Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>A double dose of StubWorld this week. <a href="https://www.smartkarma.com/entities/swire-pacific-ltd-cl-a" target="_blank" data-smartkarma-citation="entities:10433:1" rel="noopener">Swire Pacific (A) (19 HK)</a>'s P/B is back down to 0.31x as <a href="https://www.smartkarma.com/entities/cathay-pacific-airways-ltd" target="_blank" data-smartkarma-citation="entities:243:1" rel="noopener">Cathay Pacific (293 HK)</a> tackles alleged language bias by flight attendants.</li>
<li>Preceding my comments on Japan Post are the current setup/unwind tables for Asia-Pacific Holdcos.</li>
<li>These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.</li>
</ul>


A double dose of StubWorld this week. Swire Pacific (A) (19 HK)'s P/B is back down to 0.31x as Cathay Pacific (293 HK) tackles alleged language bias by flight attendants.
Preceding my comments on Japan Post are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.


StubWorld: Swire Drifts Lower As Cathay Faces Discrimination Claim

Travis Lundy

<ul>
<li>In August this year, Swire Pacific started a buyback programme for up to HK$4.0 billion worth of their shares (<a href="https://www.smartkarma.com/entities/swire-pacific-ltd-cl-a" target="_blank" data-smartkarma-citation="entities:10433:1" rel="noopener">Swire Pacific (A) (19 HK)</a> | <a href="https://www.smartkarma.com/entities/swire-pacific-ltd" target="_blank" data-smartkarma-citation="entities:23726:1" rel="noopener">Swire Pacific (B) (87 HK)</a>).</li>
<li>The shares went up. And B briefly outperformed A, but since then, the B/A ratio has fallen and my impression was Swire may have been misinterpreting the buyback rules.</li>
<li>Swire had been buying both every day. But they've been Buying Bs but no As for the last ten days in a row. This begs a few questions.</li>
</ul>


In August this year, Swire Pacific started a buyback programme for up to HK$4.0 billion worth of their shares (Swire Pacific (A) (19 HK) | Swire Pacific (B) (87 HK)).
The shares went up. And B briefly outperformed A, but since then, the B/A ratio has fallen and my impression was Swire may have been misinterpreting the buyback rules.
Swire had been buying both every day. But they've been Buying Bs but no As for the last ten days in a row. This begs a few questions.


<ul>
<li>The Swire buyback has been impressive. In 27 trading days they have bought back 26.8% of teh HK$4bn promised. In that period, participation has been aggressive.</li>
<li>Swire has bought back As at a pace of 52% of pre-buyback one-year ADV. For Bs, it has been 105%. But Bs have dramatically underperformed As on "HK Re-opening" trades.</li>
<li>Historically, when B/A gets more than 6% from 3mo Avg VWAP Ratio, there is statistically significant reversion. We are now at 6.8%. I'd buy B vs A.</li>
</ul>


The Swire buyback has been impressive. In 27 trading days they have bought back 26.8% of teh HK$4bn promised. In that period, participation has been aggressive.
Swire has bought back As at a pace of 52% of pre-buyback one-year ADV. For Bs, it has been 105%. But Bs have dramatically underperformed As on "HK Re-opening" trades.
Historically, when B/A gets more than 6% from 3mo Avg VWAP Ratio, there is statistically significant reversion. We are now at 6.8%. I'd buy B vs A.


Swire B Vs A - Surprising on Regs, Surprising on Risk; Short-Tm Displacement Now in 99th Percentile

<ul>
<li>After Hong Kong announced abandoning hotel quarantine for inbound travellers, <a href="https://www.smartkarma.com/entities/cathay-pacific-airways-ltd" target="_blank" data-smartkarma-citation="entities:243:1" rel="noopener">Cathay Pacific (293 HK)</a> gained 2.6% last Friday, but finished up just 1%. That probably sums up the situation.</li>
<li>Preceding my comments on Cathay and <a href="https://www.smartkarma.com/entities/swire-pacific-ltd-cl-a" target="_blank" data-smartkarma-citation="entities:10433:1" rel="noopener">Swire Pacific (19 HK)</a> are the current setup/unwind tables for Asia-Pacific Holdcos. </li>
<li>These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.</li>
</ul>


After Hong Kong announced abandoning hotel quarantine for inbound travellers, Cathay Pacific (293 HK) gained 2.6% last Friday, but finished up just 1%. That probably sums up the situation.
Preceding my comments on Cathay and Swire Pacific (19 HK) are the current setup/unwind tables for Asia-Pacific Holdcos. 
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.


StubWorld: Swire/Cathay And Hong Kong's "Opening"

<ul>
<li>And on the 6th Day, <a href="https://www.smartkarma.com/entities/swire-pacific-ltd-cl-a" target="_blank" data-smartkarma-citation="entities:10433:1" rel="noopener">Swire Pacific (A) (19 HK)</a> commenced its buyback. </li>
<li>It took until the 6th day for Swire to start its buyback, and now that it has started, we may have a little better idea of the parameters. And impact. </li>
<li>So far, they appear to be bending the rules a little, but it is still the way it should be. So there is still a trade here to do.</li>
</ul>


And on the 6th Day, Swire Pacific (A) (19 HK) commenced its buyback. 
It took until the 6th day for Swire to start its buyback, and now that it has started, we may have a little better idea of the parameters. And impact. 
So far, they appear to be bending the rules a little, but it is still the way it should be. So there is still a trade here to do.


Swire Buyback Update - It's On, and Regulatorily Constrained

Hong Kong

Swire Pacific Limited operates as a holding company. The Company, through its subsidiaries, focuses on real estate, aviation, beverage, industrial, marine services, trading, and industrial businesses. Swire Pacific operates worldwide.

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Swire Pacific (B) (87 HK)

StubWorld: Swire Drifts Lower As Cathay Faces Discrimination Claim

I prefer Pac here over Props, but it's not a high-conviction trade. Given the rebound, you could probably look to unwind a long Swire Pac (B) vs...

David Blennerhassett

Swire Now Buying Back B Shares Only

Swire's buyback has been going on 5 months. They are now 65.6% done. A new development is that in the last ten days, they have only been buying B...

Travis Lundy

Swire B Vs A - Surprising on Regs, Surprising on Risk; Short-Tm Displacement Now in 99th Percentile

Swire B vs A over the last 20 years shows unsurprising reversal patterns. We're in the right zone now to be reasonably confident. The buyback is...

Travis Lundy

StubWorld: Swire/Cathay And Hong Kong's "Opening"

I still like Swire Pac at 0.33x P/B, but it's had a great run after the buyback. If you had the trade on - long Swire Pac, Short Prop - I'd look to...

David Blennerhassett

Swire Buyback Update - It's On, and Regulatorily Constrained

Swire Pacific has started its buyback. The rules suggest they are constrained to buying 77 or Swire B shares for every 23 Swire As bought. They are...

Travis Lundy

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