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

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Quiddity Advisors

Event-Driven

NTT (Nippon Telegraph & Telephone) / Event-Driven

NTT (Nippon Telegraph & Telephone) (9432 JP)

With its Q1 earnings release on Friday 6 August, NTT also announced a buyback. This is the seventh large buyback in five years. The buyback programs for on-market buyback announced from 2016-2019 were ¥150bn in size, uniformly. Since then, the two on-market buybacks have been ¥250bn. One might have expected this one to be ¥150-200bn but at ¥250bn it is likely at the high end of expectations for three reasons.<ol>
<li>In order to buy back ¥300bn next time from the government, it needs to buy back ¥250bn from the market this time. </li>
<li>This larger buyback represents continued effort at offsetting the dilution from the ¥200bn share sale to Toyota in March 2020, and </li>
<li>This larger buyback represents NTT using the additional earnings power of NTT Docomo. NTT used to buy back shares from the market and from NTT, then NTT would take that cash and capital and buy back its own shares. Now NTT Docomo doesn't have to spend any money on buybacks from minority shareholders. All of its cash can go to the parent NTT. NTT therefore has more to spend on buybacks. Given several of the recent NTT Docomo buybacks were on the order of ¥300bn, the one-third of that amount which did not accrue to NTT now does. So now it accrues to NTT shareholders. </li>
</ol>I expect a buyback size of ¥250-300bn to be the new standard.Of course, this lets us take a look at NTT vs its competitors KDDI and Softbank Corp yet again, and compare the impact on the market of the various buyback programs in place.More below the fold.

With its Q1 earnings release on Friday 6 August, NTT also announced a buyback. This is the seventh large buyback in five years. The buyback programs for on-market buyback announced from 2016-2019 were ¥150bn in size, uniformly. Since then, the two on-market buybacks have been ¥250bn. One might have expected this one to be ¥150-200bn but at ¥250bn it is likely at the high end of expectations for three reasons.
In order to buy back ¥300bn next time from the government, it needs to buy back ¥250bn from the market this time. 
This larger buyback represents continued effort at offsetting the dilution from the ¥200bn share sale to Toyota in March 2020, and 
This larger buyback represents NTT using the additional earnings power of NTT Docomo. NTT used to buy back shares from the market and from NTT, then NTT would take that cash and capital and buy back its own shares. Now NTT Docomo doesn't have to spend any money on buybacks from minority shareholders. All of its cash can go to the parent NTT. NTT therefore has more to spend on buybacks. Given several of the recent NTT Docomo buybacks were on the order of ¥300bn, the one-third of that amount which did not accrue to NTT now does. So now it accrues to NTT shareholders. 
I expect a buyback size of ¥250-300bn to be the new standard.Of course, this lets us take a look at NTT vs its competitors KDDI and Softbank Corp yet again, and compare the impact on the market of the various buyback programs in place.More below the fold.

NTT Buybacks Continue - Bigger, Better, Faster, Stronger