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

Nissan: Production Cut May Presage Dividend Cut Opening Up Downside

Nissan: Pressure From Paris Won't Work... But It Probably Will Increase the Chance of a Dividend Cut

Nissan/Renault: French State Intervention Continues

Nissan: Atrocious Governance Should Be Rectified Before Even Thinking of a Merger

Nissan Governance Outlook - Foggy Now, Sunny Later

Quiddity Advisors

Event-Driven

Six weeks ago I wrote that Nissan's governance outlook was "<a href="https://www.smartkarma.com/insights/nissan-governance-outlook-foggy-now-sunny-later" target="_blank">Foggy Now, Sunny Later.</a>" I said "Governance changes are afoot, with a steady flow of developments likely coming in March, April, May, and June."The last couple of months have seen numerous media articles about the process of <a href="https://www.smartkarma.com/entities/72" target="_blank" data-smartkarma-citation="entities:72:1">Nissan Motor (7201 JP)</a> and <a href="https://www.smartkarma.com/entities/21536" target="_blank" data-smartkarma-citation="entities:21536:1">Renault SA (RNO FP)</a> rebuilding their relationship. There have been visits to Tokyo by Renault's new chairman of the board of directors Jean-Dominique Senard, and visits to Paris and Amsterdam by the CEOs of Nissan and <a href="https://www.smartkarma.com/entities/794" target="_blank" data-smartkarma-citation="entities:794:1">Mitsubishi Motors (7211 JP)</a>. There have been many suggestions in French and European newspapers in the interim that Jean-Dominique Senard would be the obvious choice as a representative director of Nissan. There have been other articles out there in the Japanese press suggesting what conclusions the committee might come to as to what outcomes should result. The difference is notable. The French side still wants control. The Japanese/Nissan/committee side sees the need to fix governance.Today there was a <a href="https://www.ft.com/content/0a1e6430-4fd1-11e9-9c76-bf4a0ce37d49" target="_blank">report</a> in the FT suggesting that Renault "wants" to restart merger talks with Nissan and "aims to restart merger talks with Nissan within 12 months." It should be noted that these two sentences are not exactly the same. It may still be that France wants Renault to do so, and therefore Renault aims to do so. The same article revealed past talks on Renault merging with FCA but France putting a stop to it and a current desire to acquire another automaker - perhaps FCA - after dealing with Nissan. Also today, the long-awaited Nissan Special Committee for Improving Governance (SCIG) <a href="https://www.nissan-global.com/PDF/190327-01_179.pdf" target="_blank">report</a> was released. It outlines some of the issues of governance which existed under Ghosn- both the ones which got him the boot, and the structural governance issues which were "discovered" after he got the boot. There are clear patches in the fog. Two things shine through immediately. <ol>
<li>Governance weaknesses under Ghosn were inexcusably bad. Worse than previously reported.</li>
<li>The recommendations to the board now are, on the whole, pretty decent. Some are sine qua non changes - formation of nomination and compensation committees, whistleblower reporting to the audit committee and not the CEO, and greater checks and balances. Some are stronger in terms of the independence of Nissan from Renault: the committee recommends a majority of independent board members, an independent chairman, and no representative directors from Renault, Mitsubishi, or principal shareholders.</li>
</ol>There are, however, other issues which were not addressed, which for Nissan's sake probably should be addressed. Yesterday was a first step on what will be a 3-month procession of news about the way Nissan will address the SCIG report's recommendations, the process by which it will choose new directors when it does not have an official nomination committee, and the AGM in June to propose and confirm new directors. Then they will start their jobs in July. The fog looks to lift slowly. And one may anticipate some better weather beyond. But business concerns remain a threat, and while relations appear to be getting better after the departure of Carlos Ghosn and the arrival of Jean-Dominique Senard, it is not clear that a Franco-Japanese storm is not brewing in the distance.More below.

Six weeks ago I wrote that Nissan's governance outlook was "Foggy Now, Sunny Later." I said "Governance changes are afoot, with a steady flow of developments likely coming in March, April, May, and June."The last couple of months have seen numerous media articles about the process of Nissan Motor (7201 JP) and Renault SA (RNO FP) rebuilding their relationship. There have been visits to Tokyo by Renault's new chairman of the board of directors Jean-Dominique Senard, and visits to Paris and Amsterdam by the CEOs of Nissan and Mitsubishi Motors (7211 JP). There have been many suggestions in French and European newspapers in the interim that Jean-Dominique Senard would be the obvious choice as a representative director of Nissan. There have been other articles out there in the Japanese press suggesting what conclusions the committee might come to as to what outcomes should result. The difference is notable. The French side still wants control. The Japanese/Nissan/committee side sees the need to fix governance.Today there was a report in the FT suggesting that Renault "wants" to restart merger talks with Nissan and "aims to restart merger talks with Nissan within 12 months." It should be noted that these two sentences are not exactly the same. It may still be that France wants Renault to do so, and therefore Renault aims to do so. The same article revealed past talks on Renault merging with FCA but France putting a stop to it and a current desire to acquire another automaker - perhaps FCA - after dealing with Nissan. Also today, the long-awaited Nissan Special Committee for Improving Governance (SCIG) report was released. It outlines some of the issues of governance which existed under Ghosn- both the ones which got him the boot, and the structural governance issues which were "discovered" after he got the boot. There are clear patches in the fog. Two things shine through immediately. 
Governance weaknesses under Ghosn were inexcusably bad. Worse than previously reported.
The recommendations to the board now are, on the whole, pretty decent. Some are sine qua non changes - formation of nomination and compensation committees, whistleblower reporting to the audit committee and not the CEO, and greater checks and balances. Some are stronger in terms of the independence of Nissan from Renault: the committee recommends a majority of independent board members, an independent chairman, and no representative directors from Renault, Mitsubishi, or principal shareholders.
There are, however, other issues which were not addressed, which for Nissan's sake probably should be addressed. Yesterday was a first step on what will be a 3-month procession of news about the way Nissan will address the SCIG report's recommendations, the process by which it will choose new directors when it does not have an official nomination committee, and the AGM in June to propose and confirm new directors. Then they will start their jobs in July. The fog looks to lift slowly. And one may anticipate some better weather beyond. But business concerns remain a threat, and while relations appear to be getting better after the departure of Carlos Ghosn and the arrival of Jean-Dominique Senard, it is not clear that a Franco-Japanese storm is not brewing in the distance.More below.

日産のガバナンス構造に関する報告書が発表：霧は徐々に晴れ。夏は晴れ。来冬は嵐？