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

Japan Corporate Governance - Ricoh - Lacking Board Skills?

Ricoh (7752) Buyback - Big, But Not. But Not Small.

Ricoh's BIG Buyback Potential - The Timing Is Right

Ricoh (Reductively) - Reduced Bullishness So Take Off the Trade

Quiddity Advisors

Equity Bottom-Up

<div><p>On the 19th of April 2019, <a href="https://www.smartkarma.com/entities/ricoh-co-ltd" target="_blank" data-smartkarma-citation="entities:15359:1" rel="noopener">Ricoh Co Ltd (7752 JP)</a> held an Investor Day conference discussing the 19th Mid Term Management Plan, and its long-term capital plan to return profits made in the 19th Plan to investors. In mid-2019, activist Effissimo Capital Management - which had been building a large position for 3+ years - announced it had gotten to 19% and would go activist. In late 2019, another Investor Day laid the groundwork for the 20th Mid-Term Management Plan. On the 27th of March 2020 the company held an <a href="https://www.ricoh.com/IR/events/investors_meeting" target="_blank" rel="noopener">Investors Meeting</a>. There was continued discussion of how the company had gone through the pain of realising a few years ago how they were in real trouble, and how they then made significant efforts to change that, and they reiterated the ongoing MTMP goal to pay out a fair chunk of accumulated capital. </p></div><div><p>In the <em>previous</em> two Mid-Term Management Plans (MTMPs), called "Resurgent" and "Ignite", respectively, the company led by CEO "Jake" Yamashita undertook structural reform to create cost savings of ¥100bn (mostly fixing the sales structure in the US, cutting out HQ costs and using RPA ("Robotic Process Automation") everywhere, and streamlining in-house production). They also started cutting businesses which had not delivered margin and revenue improvements. They announced they would stop supporting fraud-hit Ricoh India in late 2017 (a case finally resolved in early 2019), took impairments on Ikon and Mindshift in 2018, deciding to sell their long-held position (tied to Ricoh's founder) in <a href="https://www.smartkarma.com/entities/coca-cola-bottlers-japan" target="_blank" data-smartkarma-citation="entities:20051:1" rel="noopener">Coca Cola Bottlers Japan (2579 JP)</a> that year to help them smooth out the large losses. In May 2018 they sold Ricoh Logistics. That seemed to get them "over the hump" as Yamashita-san said then, and the growth strategy outlined in mid-2018 concentrated on industrial commercial printing and more features in MFPs to create a better "digital services business."</p></div><div><p>In early March 2020, they announced they were going to sell 20% of <a href="https://www.smartkarma.com/entities/ricoh-leasing-co-ltd" target="_blank" data-smartkarma-citation="entities:9144:1" rel="noopener">Ricoh Leasing (8566 JP)</a>to <a href="https://www.smartkarma.com/entities/mizuho-leasing-co-ltd" target="_blank" data-smartkarma-citation="entities:12780:1" rel="noopener">Mizuho Leasing Co (8425 JP)</a>, which would allow them to de-consolidate Ricoh Leasing, completely changing the optics of Ricoh's consolidated debt position. </p></div><p>The company in its March 2020 Investor Day gave a further preview of the next Mid-Term Plan for FY20-22 called "Lift Off" which was supposed to be fully announced in May 2020 (and which Yamashita-san had previously previewed in November 2019). There would be digital services and capital returns, responding to the constant pressure from activist firm Effissimo Capital Management which had lifted its position to 19% in late 2019 and changed the purpose of their holding to "making important recommendations to management" then too. The stock hit a four-year high just before Q3 earnings came out in February, fell in March 2020, but there was hope. </p><p><em><strong>I wrote about the situation originally in <a href="https://www.smartkarma.com/insights/ricoh-s-big-buyback-potential-the-timing-is-right" target="_blank" data-smartkarma-citation="insights:38518" rel="noopener">Ricoh's BIG Buyback Potential - The Timing Is Right</a>. </strong></em></p><p>Unfortunately, when full-year earnings came out, the issues facing office supply and documentation businesses in the US and Europe as covid-19 worsened slightly delayed the execution of the Capital Return Plan at the start of the new MTP. I wrote about the timing and the relative trade in <a href="https://www.smartkarma.com/insights/ricoh-redux-get-long-vs-comps" target="_blank" data-smartkarma-citation="insights:39155" rel="noopener"><em><strong>Ricoh Redux:  Get Long Vs Comps</strong></em></a> in early May 2020.</p><p>By the start of calendar Q4 however, after Ricoh had outperformed by 25+% in 5 months, forward forecasts for Ricoh earnings started to deteriorate much faster than for rivals and I recommended taking off the trade in <a href="https://www.smartkarma.com/insights/ricoh-reductively-reduced-bullishness-so-take-off-the-trade" target="_blank" data-smartkarma-citation="insights:42625" rel="noopener"><em><strong>Ricoh (Reductively) - Reduced Bullishness So Take Off the Trade</strong></em></a>. </p><p>The buyback would come, but the Valley of the Shadow of Covid was deep and wide. </p><h3>The NEW News Today</h3><p>Ricoh today announced it would launch its buyback, of up to 145,000,000 shares (20.02%) spending up to ¥100 billion. Once the buyback is completed, the company will retire the repurchased shares PLUS another 20,000,000 shares. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/192/081/original/Screenshot+2021-03-03+at+7.38.47+PM.png?1614771571" class="editor-image img-responsive" data-smartkarma-image-id="192081"></figure><p></p></section><div class="content-highlight"><p>This is big news, and deserves a much closer look.</p></div>

