Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

HK Type 4 license through Ballingal Investment Advisors Ltd. ("BIA" or "BIAL")

BACKGROUND
I have 20+yrs experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies with most of that time spent managing money. 

4 years in fixed income macro, 8 years running internal hedge fund and 4yrs investment banking at Citi in Japan, 3 years running an Asia multi-strat portfolio at a hedge fund, 4+yrs as an independent special situations analyst.

Pan-Asia Catalysts/Events

Toshiba Corp (6502 JP) – And so It Begins

Toshiba – How the Kurumatani Resignation and KKR or Brookfield Bids Could Change Things

Toshiba - The King Is Dead, Long Live the King

Toshiba – Tsunakawa’s Reappointment as EO Is Probably the End for Kurumatani

Toshiba - The CEO Gets His MBO Bidder and Toshiba Will Get Interestinger

Gravity Works As WeWork Doesn't; Now Plan B

Quiddity Advisors

Event-Driven

Things are heating up.Some might say after today that Kurumatani-san is on the hot seat feeling considerably toasty.Over the weekend, there were more noises as the Nikkei reported that Toshiba would "take the CVC bid seriously", had set up an internal review committee to be chaired by a Vice President, and that the approvals would be expected by early summer, a Tender Offer would start in July, and if successful, Toshiba would be delisted in October. This morning there is a <a href="https://www.nikkei.com/article/DGXZQOUB1117Z0R10C21A4000000/?unlock=1" target="_blank" rel="noopener">report</a> that the large increase in position by Singapore-based (and as the Nikkei describes them "noisy shareholder" 3D Investment Partners reported in the previous insight was in fact 3D purchasing the stake from Harvard Investment Management. This is important because 3D voted against Kurumatani-san last year as director and later asked the firm to investigate vote-counting irregularities. Harvard,  with 4.7%, abstained, reportedly after former GPIF CIO Hiromichi Mizuno - champion of governance and stewardship while at GPIF and then-special advisor to METI - communicated with Harvard and voiced the possibility that if they voted against Kurumatani-san there could be a probe based on the idea that if shareholders coordinate to vote without declaring joint ownership, there can be issues (Reuters <a href="https://www.reuters.com/article/toshiba-board-idUSKBN28X0O6" target="_blank" rel="noopener">report</a>, FT <a href="https://www.ft.com/content/bdfff63b-93a4-451c-a98f-a22548106327" target="_blank" rel="noopener">article</a>).Now there appears to be no issue of a Harvard abstention and clear increase in voting power for shares held by those who would challenge management (with or without Kurumatani-san) on capital and management policy, but to be clear, votes FOR are measured as a percentage of votes PLUS active abstentions. If Harvard actively abstained (rather than passively not voting), then this won't change the support ratio (it would just change the optics). IF the 21.4mm share position moved from passive abstention to active opposition, it would have lowered the votes FOR from 57.98% to 54.46%, but Kurumatani-san would have squeaked through still. The entire situation is great fun. The situation of Toshiba governance has become something of a governance nightmare and with national security issues at stake for a minority of the business, a potential bureaucratic quagmire. But the company is doing decently well, and is long a desirable asset, and there are LOTS of shareholders who are heavily vested in seeing this through. And it appears with the March EGM result that they have a majority. Sitting in the audience, it makes me want to have a squirt gun, rubber gloves, rice, newspaper, and toast. Gotta have toast.

Things are heating up.Some might say after today that Kurumatani-san is on the hot seat feeling considerably toasty.Over the weekend, there were more noises as the Nikkei reported that Toshiba would "take the CVC bid seriously", had set up an internal review committee to be chaired by a Vice President, and that the approvals would be expected by early summer, a Tender Offer would start in July, and if successful, Toshiba would be delisted in October. This morning there is a report that the large increase in position by Singapore-based (and as the Nikkei describes them "noisy shareholder" 3D Investment Partners reported in the previous insight was in fact 3D purchasing the stake from Harvard Investment Management. This is important because 3D voted against Kurumatani-san last year as director and later asked the firm to investigate vote-counting irregularities. Harvard,  with 4.7%, abstained, reportedly after former GPIF CIO Hiromichi Mizuno - champion of governance and stewardship while at GPIF and then-special advisor to METI - communicated with Harvard and voiced the possibility that if they voted against Kurumatani-san there could be a probe based on the idea that if shareholders coordinate to vote without declaring joint ownership, there can be issues (Reuters report, FT article).Now there appears to be no issue of a Harvard abstention and clear increase in voting power for shares held by those who would challenge management (with or without Kurumatani-san) on capital and management policy, but to be clear, votes FOR are measured as a percentage of votes PLUS active abstentions. If Harvard actively abstained (rather than passively not voting), then this won't change the support ratio (it would just change the optics). IF the 21.4mm share position moved from passive abstention to active opposition, it would have lowered the votes FOR from 57.98% to 54.46%, but Kurumatani-san would have squeaked through still. The entire situation is great fun. The situation of Toshiba governance has become something of a governance nightmare and with national security issues at stake for a minority of the business, a potential bureaucratic quagmire. But the company is doing decently well, and is long a desirable asset, and there are LOTS of shareholders who are heavily vested in seeing this through. And it appears with the March EGM result that they have a majority. Sitting in the audience, it makes me want to have a squirt gun, rubber gloves, rice, newspaper, and toast. Gotta have toast. 

Gaming Out a CVC Bid for Toshiba - The Right Noises, The Wrong Price, and Toast