Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>Today after the close, <strong><a href="https://www.smartkarma.com/entities/786" target="_blank" data-smartkarma-citation="entities:786:1">Altaba Inc (AABA US)</a></strong> announced a secondary offering of 750mm shares of <strong><a href="https://www.smartkarma.com/entities/19603" target="_blank" data-smartkarma-citation="entities:19603:1">Yahoo Japan (4689 JP)</a></strong> at ¥353-360 yen, a very slight discount to where they sold ~613mm shares to <a href="https://www.smartkarma.com/entities/27445" target="_blank" data-smartkarma-citation="entities:27445:1">Softbank Corp (9434 JP)</a>. For any unsold shares, Altaba is subject to a 120-day lockup. The pricing date of the deal is expected to be tomorrow AM pre-open.</p><p>That is 14.7% of the shares outstanding of <strong>Yahoo Japan</strong>, but it is 60% of current float (even more of the TSE's calculated float). However, given how many shares of Yahoo Japan have been shorted, the actual float long position is larger than is commonly reported.</p><p>This has been my operating model for a while (discussed in <strong><a href="https://www.smartkarma.com/insights/altaba-and-yahoo-japan-the-art-of-the-possible" target="_blank" data-smartkarma-citation="insights:20504">Altaba and Yahoo Japan - The Art of the Possible</a></strong> in May), and the indications from contacts in the market suggest it is shaping up as I had discussed in the notes.</p><p>The important takeaways of this deal are two-fold.</p><ol>
<li>The short and medium-term demand function here is different than many people think it is.</li>
<li>This goes a VERY long way to clearing out the Altaba overhang on Yahoo Japan. Perhaps all the way.</li>
</ol><p><em>For a history of this situation, background insights are shown in the table below. To get to the nitty gritty of today's trade, jump below to the Conclusions First. </em></p><div><table class="table table-striped"><tbody>
<tr><td colspan="2"><h2>Recent Insights on the Situation</h2></td></tr>
<tr>
<td><strong>Date</strong></td>
<td><strong>Insight</strong></td>
</tr>
<tr>
<td>18 May 2018</td>
<td><a href="https://www.smartkarma.com/insights/altaba-and-yahoo-japan-the-art-of-the-possible" target="_blank" data-smartkarma-citation="insights:20504">Altaba and Yahoo Japan - The Art of the Possible</a></td>
</tr>
<tr>
<td>10 June 2018</td>
<td><a href="https://www.smartkarma.com/insights/altaba-tender-offer-i-more-games-of-chicken" target="_blank" data-smartkarma-citation="insights:21139">Altaba Tender Offer I : More Games of Chicken 🐓</a></td>
</tr>
<tr>
<td>10 June 2018</td>
<td><a href="https://www.smartkarma.com/insights/altaba-tender-offer-ii-who-s-there-just-us-chickens" target="_blank" data-smartkarma-citation="insights:21162">Altaba Tender Offer II:   Who's There? "Just Us Chickens" 🐓</a></td>
</tr>
<tr>
<td>2 July 2018</td>
<td><a href="https://www.smartkarma.com/insights/altaba-tender-update-one-week-to-go-and-yj-sales" target="_blank" data-smartkarma-citation="insights:21770">Altaba Tender Update - One Week To Go and YJ Sales</a></td>
</tr>
<tr>
<td>3 July 2018</td>
<td><a href="https://www.smartkarma.com/insights/altaba-tender-extension-waiting-for-sec-exemptive-order" target="_blank" data-smartkarma-citation="insights:21845">Altaba Tender Extension - Waiting for SEC Exemptive Order</a></td>
</tr>
<tr>
<td>9 July 2018</td>
<td><a href="https://www.smartkarma.com/insights/altaba-and-yahoo-japan-more-artful-than-i-thought-possible" target="_blank" data-smartkarma-citation="insights:21981">Altaba and Yahoo Japan - More Artful Than I Thought Possible</a></td>
</tr>
<tr>
<td>11 July 2018</td>
<td><a href="https://www.smartkarma.com/insights/softaltabayahoobank-artful-complication-with-clarity" target="_blank" data-smartkarma-citation="insights:22024">SoftAltabaYahooBank:  Artful Complication with Clarity</a></td>
</tr>
<tr>
<td>5 August 2018</td>
<td><a href="https://www.smartkarma.com/insights/altaba-tender-vwap-day-and-estimating-pro-ration" target="_blank" data-smartkarma-citation="insights:22749">Altaba Tender VWAP Day and Estimating Pro-Ration</a></td>
</tr>
</tbody></table></div>

