Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Ten months ago, in the 2020FQ2 earnings call for <a href="https://www.smartkarma.com/entities/mcdonald-s-corp" target="_blank" data-smartkarma-citation="entities:1425:1" rel="noopener">Mcdonald's Corp (MCD US)</a>, CFO Kevin Ozan brought up the subject of <a href="https://www.smartkarma.com/entities/mcdonald-s-holdings-co-japan" target="_blank" data-smartkarma-citation="entities:985:1" rel="noopener">Mcdonald's Holdings Co Japan (2702 JP)</a> a bit over 22 minutes into the call, saying that McDs fully supported McDs Japan, but they would be selling down their stake from ~49% and would in any case retain a stake of at least 35%. They started selling in the market. <div>On 20 August, MCD <a href="https://disclosure.edinet-fsa.go.jp/E01EW/download?uji.verb=W0EZA104CXP001003Action&amp;uji.bean=ee.bean.parent.EECommonSearchBean&amp;PID=W1E63011&amp;SESSIONKEY=1597918899762&amp;lgKbn=2&amp;pkbn=0&amp;skbn=1&amp;dskb=&amp;askb=&amp;dflg=0&amp;iflg=&amp;preId=1&amp;mul=2702&amp;lpr=on&amp;cal=1&amp;era=R&amp;yer=&amp;mon=&amp;pfs=4&amp;row=100&amp;idx=0&amp;str=&amp;kbn=1&amp;flg=&amp;syoruiKanriNo=&amp;s=S100JKOI" target="_blank" rel="noopener">announced</a> it had sold a bit over 3% of McD J, selling 4.2mm shares at ¥5,340/share on 19 August 2020. On 20 November 2020, they <a href="https://disclosure.edinet-fsa.go.jp/E01EW/download?uji.verb=W0EZA104CXP001003Action&amp;uji.bean=ee.bean.parent.EECommonSearchBean&amp;PID=W1E63011&amp;SESSIONKEY=1614669632749&amp;lgKbn=2&amp;pkbn=0&amp;skbn=1&amp;dskb=&amp;askb=&amp;dflg=0&amp;iflg=&amp;preId=1&amp;mul=2702&amp;lpr=on&amp;cal=1&amp;era=R&amp;yer=&amp;mon=&amp;pfs=4&amp;row=100&amp;idx=0&amp;str=&amp;kbn=1&amp;flg=&amp;syoruiKanriNo=&amp;s=S100K899" target="_blank" rel="noopener">announced</a> they had sold another 4,000,000 shares at ¥5,370/share on 19 November. On 1 March, another tranche of 4,000,000 shares was transacted at ¥5,280/share (<a href="https://disclosure.edinet-fsa.go.jp/E01EW/download?uji.verb=W0EZA104CXP001003Action&amp;uji.bean=ee.bean.parent.EECommonSearchBean&amp;PID=W1E63011&amp;SESSIONKEY=1623305683613&amp;lgKbn=2&amp;pkbn=0&amp;skbn=1&amp;dskb=&amp;askb=&amp;dflg=0&amp;iflg=&amp;preId=1&amp;mul=2702&amp;lpr=on&amp;cal=1&amp;era=R&amp;yer=&amp;mon=&amp;pfs=4&amp;row=100&amp;idx=0&amp;str=&amp;kbn=1&amp;flg=&amp;syoruiKanriNo=&amp;s=S100KWJA" target="_blank" rel="noopener">reported</a> 4 March). </div>Today, with half an hour to the close, McDs announced it had reduced its stake to 37.95%, which meant they sold 3.8mm shares. There is a pattern to these transactions which was not subtle at the beginning but may be becoming more flexible as time goes on. It is reasonable for those who understand how these things work in the U.S. And understanding how they work tells you what the supply looks like going forward. And the timing of other parts of the context will tell you about McDs and TSE Prime.

Ten months ago, in the 2020FQ2 earnings call for Mcdonald's Corp (MCD US), CFO Kevin Ozan brought up the subject of Mcdonald's Holdings Co Japan (2702 JP) a bit over 22 minutes into the call, saying that McDs fully supported McDs Japan, but they would be selling down their stake from ~49% and would in any case retain a stake of at least 35%. They started selling in the market. On 20 August, MCD announced it had sold a bit over 3% of McD J, selling 4.2mm shares at ¥5,340/share on 19 August 2020. On 20 November 2020, they announced they had sold another 4,000,000 shares at ¥5,370/share on 19 November. On 1 March, another tranche of 4,000,000 shares was transacted at ¥5,280/share (reported 4 March). Today, with half an hour to the close, McDs announced it had reduced its stake to 37.95%, which meant they sold 3.8mm shares. There is a pattern to these transactions which was not subtle at the beginning but may be becoming more flexible as time goes on. It is reasonable for those who understand how these things work in the U.S. And understanding how they work tells you what the supply looks like going forward. And the timing of other parts of the context will tell you about McDs and TSE Prime.

