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

McDs Japan (2702) Update: Parent Selldown 80% Done, or 63.6% Done.

McDs Japan (2702) Update: Q1 Strong As Expected, No TSE1 News

TOPIX Inclusions: How to Account for The Impact of Equity Offerings

2021 High Conviction: McDonald's Japan -  A TOPIX Inclusion BIG Bet

Gravity Works As WeWork Doesn't; Now Plan B

Quiddity Advisors

Event-Driven

<p>In the 2020FQ2 earnings call for <a href="https://www.smartkarma.com/entities/mcdonald-s-corp" target="_blank" data-smartkarma-citation="entities:1425:1" rel="noopener">Mcdonald's Corp (MCD US)</a> held in late July, CFO Kevin Ozan brought up the subject of <a href="https://www.smartkarma.com/entities/mcdonald-s-holdings-co-japan" target="_blank" data-smartkarma-citation="entities:985:1" rel="noopener">Mcdonald's Holdings Co Japan (2702 JP)</a> a bit over 22 minutes into the call. </p><div><blockquote><p>Consistent with enhancing financial flexibility and our franchising strategy, we're planning to divest a portion of our stake in McDonald's Japan. As a result of the strong performance of the McDonald's Japan business over the past few years and our confidence in the local management team, we believe it's the right time to gradually reduce our ownership stake in the market. This will take some time because of the low trading volume of McDonald's Japan shares. As a reminder, we currently own about 49% of the business, and we will retain at least 35% ownership. This decision provides us with additional financial flexibility to execute our capital allocation strategy while also demonstrating our commitment to our Japanese business.</p></blockquote></div><div>
<p>The conclusion was that MCD would sell 14% of McD Japan in the market. But 14% was 18.6mm shares, which on an ex-ante basis was 56 days worth of average daily volume over the previous three years and over a year's worth of volume if trading at 20% of volume every single day.</p>
<p>It was a near 30% increase in the float and not quite US$1bn in value.</p>
<p>On 20 August, MCD <a href="https://disclosure.edinet-fsa.go.jp/E01EW/download?uji.verb=W0EZA104CXP001003Action&amp;uji.bean=ee.bean.parent.EECommonSearchBean&amp;PID=W1E63011&amp;SESSIONKEY=1597918899762&amp;lgKbn=2&amp;pkbn=0&amp;skbn=1&amp;dskb=&amp;askb=&amp;dflg=0&amp;iflg=&amp;preId=1&amp;mul=2702&amp;lpr=on&amp;cal=1&amp;era=R&amp;yer=&amp;mon=&amp;pfs=4&amp;row=100&amp;idx=0&amp;str=&amp;kbn=1&amp;flg=&amp;syoruiKanriNo=&amp;s=S100JKOI" target="_blank" rel="noopener">announced</a> that it had sold a bit over 3% of McD J, selling 4.2mm shares at ¥5340/share on 19 August 2020. On 20 November 2020, they <a href="https://disclosure.edinet-fsa.go.jp/E01EW/download?uji.verb=W0EZA104CXP001003Action&amp;uji.bean=ee.bean.parent.EECommonSearchBean&amp;PID=W1E63011&amp;SESSIONKEY=1614669632749&amp;lgKbn=2&amp;pkbn=0&amp;skbn=1&amp;dskb=&amp;askb=&amp;dflg=0&amp;iflg=&amp;preId=1&amp;mul=2702&amp;lpr=on&amp;cal=1&amp;era=R&amp;yer=&amp;mon=&amp;pfs=4&amp;row=100&amp;idx=0&amp;str=&amp;kbn=1&amp;flg=&amp;syoruiKanriNo=&amp;s=S100K899" target="_blank" rel="noopener">announced</a> they had sold another 4,000,000 shares at ¥5370/share on 19 November.</p>
<p>Yesterday, another tranche of 4,000,000 shares was transacted at ¥5280/share. It is likely McDs US selling down more. That would leave McDs with 40.82%, which is more done than not.</p>
<p>And it leaves the setup to be quite favorable to an application to move from JASDAQ to TSE1. </p>
<p>This was originally discussed in <a href="https://www.smartkarma.com/insights/a-modest-mcdonald-s-japan-proposal" target="_blank" data-smartkarma-citation="insights:42401" rel="noopener">A Modest (McDonald's Japan) Proposal</a> last August and by <a href="https://www.smartkarma.com/profiles/janaghan-jeyakumar-cfa" target="_blank" data-smartkarma-citation="accounts:3173" rel="noopener">Janaghan Jeyakumar, CFA</a> in <a href="https://www.smartkarma.com/insights/2021-high-conviction-mcdonald-s-japan-a-topix-inclusion-big-bet" target="_blank" data-smartkarma-citation="insights:46153" rel="noopener">2021 High Conviction: McDonald's Japan -  A TOPIX Inclusion BIG Bet</a> in December 2020.</p>
<p>Now we discuss the timing pattern of how this might work.</p>
</div>

In the 2020FQ2 earnings call for Mcdonald's Corp (MCD US) held in late July, CFO Kevin Ozan brought up the subject of Mcdonald's Holdings Co Japan (2702 JP) a bit over 22 minutes into the call. Consistent with enhancing financial flexibility and our franchising strategy, we're planning to divest a portion of our stake in McDonald's Japan. As a result of the strong performance of the McDonald's Japan business over the past few years and our confidence in the local management team, we believe it's the right time to gradually reduce our ownership stake in the market. This will take some time because of the low trading volume of McDonald's Japan shares. As a reminder, we currently own about 49% of the business, and we will retain at least 35% ownership. This decision provides us with additional financial flexibility to execute our capital allocation strategy while also demonstrating our commitment to our Japanese business.
The conclusion was that MCD would sell 14% of McD Japan in the market. But 14% was 18.6mm shares, which on an ex-ante basis was 56 days worth of average daily volume over the previous three years and over a year's worth of volume if trading at 20% of volume every single day.
It was a near 30% increase in the float and not quite US$1bn in value.
On 20 August, MCD announced that it had sold a bit over 3% of McD J, selling 4.2mm shares at ¥5340/share on 19 August 2020. On 20 November 2020, they announced they had sold another 4,000,000 shares at ¥5370/share on 19 November.
Yesterday, another tranche of 4,000,000 shares was transacted at ¥5280/share. It is likely McDs US selling down more. That would leave McDs with 40.82%, which is more done than not.
And it leaves the setup to be quite favorable to an application to move from JASDAQ to TSE1. 
This was originally discussed in A Modest (McDonald's Japan) Proposal last August and by Janaghan Jeyakumar, CFA in 2021 High Conviction: McDonald's Japan -  A TOPIX Inclusion BIG Bet in December 2020.
Now we discuss the timing pattern of how this might work.


McD's Japan:  Earnings? Check. Parent Selldown OK? Check. Japanese CEO? Check TSE Prime? Unknown

Mcdonald's Japan

McD's Japan: Earnings? Check. Parent Selldown OK? Check. Japanese CEO? Check TSE Prime? Unknown