Today after the close, Altaba Inc (AABA US) announced a secondary offering of 750mm shares of Yahoo Japan (4689 JP) at ¥353-360 yen, a very slight discount to where they sold ~613mm shares to Softbank Corp (9434 JP). For any unsold shares, Altaba is subject to a 120-day lockup. The pricing date of the deal is expected to be tomorrow AM pre-open.That is 14.7% of the shares outstanding of Yahoo Japan, but it is 60% of current float (even more of the TSE's calculated float). However, given how many shares of Yahoo Japan have been shorted, the actual float long position is larger than is commonly reported.This has been my operating model for a while (discussed in Altaba and Yahoo Japan - The Art of the Possible in May), and the indications from contacts in the market suggest it is shaping up as I had discussed in the notes.The important takeaways of this deal are two-fold.
The short and medium-term demand function here is different than many people think it is.
This goes a VERY long way to clearing out the Altaba overhang on Yahoo Japan. Perhaps all the way.
For a history of this situation, background insights are shown in the table below. To get to the nitty gritty of today's trade, jump below to the Conclusions First. 
Recent Insights on the Situation

Date
Insight


18 May 2018
Altaba and Yahoo Japan - The Art of the Possible


10 June 2018
Altaba Tender Offer I : More Games of Chicken 🐓


10 June 2018
Altaba Tender Offer II:   Who's There? "Just Us Chickens" 🐓


2 July 2018
Altaba Tender Update - One Week To Go and YJ Sales


3 July 2018
Altaba Tender Extension - Waiting for SEC Exemptive Order


9 July 2018
Altaba and Yahoo Japan - More Artful Than I Thought Possible


11 July 2018
SoftAltabaYahooBank:  Artful Complication with Clarity


5 August 2018
Altaba Tender VWAP Day and Estimating Pro-Ration



Quality-first, Business-perspective Strategy, Urbem (HK) Limited

Steven Chen

Quality-first, Business-perspective Strategy

Equity Bottom-Up

<ul>
<li>With less than 60 employees, Tobila Systems is the absolute dominator in the space that can make a significant impact on Japan's society;</li>
<li>The valuation starts to look attractive while the fundamentals remain sound;</li>
<li>Partly benefiting from being the first entrant to this niche with a robust flywheel business model, the company now “monopolizes” both the supply side and the distribution side.</li>
</ul>


With less than 60 employees, Tobila Systems is the absolute dominator in the space that can make a significant impact on Japan's society;
The valuation starts to look attractive while the fundamentals remain sound;
Partly benefiting from being the first entrant to this niche with a robust flywheel business model, the company now “monopolizes” both the supply side and the distribution side.


Tobila Systems: The Monopoly that You Probably Never Heard Of (Even as Its Customer)

Japan

Softbank Corporation provides mobile phone telecommunication and networking services. The Company offers mobile communication opening, short messaging function opening, video function opening, and other services. Softbank also provides mobile phones.

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Softbank Corp (9434 JP)

Altaba's Big Yahoo Japan Selldown

Today after the close, Altaba Inc (AABA US) announced a secondary offering of 750mm shares of Yahoo Japan (4689 JP) at ¥353-360 yen, a very slight...

Travis Lundy

Tobila Systems: The Monopoly that You Probably Never Heard Of (Even as Its Customer)

Emotional Mr. Market seems to be offering investors a precious opportunity to accumulate “partial ownerships” in this high-quality business at...

Steven Chen

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