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Event-Driven and Index Rebalance

Apr 27
0

Weekly Top Ten Event-Driven and Index Rebalance – Apr 27, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. Zomato/Eternal: Lower Foreign Ownership Limits & The BIG Passive Selling

By Brian Freitas, Periscope Analytics

  • Zomato (ZOMATO IN), now Eternal, listed in July 2021 with a Foreign Ownership Limit (FOL) of 100%. Since listing, foreign ownership has dropped from over 70% to just under 45%.
  • Eternal is looking to cap foreign ownership at 49.5% to continue qualifying as an Indian-Owned-and-Controlled Company. That will give the company greater operational flexibility, especially for inventory ownership.
  • The FOL decrease will result in selling from passive global index trackers. With the stock 23.5% off its highs and a steady increase in futures open interest, covering could ensue.

2. Swiggy (SWIGGY IN): US$7.6bn Lock-Up Expiry & Index Inclusion

By Brian Freitas, Periscope Analytics

  • Swiggy (SWIGGY IN) listed in November 2024 and around 85% of the shares outstanding (US$7.6bn) will unlock on 13 May.
  • Nearly 80% of the shares that unlock are held by pre-IPO PE/VC investors and they are 100% in the money in most cases. Expect the selldown to commence soon.
  • Swiggy (SWIGGY IN) should be added to one global index in June, while inclusion in the other global index will require a small price increase or selling from PE/VC investors.

3. Merger Arb Mondays (21 Apr) – ENN Energy, Canvest, OneConnect, Makino, Shibaura, Welcia, Topcon

By Arun George, Global Equity Research Ltd

4. StubWorld: GMO Internet (4784) Will Be Squeezy. Until It’s Not.

By David Blennerhassett, Quiddity Advisors

  • Negligible float, 150x+ forward earnings – yes, investors can afford NOT to have GMO Internet (4784 JP) in their portfolio.
  • Preceding my comments on the GMO group are the current setup/unwind tables for Asia-Pacific Holdcos.
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

5. Poon Moves On Dickson Concepts (113 HK)’s Cash Hoard?

By David Blennerhassett, Quiddity Advisors

  • Dickson Concepts Intl (113 HK) (DC), which is principally engaged in the sale of luxury goods business, is suspended pursuant to the Takeovers Code.
  • DC’s Chairman, Dickson Poon (& spouse), hold 60.5%. Super-net-cash rich DC is trading in sync with historical metrics. 1H25 (Mar Y/E) net profit dropped 40.1%. Shares are roughly flat yoy. 
  • Given DC’s cash hoard, taking the company private makes sense. I doubt Poon is seeking to exit his stake.

6. *NEW* USTR Section 301 Proposed Actions on China Maritime Dominance

By Travis Lundy, Quiddity Advisors

  • Biden’s USTR came out with a flawed Section 301 report on Chinese maritime “dominance” in January. It is not that China shipbuilding is not dominant, but the report was flawed.
  • In February/March (flawed) measures were proposed. Then mostly minimally-insightful hearings were held. Then Trump came out with an Executive Order “Restoring America’s Maritime Dominance” (that requires looking back 80yrs). 
  • Now we have new USTR Proposed Measures which water down the old ones quite considerably.

7. JAFCO (8595) Good Results, Higher Div, Buyback, More Plans; Not Quite There, But Maybe Will Be Later

By Travis Lundy, Quiddity Advisors

  • At noon today, Jafco Co Ltd (8595 JP) announced full year (to March 2025) results. Revenues were up 21.4% this year, OP +49.7%, and Net Income +27.8%.
  • The company announced a ¥5bn buyback, and also announced a new dividend policy of 6% DOE or 50% payout ratio. As it is a markets business, there is no guidance. 
  • The stock popped significantly in the PM session, but the market zeitgeist is a tailwind. And there is supportive new news.

