Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

In January and February we saw a large wave of TSE1 Section Transfers as many small cap names rushed to get promoted before the new (and more stringent) Section Transfer Requirements were implemented. In contrast, not a single TSE1 Section Transfer was announced in the month of March 2021. 
However, this is only the calm before the storm.
In April 2021, we are expecting dozens of companies to enjoy TOPIX Index upweights as a result of the annual liquidity factor review (and this will mean dozens of downweights too). On the other hand, although fewer companies will qualify under the new rules, small-cap companies could use M&amp;A as an alternative route to Section Transfers to meet criteria as discussed below in this insight.
Furthermore, I have discussed the changes to Quiddity's pre-events watchlist and provided performance updates for one "Live" event stock which is expected to have its Inclusion event at the end of April 2021 and 9 "Post" event stocks that completed their Inclusion Events at the end of January 2021 and February 2021.

In January and February we saw a large wave of TSE1 Section Transfers as many small cap names rushed to get promoted before the new (and more stringent) Section Transfer Requirements were implemented. In contrast, not a single TSE1 Section Transfer was announced in the month of March 2021. 
However, this is only the calm before the storm.
In April 2021, we are expecting dozens of companies to enjoy TOPIX Index upweights as a result of the annual liquidity factor review (and this will mean dozens of downweights too). On the other hand, although fewer companies will qualify under the new rules, small-cap companies could use M&amp;A as an alternative route to Section Transfers to meet criteria as discussed below in this insight.
Furthermore, I have discussed the changes to Quiddity's pre-events watchlist and provided performance updates for one "Live" event stock which is expected to have its Inclusion event at the end of April 2021 and 9 "Post" event stocks that completed their Inclusion Events at the end of January 2021 and February 2021. 

During the month of February 2021, one of the most anticipated TOPIX Inclusion candidates, <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a> completed its TOPIX Inclusion Event. We also saw four new names announce their TSE1 moves during this month, among which was <a href="https://www.smartkarma.com/entities/faithnetwork-co-ltd" target="_blank" data-smartkarma-citation="entities:29132:1" rel="noopener">FaithNetwork Co Ltd (3489 JP)</a> the third stock out of the four pre-event bets highlighted in <a href="https://www.smartkarma.com/insights/topix-inclusion-trade-summary-sep-2020" target="_blank" data-smartkarma-citation="insights:43700" rel="noopener">TOPIX Inclusion Trade Summary: Sep 2020</a>. During this month, we also introduced new pre-event picks to be added to our list in <a href="https://www.smartkarma.com/insights/topix-inclusions-who-is-ready-3-0" target="_blank" data-smartkarma-citation="insights:48306" rel="noopener">TOPIX Inclusions: Who Is READY? 3.0</a>. In this insight, I have provided performance updates for 4 "Live" event stocks which are expected to have Inclusion Events at the end of March/April 2021 and 17 "Post" event stocks that completed their Inclusion Events at the end of January 2021 and February 2021.

During the month of February 2021, one of the most anticipated TOPIX Inclusion candidates, Toshiba Corp (6502 JP) completed its TOPIX Inclusion Event. We also saw four new names announce their TSE1 moves during this month, among which was FaithNetwork Co Ltd (3489 JP) the third stock out of the four pre-event bets highlighted in TOPIX Inclusion Trade Summary: Sep 2020. During this month, we also introduced new pre-event picks to be added to our list in TOPIX Inclusions: Who Is READY? 3.0. In this insight, I have provided performance updates for 4 "Live" event stocks which are expected to have Inclusion Events at the end of March/April 2021 and 17 "Post" event stocks that completed their Inclusion Events at the end of January 2021 and February 2021. 