McDs Japan (2702) Update: Parent Selldown 80% Done, or 63.6% Done.

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

In this insight, we take a look at the monthly performance of the trading opportunities surrounding TOPIX Index Rebalance events. After a dry spell in March and April, two new Section Transfers were announced in May 2021: <a href="https://www.smartkarma.com/entities/anshin-guarantor-service-co" target="_blank" data-smartkarma-citation="entities:33234:1" rel="noopener">Anshin Guarantor Service (7183 JP)</a> and <a href="https://www.smartkarma.com/entities/nomura-micro-science-co-ltd" target="_blank" data-smartkarma-citation="entities:11317:1" rel="noopener">Nomura Micro Science (6254 JP)</a>. On the other hand, we also witnessed some Inclusion Events resulting from TSE1 Direct Listings: <a href="https://www.smartkarma.com/entities/tess-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:32979:1" rel="noopener">Tess Holdings Co Ltd (5074 JP)</a> and <a href="https://www.smartkarma.com/entities/kibun-foods-inc" target="_blank" data-smartkarma-citation="entities:33019:1" rel="noopener">Kibun Foods Inc (2933 JP)</a>. Below is a discussion of the situations covered by Quiddity in the Pre-event, Live-event, and Post-event categories during the month of May 2021.

In this insight, we take a look at the monthly performance of the trading opportunities surrounding TOPIX Index Rebalance events. After a dry spell in March and April, two new Section Transfers were announced in May 2021: Anshin Guarantor Service (7183 JP) and Nomura Micro Science (6254 JP). On the other hand, we also witnessed some Inclusion Events resulting from TSE1 Direct Listings: Tess Holdings Co Ltd (5074 JP) and Kibun Foods Inc (2933 JP). Below is a discussion of the situations covered by Quiddity in the Pre-event, Live-event, and Post-event categories during the month of May 2021.   

In January and February 2021 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 (application deadline November 1, 2020). In contrast, not a single TSE1 Section Transfer was announced in the months of March and April 2021. However, during the month of April, we witnessed TSE's Annual Liquidity Factor Review which caused dozens of stocks to enjoy Index Upweights during the April-end Inclusion Event collectively amount to an estimated upweight size of approximately US$1bn. Below is a look at the performance of the TOPIX-related event trades covered by Quiddity in the Pre-event, Live-event, and Post-event categories during the month of April 2021.

In January and February 2021 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 (application deadline November 1, 2020). In contrast, not a single TSE1 Section Transfer was announced in the months of March and April 2021. However, during the month of April, we witnessed TSE's Annual Liquidity Factor Review which caused dozens of stocks to enjoy Index Upweights during the April-end Inclusion Event collectively amount to an estimated upweight size of approximately US$1bn. Below is a look at the performance of the TOPIX-related event trades covered by Quiddity in the Pre-event, Live-event, and Post-event categories during the month of April 2021.  

TOPIX Inclusion Trade Summary: April 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.

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. 

David Blennerhassett

Last Week in Event SPACE: China Youzan, Mcdonald's, Beijing Jingneng, Ricoh, Melco Resorts, LG Corp

Japan

McDonald's Holdings Company (Japan), Ltd. operates a hamburger fast food restaurant chain throughout Japan.  The Company operates its own stores and franchise stores.

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Mcdonald's Japan (2702 JP)

McDs Japan (2702) Update: Parent Selldown 80% Done, or 63.6% Done.

The McDonalds selldown of MCD Japan shares took another step Thursday 10 June. Optically it is 80% done. Economically, it's about 64% done. There's...

Travis Lundy

TOPIX Inclusion Trade Summary: May 2021

TOPIX Index Changes Review for May 2021. There are a couple of new names, a list of ongoing pre-event trades, a couple of post-event trades. Things...

Janaghan Jeyakumar, CFA

TOPIX Inclusion Trade Summary: April 2021

April TOPIX Index Events had a great month. Whether it be the single inclusion Rakus (3923), the LF reweight baskets, or the normal TOPIX month-end...

Janaghan Jeyakumar, CFA

TOPIX Inclusion Trade Summary: Mar 2021

The March 2021 TOPIX Index Inclusion Event and Pre-Event Summary, with links to all the greatest hits. The model performed as expected. The best...

Janaghan Jeyakumar, CFA

Last Week in Event SPACE: China Youzan, Mcdonald's, Beijing Jingneng, Ricoh, Melco Resorts, LG Corp

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

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