Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Quantitative Analysis

In my previous thematic Insight on TOPIX Inclusions, <a href="https://www.smartkarma.com/insights/historical-topix-inclusions-what-flavor-performs-best" target="_blank" data-smartkarma-citation="insights:39523" rel="noopener">Historical TOPIX Inclusions:  What Flavor Performs Best?</a> I discussed how we could use Index Inclusion Parameters to identify situations with above-average return:risk characteristics mainly in the period from a company's TSE1 promotion to the Inclusion Event and in the immediate aftermath (post-inclusion). 
In this insight, we focus on one of the most common "Pre-event" indicators for TOPIX Inclusion Events:Tachiaigai Bunbai Offerings.
A Tachiaigai Bunbai Offering is where a company sells newly issued or secondary shares (usually from a controlling shareholder) to the public (Off-market), with a limit placed on the maximum quantity per subscriber, most often with the intention of increasing the number of shareholders, public float percentage, and/or the market capitalization of the public float in order to meet TSE1 promotion requirements.
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A typical example would be a sale of 200,000 shares of a stock with a maximum individual purchase quantity of 100 shares. If fully sold, it would have an instantaneous increase in shareholder count of 2,000 new shareholders, assuming that none of the existing shareholders participated.
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In the last ~30 days, 10 different companies have made announcements relating to  such Tachiaigai Bunbai Offerings. Some of these companies have explicitly stated that they are working towards an eventual TSE1 move. 
Here is a quick round-up of these Tachiaigai Bunbai Offerings and recommended additions to a  TOPIX Inclusion Pre-event Watchlist.

In my previous thematic Insight on TOPIX Inclusions, Historical TOPIX Inclusions:  What Flavor Performs Best? I discussed how we could use Index Inclusion Parameters to identify situations with above-average return:risk characteristics mainly in the period from a company's TSE1 promotion to the Inclusion Event and in the immediate aftermath (post-inclusion). 
In this insight, we focus on one of the most common "Pre-event" indicators for TOPIX Inclusion Events:Tachiaigai Bunbai Offerings.
A Tachiaigai Bunbai Offering is where a company sells newly issued or secondary shares (usually from a controlling shareholder) to the public (Off-market), with a limit placed on the maximum quantity per subscriber, most often with the intention of increasing the number of shareholders, public float percentage, and/or the market capitalization of the public float in order to meet TSE1 promotion requirements.

A typical example would be a sale of 200,000 shares of a stock with a maximum individual purchase quantity of 100 shares. If fully sold, it would have an instantaneous increase in shareholder count of 2,000 new shareholders, assuming that none of the existing shareholders participated.

In the last ~30 days, 10 different companies have made announcements relating to  such Tachiaigai Bunbai Offerings. Some of these companies have explicitly stated that they are working towards an eventual TSE1 move. 
Here is a quick round-up of these Tachiaigai Bunbai Offerings and recommended additions to a  TOPIX Inclusion Pre-event Watchlist.  

TOPIX Inclusion Pre-Events: Recent "Tachiaigai Bunbai" Round-Up

Japan

FaithNetwork Co. Ltd. operates real estate ownership and development services. The Company provides home renovation, housing loans, real estate brokerage, and other services. FaithNetwork also offers construction services. FaithNetwork serves customers in Japan.

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FaithNetwork Co Ltd (3489 JP)

TOPIX Inclusion Pre-Events: Recent "Tachiaigai Bunbai" Round-Up

In my previous thematic Insight on TOPIX Inclusions, Historical TOPIX Inclusions: What Flavor Performs Best? I discussed how we could use Index...

Janaghan Jeyakumar, CFA

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