<div>There are currently ~1,500 stocks listed in the Mothers, JASDAQ, and Second Sections of the Tokyo Stock Exchange. As time passes, some of these stocks will "graduate" to the First Section of the Tokyo Stock Exchange (TSE1), triggering inclusion into the TOPIX Index causing passive funds tracking TOPIX to buy them on an inclusion event. This presents various trading opportunities in several phases of this event timeline.  </div><div>
Being able to identify such candidates at a "Pre-event" phase (before the TSE reassignment is confirmed) can unlock great value for speculative bets. Smartkarma readers familiar with the work of Quiddity Advisors will be able to recall the attractive rewards <a href="https://www.smartkarma.com/entities/shinnihonseiyaku-co-ltd" target="_blank" data-smartkarma-citation="entities:28122:1" rel="noopener">Shinnihonseiyaku Co Ltd (4931 JP)</a>, <a href="https://www.smartkarma.com/entities/gremz-inc" target="_blank" data-smartkarma-citation="entities:1858:1" rel="noopener">Gremz Inc (3150 JP)</a>, and <a href="https://www.smartkarma.com/entities/sansan-inc" target="_blank" data-smartkarma-citation="entities:28112:1" rel="noopener">Sansan Inc (4443 JP)</a> were able to deliver in their pre-event phases. 
This insight is a continuation of our work in identifying such pre-event candidates.
More below the fold  
</div>

There are currently ~1,500 stocks listed in the Mothers, JASDAQ, and Second Sections of the Tokyo Stock Exchange. As time passes, some of these stocks will "graduate" to the First Section of the Tokyo Stock Exchange (TSE1), triggering inclusion into the TOPIX Index causing passive funds tracking TOPIX to buy them on an inclusion event. This presents various trading opportunities in several phases of this event timeline.  
Being able to identify such candidates at a "Pre-event" phase (before the TSE reassignment is confirmed) can unlock great value for speculative bets. Smartkarma readers familiar with the work of Quiddity Advisors will be able to recall the attractive rewards Shinnihonseiyaku Co Ltd (4931 JP), Gremz Inc (3150 JP), and Sansan Inc (4443 JP) were able to deliver in their pre-event phases. 
This insight is a continuation of our work in identifying such pre-event candidates.
More below the fold  


In the month of January 2021, one of the most anticipated TOPIX Inclusion candidates, <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a> announced its move to TSE1 triggering what could potentially be one of the largest TOPIX Inclusion events in recent memory. The stock could see its TOPIX Inclusion take place at the end of February, along with <a href="https://www.smartkarma.com/entities/sansan-inc" target="_blank" data-smartkarma-citation="entities:28112:1" rel="noopener">Sansan Inc (4443 JP)</a> - another larger-than-usual candidate - and two other super-high-impact names <a href="https://www.smartkarma.com/entities/bull-dog-sauce-co-ltd" target="_blank" data-smartkarma-citation="entities:16235:1" rel="noopener">Bull Dog Sauce (2804 JP)</a> and <a href="https://www.smartkarma.com/entities/alps-logistics-co-ltd" target="_blank" data-smartkarma-citation="entities:3935:1" rel="noopener">Alps Logistics (9055 JP)</a>. There is plenty to look forward to. In this insight, I have provided performance updates for 6 "Live" event stocks (including the names mentioned above) which are expected to have Inclusion Events at the end of February 2021 and 14 "Post" event stocks that completed their Inclusion Events at the end of December 2020 and January 2021 (on 28 January 2021).Furthermore, I have also highlighted some interesting Pre-event situations involving stocks that are likely to become TSE1-promotion candidates in the near future.

In the month of January 2021, one of the most anticipated TOPIX Inclusion candidates, Toshiba Corp (6502 JP) announced its move to TSE1 triggering what could potentially be one of the largest TOPIX Inclusion events in recent memory. The stock could see its TOPIX Inclusion take place at the end of February, along with Sansan Inc (4443 JP) - another larger-than-usual candidate - and two other super-high-impact names Bull Dog Sauce (2804 JP) and Alps Logistics (9055 JP). There is plenty to look forward to. In this insight, I have provided performance updates for 6 "Live" event stocks (including the names mentioned above) which are expected to have Inclusion Events at the end of February 2021 and 14 "Post" event stocks that completed their Inclusion Events at the end of December 2020 and January 2021 (on 28 January 2021).Furthermore, I have also highlighted some interesting Pre-event situations involving stocks that are likely to become TSE1-promotion candidates in the near future. 

