Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

<ul>
<li>This article will discuss points with reference to the March 16 Nikkei article and focused on the corporate governance practices of companies in which activists have recently raised their shareholdings.</li>
<li>It isn't reasonable to link the investment activity of activists to the number of M&amp;As, nor is it reasonable to discuss their performance over a short period in their mandate.</li>
<li>Looking at the corporate governance status of the portfolio companies, excluding Monex Group, which generally responds well to many of the criteria, these companies are facing some challenges.</li>
</ul>


This article will discuss points with reference to the March 16 Nikkei article and focused on the corporate governance practices of companies in which activists have recently raised their shareholdings.
It isn't reasonable to link the investment activity of activists to the number of M&amp;As, nor is it reasonable to discuss their performance over a short period in their mandate.
Looking at the corporate governance status of the portfolio companies, excluding Monex Group, which generally responds well to many of the criteria, these companies are facing some challenges.


Japan's Governance: About the Article on Activist

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>We continue to see some encouraging signs that suggest that the lows may have been established for this correction.</li>
<li>We still believe a bottoming process would likely take weeks or potentially months and could come with more tests of the lows -- or even an undercut.</li>
<li>With that said, we continue to see attractive and actionable setups, primarily within cyclical value (Energy, Materials, Manufacturing, Transportation, and Financials).</li>
</ul>


We continue to see some encouraging signs that suggest that the lows may have been established for this correction.
We still believe a bottoming process would likely take weeks or potentially months and could come with more tests of the lows -- or even an undercut.
With that said, we continue to see attractive and actionable setups, primarily within cyclical value (Energy, Materials, Manufacturing, Transportation, and Financials).


Encouraging Signs, But Concerns Still Outweigh; Buying Materials, Energy, Industrials, Health Care

<ul>
<li>The Nikkei published articles about the fact that the total dividends paid by companies for FY3/2022 is expected to reach a record high. I would like to discuss the topics.</li>
<li>Market capitalization shows a different trend from the increase in total net profit, and the movement in market capitalization and dividend payout ratio has strengthened over the past 2 years.</li>
<li>Examining separately for pre-COVID-19 pandemic and post-COVID-19 periods, dividend payout ratios are more inversely correlated with total net income and more positively correlated with market capitalization in the post-COVID-19 period.</li>
</ul>


The Nikkei published articles about the fact that the total dividends paid by companies for FY3/2022 is expected to reach a record high. I would like to discuss the topics.
Market capitalization shows a different trend from the increase in total net profit, and the movement in market capitalization and dividend payout ratio has strengthened over the past 2 years.
Examining separately for pre-COVID-19 pandemic and post-COVID-19 periods, dividend payout ratios are more inversely correlated with total net income and more positively correlated with market capitalization in the post-COVID-19 period.


Japan's Governance: About the Articles on Record-High Total Dividends Paid

<ul>
<li>Global equity indexes have staged impressive rallies from oversold levels, and certain hard-hit areas in Europe (STOXX600 Technology, Industrial Goods &amp; Services, and Chemicals Sectors) display bullish short-term price reversals.</li>
<li>We view this as a <em>potential</em> signal that the lows may have been established for this correction, but we need to see more upside follow-through.</li>
<li>Regardless, we want to stick with Sectors and stocks that have remained technically attractive throughout this pullback, <em>not</em> on areas that are just now spiking from oversold levels within downtrends.</li>
</ul>


Global equity indexes have staged impressive rallies from oversold levels, and certain hard-hit areas in Europe (STOXX600 Technology, Industrial Goods &amp; Services, and Chemicals Sectors) display bullish short-term price reversals.
We view this as a potential signal that the lows may have been established for this correction, but we need to see more upside follow-through.
Regardless, we want to stick with Sectors and stocks that have remained technically attractive throughout this pullback, not on areas that are just now spiking from oversold levels within downtrends.


Value Remains Leadership; Actionable Ideas: Energy, Financials, Industrials, and Materials

<ul>
<li>During the period from December 2020 to February 2022, the increase in foreign ownership and the increase in Tobin's q contributed to the increase in market capitalization.</li>
<li>Since it's difficult to expect board practices to directly affect market capitalization over one-year, I maintain the hypothesis that improving board practices raise it by leading to improving key actions.</li>
<li>Regarding key actions, rather than implementation of individual shareholder return policies alone, systematic implementation of such policies in the context of growth and capital allocation management policies is more effective.</li>
</ul>


During the period from December 2020 to February 2022, the increase in foreign ownership and the increase in Tobin's q contributed to the increase in market capitalization.
Since it's difficult to expect board practices to directly affect market capitalization over one-year, I maintain the hypothesis that improving board practices raise it by leading to improving key actions.
Regarding key actions, rather than implementation of individual shareholder return policies alone, systematic implementation of such policies in the context of growth and capital allocation management policies is more effective.


Japan's Governance: What Are the Effective Factors for Stock Returns?

Japan

The TOPIX, also known as the Tokyo Stock Price Index, is a capitalization-weighted index of all companies listed on the First Section of the Tokyo Stock Exchange. The index is supplemented by the subindices of the 33 industry sectors. The index calculation excludes temporary issues and preferred stocks, and has a base value of 100 as of January 4, 1968.

TSE Tokyo Price Index TOPIX (TPX INDEX)

Japan's Governance: About the Article on Activist

This article will discuss points with reference to March 16 Nikkei article and focused on the corporate governance practices of companies in which...

Metrical Inc

Encouraging Signs, But Concerns Still Outweigh; Buying Materials, Energy, Industrials, Health Care

We continue to see some encouraging signs that suggest that the lows may have been established for this correction. Still, cyclical value remains...

Vermilion Research

Japan's Governance: About the Articles on Record-High Total Dividends Paid

The Nikkei Shimbun published articles about the fact that the total dividends paid by companies for FY3/2022 is expected to reach a record high. I...

Metrical Inc

Value Remains Leadership; Actionable Ideas: Energy, Financials, Industrials, and Materials

We are sticking with Sectors and stocks that have remained technically sound throughout this correction, not on areas that are just now spiking...

Vermilion Research

Japan's Governance: What Are the Effective Factors for Stock Returns?

This article will try to explore what factors were effective in terms of stock returns by analyzing Metrical universe of 1,487 companies, which are...

Metrical Inc