In today’s briefing:
- [Japan Buyback] Leopalace (8848 JP) – A Giant Buyback To Get Fortress Partially Out
- CSI300/CSI500/CSI1000 Index Rebalance: Changes Lead to US$12bn Trade
- Nifty 50 and the RBI Rate Decision: History Has a Pattern
- [Alert] Buy Net Lease Office Properties (NLOP)
- Korean Banks; Presidential Election Drives Positive View on Hana (086790 KS) And Woori (316140 KS)
- Schloss Bangalore IPO Trading – Decent Anchor; Muted Overall Demand
- Pair Trade Signal: LIC Housing Finance (LICHF IN) Long Vs. Canara Bank (CBK IN) Short
- Renatus Tactical Acquisition Corp I: SPAC with Crypto Focus and Trump-Linked Management
[Japan Buyback] Leopalace (8848 JP) – A Giant Buyback To Get Fortress Partially Out
- Leopalace21 Corp (8848 JP) had a giant oopsie in 2018-2021 where they lost ¥180bn over three years because of defective construction requiring repairs.
- Murakami and others got involved. Leopalace got financing from FIG (shares/SARs/loan), Murakami bailed. Eventually Hikari Tsushin got in. Leopalace got FIG out of their loan, doing a refi through Mizuho.
- Cash was up, cashflow is strong. Business is changed/revived. Now Leopalace is buying back SARs it sold to FIG. FIG will still own 26%. The future is potentially interesting. Still.
CSI300/CSI500/CSI1000 Index Rebalance: Changes Lead to US$12bn Trade
- There are 7 changes for the CSI 300 Index, 50 changes for the CSI 500 Index and 100 changes for the CSI1000 Index that will be implemented on 13 June.
- There are 240 unique names that are adds or deletes and the round-trip trade across all 3 indices is close to US$12bn.
- The adds have outperformed the deletes for the CSI 300 Index and the CSI 1000 Index but underperformed for the CSI 500 Index.
Nifty 50 and the RBI Rate Decision: History Has a Pattern
- The Reserve Bank of India (RBI) is set to announce a monetary policy decision on Friday, 6 June 2025.
- Market Expectations: The consensus anticipates a 25-basis-point rate cut, lowering the rate from currently 6.00% to 5.75%. Historically, one in four RBI rate decisions is a surprise to the market.
- This Insight investigates past market behavior during comparable RBI policy announcements, unearthing a surprising statistic about how the Nifty 50 might react to June’s decision, regardless of the outcome.
[Alert] Buy Net Lease Office Properties (NLOP)
- I thought I had missed NLOP. But a conversation at the Berkshire Hathaway annual meeting convinced me to take another look.
- I told a friend that I “was pissed that I missed NLOP.” He said, “You haven’t missed it. All recourse debt has been paid off and the company is about to start paying dividends.”
- So I made a decision to revisit NLOP with a fresh perspective.
Korean Banks; Presidential Election Drives Positive View on Hana (086790 KS) And Woori (316140 KS)
- The “Value Up” initiative which kicked off in February 2024 has been intended to bring about corporate governance and market reforms which minority and especially foreign investors have long sought
- So far, these voluntary reforms have brought positive albeit limited benefits to South Korean equities; presidential elections, with potential legislative change, should act as a positive valuation driver
- We reiterate our positive views on Woori and Hana Financial which are the top banks based on our scorecard; these attributes are due to attractive valuations and balance sheet credentials
Schloss Bangalore IPO Trading – Decent Anchor; Muted Overall Demand
- Schloss Bangalore Ltd (SCHBL IN) raised about US$400m in its India IPO.
- It is a luxury hospitality company which owns, operates, manages and develops luxury hotels and resorts under ‘The Leela’ brand, through direct ownership and hotel management agreements with third-party owners.
- We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.
Pair Trade Signal: LIC Housing Finance (LICHF IN) Long Vs. Canara Bank (CBK IN) Short
- The Canara Bank (CBK IN) vs. LIC Housing Finance (LICHF IN) Price-Ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.
- The relative value opportunity can be implemented through stocks, derivatives, or as relative over-/underweights in a long only context.
- This Insight provides a target return and discusses trade setup and risk management strategies.
Renatus Tactical Acquisition Corp I: SPAC with Crypto Focus and Trump-Linked Management
- Renatus Tactical Acquisition Corp I (RTAC) is a SPAC targeting crypto/blockchain with a $240m IPO, led by Trump Media executives.
- RTAC units include one share and half a warrant, with a trust value of $10.025/share, trading above trust value.
- RTAC’s sponsor sold 1.5m shares and 0.7m warrants post-IPO at $2.45/unit, below IPO price.
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