s investment.

This is Part 1 of our exclusive deep dive on “Sogo Shosha”, or Japanese trading companies.We’ve decided to break this deep dive into two parts given its length.Part 1 will build the foundation and covers the business, history, and a discussion of Berkshire’s investment.

Deep Dive: Japanese Trading Companies (Part 1)

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/mitsui-co-ltd" target="_blank" data-smartkarma-citation="entities:20799:1" rel="noopener">Mitsui &amp; Co Ltd (8031 JP)</a> reported Q3 earnings Friday afternoon during the market session. Like at Q2, they upped their fiscal-year forecast to well above Street consensus.</li>
<li>Also like Q2, they announced a buyback - this one an extension in time, shares, and money on the one already in place, raising the total Core CashFlow Payout Ratio.</li>
<li>This creates interesting index flows over the next several months, and other trading cos have live buybacks too.</li>
</ul>



Mitsui &amp; Co Ltd (8031 JP) reported Q3 earnings Friday afternoon during the market session. Like at Q2, they upped their fiscal-year forecast to well above Street consensus.
Also like Q2, they announced a buyback - this one an extension in time, shares, and money on the one already in place, raising the total Core CashFlow Payout Ratio.
This creates interesting index flows over the next several months, and other trading cos have live buybacks too.


Mitsui & Co (8031) Q3 - Big Profit, New Bigger Buyback, Some Index Selling; and Competition

<ul>
<li>
<a href="https://www.smartkarma.com/entities/mitsui-co-ltd" target="_blank" data-smartkarma-citation="entities:20799:1" rel="noopener">Mitsui &amp; Co Ltd (8031 JP)</a> on 1 November reported its results for H1 2022. H1 Revenue +37.1%yoy, OP+27.2%yoy, NP+33.2%yoy to ¥539bn. Full-year NP forecast +22.5% to ¥980bn.</li>
<li>Mitsui raised its dividend forecast (previously scheduled to rise from ¥105/share to ¥120/share) to ¥130/share and announced a ¥140bn buyback, adding to the ¥100bn announced in May completed in September.</li>
<li>The first ¥58.6bn was done in a ToSTNeT-3 buyback. Now there is another ¥79.4bn to go. There's also a fair bit of index selling the next 6mos.</li>
</ul>



Mitsui &amp; Co Ltd (8031 JP) on 1 November reported its results for H1 2022. H1 Revenue +37.1%yoy, OP+27.2%yoy, NP+33.2%yoy to ¥539bn. Full-year NP forecast +22.5% to ¥980bn.
Mitsui raised its dividend forecast (previously scheduled to rise from ¥105/share to ¥120/share) to ¥130/share and announced a ¥140bn buyback, adding to the ¥100bn announced in May completed in September.
The first ¥58.6bn was done in a ToSTNeT-3 buyback. Now there is another ¥79.4bn to go. There's also a fair bit of index selling the next 6mos.


Mitsui & Co (8031) Buyback - Big Profit, Big Div, Big Buyback, Some Index Selling

<ul>
<li>The TSE announced its first large FFW rebalance under new rules and Market Segmentation. ~1,000 names see FFW drop 5% or more. 100+ rise 5+%. Reverse funding trades are significant.</li>
<li>Top BUY flow: Toyota, Olympus, Daiichi Sankyo, Tokio Marine, JP Holdings with an average of 4.0 days' ADV to buy. Softbank/9984, MitCorp, Hitachi, Suzuki, Marubeni average 4.8 days to SELL.</li>
<li>493 names start their phased weight reduction out of TOPIX because they do not meet the hurdle for minimum trading value. And... Shinsei is the most impressive SELL name.
</li>
</ul>


The TSE announced its first large FFW rebalance under new rules and Market Segmentation. ~1,000 names see FFW drop 5% or more. 100+ rise 5+%. Reverse funding trades are significant.
Top BUY flow: Toyota, Olympus, Daiichi Sankyo, Tokio Marine, JP Holdings with an average of 4.0 days' ADV to buy. Softbank/9984, MitCorp, Hitachi, Suzuki, Marubeni average 4.8 days to SELL.
493 names start their phased weight reduction out of TOPIX because they do not meet the hurdle for minimum trading value. And... Shinsei is the most impressive SELL name.



TOPIX October 2022 Rebal - BIG Names with BIG Flows

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>At the October rebalance, there are 970 stocks that will have a lower FFW while 114 stocks will have a higher FFW. 493 stocks will undergo a Phased Weight Reduction.</li>
<li>Estimated one-way turnover is 2.54% resulting in a one-way trade of ¥1.815tn. 500 stocks have over 4 days ADV to trade, 100 stocks have over 9 days ADV to trade.</li>
<li>Setting the threshold at +/-US$50m to trade, the stocks with inflows have outperformed the stocks with outflows by 6.5% over the last four months.</li>
</ul>


At the October rebalance, there are 970 stocks that will have a lower FFW while 114 stocks will have a higher FFW. 493 stocks will undergo a Phased Weight Reduction.
Estimated one-way turnover is 2.54% resulting in a one-way trade of ¥1.815tn. 500 stocks have over 4 days ADV to trade, 100 stocks have over 9 days ADV to trade.
Setting the threshold at +/-US$50m to trade, the stocks with inflows have outperformed the stocks with outflows by 6.5% over the last four months.


TOPIX October Rebalance: BIG One With ¥1.8tn a Side to Trade

Japan

Marubeni Corporation is a trading company with business divisions in iron & steel, information technology, utility & infrastructure, energy, food, metals & mineral resources, development & construction, and chemicals.  The Company markets its products globally through a network of sales offices and representative firms.

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Marubeni Corp (8002 JP)

Deep Dive: Japanese Trading Companies (Part 1)

This is Part 1 of our exclusive deep dive on “Sogo Shosha”, or Japanese trading companies. We’ve decided to break this deep dive into two parts...

Value Punks

Mitsui & Co (8031) Q3 - Big Profit, New Bigger Buyback, Some Index Selling; and Competition

Mitsui had a great Q3, forecasting an even better Q4. It announced a new Buyback to pay out 100% of incremental Net Profit, 142% of incremental...

Travis Lundy

Mitsui & Co (8031) Buyback - Big Profit, Big Div, Big Buyback, Some Index Selling

Mitsui Corp last week announced strong results and upward guidance, especially in energy. Consensus says Mar-23 is the cycle peak. Higher div,...

Travis Lundy

TOPIX October 2022 Rebal - BIG Names with BIG Flows

The annual TOPIX FFW rebalance is larger this year than normal, with the twist that 493 names will now start to be phased out completely.

Travis Lundy

TOPIX October Rebalance: BIG One With ¥1.8tn a Side to Trade

Lower FFWs on 970 stocks and higher FFWs on 114 stocks will result in one-way turnover of 2.52% leading to a one-way trade of ¥1.8tn at the close...

Brian Freitas

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