On the 19th of April 2019, Ricoh Co Ltd (7752 JP) held an Investor Day conference discussing the 19th Mid Term Management Plan, and its long-term capital plan to return profits made in the 19th Plan to investors. In mid-2019, activist Effissimo Capital Management - which had been building a large position for 3+ years - announced it had gotten to 19% and would go activist. In late 2019, another Investor Day laid the groundwork for the 20th Mid-Term Management Plan. On the 27th of March 2020 the company held an Investors Meeting. There was continued discussion of how the company had gone through the pain of realising a few years ago how they were in real trouble, and how they then made significant efforts to change that, and they reiterated the ongoing MTMP goal to pay out a fair chunk of accumulated capital. In the previous two Mid-Term Management Plans (MTMPs), called "Resurgent" and "Ignite", respectively, the company led by CEO "Jake" Yamashita undertook structural reform to create cost savings of ¥100bn (mostly fixing the sales structure in the US, cutting out HQ costs and using RPA ("Robotic Process Automation") everywhere, and streamlining in-house production). They also started cutting businesses which had not delivered margin and revenue improvements. They announced they would stop supporting fraud-hit Ricoh India in late 2017 (a case finally resolved in early 2019), took impairments on Ikon and Mindshift in 2018, deciding to sell their long-held position (tied to Ricoh's founder) in Coca Cola Bottlers Japan (2579 JP) that year to help them smooth out the large losses. In May 2018 they sold Ricoh Logistics. That seemed to get them "over the hump" as Yamashita-san said then, and the growth strategy outlined in mid-2018 concentrated on industrial commercial printing and more features in MFPs to create a better "digital services business."In early March 2020, they announced they were going to sell 20% of Ricoh Leasing (8566 JP)to Mizuho Leasing Co (8425 JP), which would allow them to de-consolidate Ricoh Leasing, completely changing the optics of Ricoh's consolidated debt position. The company in its March 2020 Investor Day gave a further preview of the next Mid-Term Plan for FY20-22 called "Lift Off" which was supposed to be fully announced in May 2020 (and which Yamashita-san had previously previewed in November 2019). There would be digital services and capital returns, responding to the constant pressure from activist firm Effissimo Capital Management which had lifted its position to 19% in late 2019 and changed the purpose of their holding to "making important recommendations to management" then too. The stock hit a four-year high just before Q3 earnings came out in February, fell in March 2020, but there was hope. I wrote about the situation originally in Ricoh's BIG Buyback Potential - The Timing Is Right. Unfortunately, when full-year earnings came out, the issues facing office supply and documentation businesses in the US and Europe as covid-19 worsened slightly delayed the execution of the Capital Return Plan at the start of the new MTP. I wrote about the timing and the relative trade in Ricoh Redux:  Get Long Vs Comps in early May 2020.By the start of calendar Q4 however, after Ricoh had outperformed by 25+% in 5 months, forward forecasts for Ricoh earnings started to deteriorate much faster than for rivals and I recommended taking off the trade in Ricoh (Reductively) - Reduced Bullishness So Take Off the Trade. The buyback would come, but the Valley of the Shadow of Covid was deep and wide. The NEW News TodayRicoh today announced it would launch its buyback, of up to 145,000,000 shares (20.02%) spending up to ¥100 billion. Once the buyback is completed, the company will retire the repurchased shares PLUS another 20,000,000 shares. This is big news, and deserves a much closer look.

Ricoh Buyback Redux - It's On, It's Big. Crossholders Vs Activist Vs Public. Who Sells?

Ricoh Company Ltd

Ricoh Buyback Redux - It's On, It's Big. Crossholders Vs Activist Vs Public. Who Sells?