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

About 18 months ago, <a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" data-smartkarma-citation="accounts:25" rel="noopener">Travis Lundy</a> set up an interesting framework to look at TOPIX Inclusions over time, showing how different size categories performed in the run-up to inclusion then after inclusion. That was in <a href="https://www.smartkarma.com/insights/historical-topix-inclusions-how-do-they-do-around-inclusion-date" target="_blank" data-smartkarma-citation="insights:26751" rel="noopener">Historical TOPIX Inclusions:  How Do They Do Around Inclusion Date?</a> I published <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> last month to enhance and update the analysis to include combination inclusion event size and impact size as parameters by which to understand reward: risk characteristics. This month I published <a href="https://www.smartkarma.com/insights/topix-inclusion-pre-events-recent-tachiaigai-bunbai-round-up" target="_blank" data-smartkarma-citation="insights:40509" rel="noopener">TOPIX Inclusion Pre-Events: Recent "Tachiaigai Bunbai" Round-Up</a> which discussesThere are currently 10 live pre-events, 5 live inclusion events, and a half dozen just-post-inclusion names from May 2020.This insight provides a recap of what has happened this month in each category, and the charts can show you where each category of live event situates itself on its historical pattern.The three TOPIX inclusions for May in the non-AVOID category outperformed TOPIX by an average of just over 50% from announcement to inclusion. We wrote on all three, being <a href="https://www.smartkarma.com/insights/topix-inclusion-retail-partners-8167-jp" target="_blank" rel="noopener">especially bullish on the one which went up 80%</a>. This category of event trade can offer significantly interesting trading opportunities. We encourage investors to track them.

About 18 months ago, Travis Lundy set up an interesting framework to look at TOPIX Inclusions over time, showing how different size categories performed in the run-up to inclusion then after inclusion. That was in Historical TOPIX Inclusions:  How Do They Do Around Inclusion Date? I published Historical TOPIX Inclusions:  What Flavor Performs Best? last month to enhance and update the analysis to include combination inclusion event size and impact size as parameters by which to understand reward: risk characteristics. This month I published TOPIX Inclusion Pre-Events: Recent "Tachiaigai Bunbai" Round-Up which discussesThere are currently 10 live pre-events, 5 live inclusion events, and a half dozen just-post-inclusion names from May 2020.This insight provides a recap of what has happened this month in each category, and the charts can show you where each category of live event situates itself on its historical pattern.The three TOPIX inclusions for May in the non-AVOID category outperformed TOPIX by an average of just over 50% from announcement to inclusion. We wrote on all three, being especially bullish on the one which went up 80%. This category of event trade can offer significantly interesting trading opportunities. We encourage investors to track them.

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

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TOPIX Inclusion Trade Summary: June 2020

About 18 months ago, Travis Lundy set up an interesting framework to look at TOPIX Inclusions over time, showing how different size categories...

Janaghan Jeyakumar, CFA

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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