With the Section Transfer Requirements to move to TSE1 becoming more stringent, some small-cap candidates have been rushing to enter TSE1 so that they can avoid having to face the new regulations under which they may struggle to qualify. This trend has resulted in a "flurry" of TOPIX Inclusion Trades in the month of December 2020 as <a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" data-smartkarma-citation="accounts:25" rel="noopener">Travis Lundy</a> predicted in <a href="https://www.smartkarma.com/insights/the-tse-s-listing-criteria-revisions-part-i" target="_blank" data-smartkarma-citation="insights:43150" rel="noopener">The TSE's Listing Criteria Revisions - Part I</a>.
<blockquote>
For index inclusion and event traders taking advantage of a large number of interesting trades, the number will suddenly go waaaay down. This means <a href="https://www.smartkarma.com/profiles/janaghan-jeyakumar-cfa" target="_blank" data-smartkarma-citation="accounts:3173" rel="noopener">Janaghan Jeyakumar, CFA</a> likely has a flurry of interesting trade ideas to read about in the next few months, but after about March next year, things will drop off in a hurry.
</blockquote>
In this insight, I have provided performance updates for 11 "Live" event stocks which are expected to have Inclusion Events at the end of January 2021 and 6 "Post" event stocks that completed their Inclusion Events at the end of November 2020 and December 2020. Furthermore, I have also highlighted some interesting Pre-event situations involving stocks that are likely to become TSE1-promotion candidates in the near future.

With the Section Transfer Requirements to move to TSE1 becoming more stringent, some small-cap candidates have been rushing to enter TSE1 so that they can avoid having to face the new regulations under which they may struggle to qualify. This trend has resulted in a "flurry" of TOPIX Inclusion Trades in the month of December 2020 as Travis Lundy predicted in The TSE's Listing Criteria Revisions - Part I.

For index inclusion and event traders taking advantage of a large number of interesting trades, the number will suddenly go waaaay down. This means Janaghan Jeyakumar, CFA likely has a flurry of interesting trade ideas to read about in the next few months, but after about March next year, things will drop off in a hurry.

In this insight, I have provided performance updates for 11 "Live" event stocks which are expected to have Inclusion Events at the end of January 2021 and 6 "Post" event stocks that completed their Inclusion Events at the end of November 2020 and December 2020. Furthermore, I have also highlighted some interesting Pre-event situations involving stocks that are likely to become TSE1-promotion candidates in the near future. 

Japan

Software Service, Inc. develops and sells medical information software for hospital uses.  The products include electronic medical carte and order entry system.  The Company also provides training and maintenance services.

Findex Inc plans, develops and maintains software products specialized in healthcare.  The Company also builds and provides medical net-work system for medical industry.

Medical Data Vision Co.,Ltd. was founded in 2003. The company's line of business includes developing integrated medical information systems, analysis of medical information, and business consulting for medical institutions.

SHIP HEALTHCARE HOLDINGS, INC. mainly distributes medical equipment and physics & chemistry equipment.  The Company also sells equipment used for medical facility and office automation.  Ship Healthcare provides integrated consultation as well as maintenance services.

MANI, INC. manufactures medical goods and equipment.  The Company's products include threads and needles for surgeries, surgical knives for eye surgeries, and dental instruments and equipment.

CE Holdings Co Ltd develops and sells packaged medical information software for hospital uses.  The Company also develops software upon clients' request.  CSI sells system equipment and provides consulting services.

TOHO HOLDINGS CO., LTD. is a wholesaler of medicine and medical tools and equipment.  The Company mainly sells to hospitals and pharmacies.  Toho's merchandise are nursing products mainly for elderly and handicapped, and these include pajamas and bedding products, wheelchairs, walkers, diapers, bathing products, and health foods.

AS ONE CORPORATION wholesales laboratory equipment, scientific equipment, and related products.  The Company sells its products through catalogs and provides quick delivery by using the on-line ordering system.

DATA HORIZON CO., LTD. provides billing data services for welfare and medical organizations. The Company also provides consultation services on public health.

NIPRO CORPORATION manufactures medical products.  The Company's products include artificial dialysis and blood transfusion equipment, hypodermic syringes, and glass products for medical use.

Winning Health Technology Group Co., Ltd. develops and sells medical software, and provides technology supporting services and comprehensive information technology solutions to the health care industry.

Winning Health Technology Group Co., Ltd. A (300253 CH)

Winning Health Technology Group Co., Ltd. A

NextGen Healthcare, Inc. develops and markets healthcare information systems. The Company's systems automate medical group practices, physical hospitals, management service organizations, community health centers, and dental schools. NextGen Healthcare offers its services throughout the United States.

Allscripts Healthcare Solutions, Inc. develops and markets clinical software. The Company's products include electronic health records, electronic prescribing, revenue cycle management, practice management, document management, medication services, hospital care management, emergency department information systems and homecare automation.

Allscripts Healthcare Solutions (MDRX US)

Omnicell, Inc. provides an integrated suite of clinical infrastructure and workflow automation solutions for healthcare facilities.  The Company's solutions include pharmacy and supply systems, clinical reference tools, an Internet-based procurement application, and decision support tools.  Omnicell sells and leases its products and services to a range of healthcare facilities.

EMIS Group Plc is a healthcare information technology company. The Company computerizes patients' medical records and allows primary, secondary and community healthcare practitioners to view and contribute to a patient's core medical record.

Craneware plc engages in the development, licensing, and ongoing support of computer software for the United States healthcare industry. The company offers access management and strategic pricing products comprising InSight Medical Necessity, which provides medical necessity validation and advance beneficiary notice creation; and Patient Charge Estimator software, which simplifies the process of providing patient bill estimates for inpatient and outpatient services. It also provides charge capture and pricing solutions include Chargemaster Toolkit that automates chargemaster management processes for capturing optimal legitimate reimbursement for hospitals; Physician Revenue Toolkit, a software for managing physician group charges, codes, RVUs, fee schedules, and related information; Pricing Analyzer software that simplifies the price modeling process; Reference Plus, a platform for hospitals to perform chargemaster analysis; Pharmacy ChargeLink, which improves charge capture, pricing, and cost management; and Supplies ChargeLink that optimize reimbursement for codable supplies by identifying missing or invalid charges, as well as offers supporting modules. In addition, the company offers coding integrity solutions consisting of Bill Analyzer, which automates claim and coding reviews to identify missed charges, billing errors, and categorize areas of risk. Further, it provides revenue recovery and retention solutions, including InSight Audit, a Web-based audit management tool to manage claim audits and workflow from one central location; InSight Payment Variance Analyzer, which identifies, tracks, and helps eliminate revenue lost in the form of underpaid claims; and InSight Denials that analyses, tracks, trends, and reports on denial data. Additionally, the company offers companion implementation and consulting services. Craneware plc was founded in 1999 and is headquartered in Edinburgh, the United Kingdom.

HealthStream, Inc. offers a Web-based solution to the continuing education and training needs of the healthcare community.  The Company distributes numerous hours of continuing education and training content to doctors, nurses, allied health professionals, and other healthcare workers through its network of distribution partners.

Evolent Health, Inc. provides a purpose-built platform, powered by our technology, proprietary processes and integrated services, enables providers to migrate their economic orientation from fee-for-service, or FFS, reimbursement to payment models that reward high-quality and cost-effective care, or value-based payment models.

Simulations Plus, Inc. develops drug discovery and development simulation software, which is licensed to and used in the conduct of drug research for pharmaceutical companies worldwide.  The Company's other businesses are based on its proprietary software technologies and provide support for the emerging pharmaceutical enterprise.

RaySearch Laboratories AB develops methods and software for cancer radiation therapy.  The Company's main product is ORBIT, a software framework for solving optimization problems in radiotherapy, and its modular structure can be adapted to many different types of environments.  RaySearch works with corporations and institutions worldwide, and sells to suppliers of treatment planning systems.

JMDC Inc. offers information services. The Company provides medical data statistics, life insurance data statistics, health data platform management, and other services. JMDC provides its services throughout Japan.

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JMDC (4483 JP)

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