8. Mayne Pharma (MYX AU): This Is A Buy

By David Blennerhassett, Quiddity Advisors

  • On the 21st Feb 2025, Mayne Pharma (MYX AU), a leader in dermatology and women’s health, entered into a Scheme Implementation Deed with US-based pharmaceutical outfit, Cosette Pharmaceuticals.
  • Cosette is offering A$7.40/share, a 37% premium to last close. The Offer has the backing of Mayne’s two largest shareholder, Viburnum and Bruce Mathieson, collectively holding 14.1%.
  • Mayne has now revised the Scheme timeline, with completion targeted late June, early July. This is done. 

9. Fujitsu (6702) – Earnings/Guidance OK, Margins Better, But New Quiddity Buyback Data Tool 🥳

By Travis Lundy, Quiddity Advisors

  • Fujitsu Earnings. Revenues +2.1%, OP +77.5%, Pretax +65.1%, Net -13.0% (basis effect from FY23 one-offs). Forecast? Revs -2.8%, OP/adj +35.8%/+17.2%, Net/adj +77.4%/+3.7%. All guided measures shy vs the Street consensus.
  • The company presented a progress update on its Medium-Term Management Plan. Core profits are better. Things are improving. 
  • The company also announced a big 11-month ¥170bn buyback. Last year’s was ¥180bn (completed 24 March). Worth checking out the details (and our brand-new buyback tool)

10. Korea Dems’ Surprise Proposal: Separate Tax for Dividends Over 35% Payout

By Sanghyun Park, Clepsydra Capital

  • The bill submitted by the Democratic Party today highlights that separate taxation on dividend income applies only to dividends from companies with a 35% payout ratio or higher.
  • We might see re-rating on dividend stocks with solid cash flow but below 35%, especially banks over telcos. Holdcos like Samsung C&T, LG, and Hyundai Glovis could attract attention too.
  • Dark horses like NAVER, with earnings potential, and Samsung Electronics, currently at 25%, could attract attention if they increase payouts to 35%.
Apr 20
0

Weekly Top Ten Event-Driven and Index Rebalance – Apr 20, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. What if China ADRs Are Delisted from US Exchanges?

By Brian Freitas, Periscope Analytics

  • We see 281 Chinese companies listed on U.S Stock Exchanges with a total market cap of US$869bn. 32 of these companies are listed on the HKEX (388 HK). 
  • If the rumours of Chinese stocks being delisted from U.S. Exchanges gathers steam, we could see a wave of secondary listings in Hong Kong.
  • PDD Holdings, Full Truck Alliance, Vipshop Holdings, TAL Education and ZEEKR are the largest China ADRs with no HK listing and could come under pressure.

2. Suzuki Motor (7269 JP) Placement: Likely to Price Today; 7-8% Underperformance Vs Peers/TOPIX

By Brian Freitas, Periscope Analytics

  • Tokio Marine & Nichido Fire Insurance and Sompo Japan Insurance are looking to raise US$1.2bn by offloading their entire stakes in Suzuki Motor by way of a secondary offering.
  • Suzuki Motor (7269 JP) stock is flat since the announcement of the placement but has underperformed its peers and the TSE Tokyo Price Index TOPIX (TPX INDEX). 
  • With the placement being less than 5% of the number of shares outstanding, there is unlikely to be any immediate passive inflow which could pressure the stock.

3. The Skew in the Tsuruha-Welcia-Aeon Combination

By Travis Lundy, Quiddity Advisors

  • Tsuruha Holdings (3391 JP), Welcia Holdings (3141 JP), and Aeon Co Ltd (8267 JP) announced their deal whereby Tsuruha merges with Welcia in December, and Aeon gains control of MERGECO.
  • Orbis Investments – owner of 9.7% of shares out – complained. I think with good reason. Tsuruha is trading a little expensive to the ratio, but there’s 7.5mos to go. 
  • Interestingly, there’s real skew on this trade. It’s not overly complicated, and it is worthwhile thinking about it.

4. “Tiny Win for Guess The Ratio” Aeon (8267) Pays a SMALL Premium for Aeon Mall (8905)

By Travis Lundy, Quiddity Advisors

  • In an announcement after the close Friday 11 April, Aeon Co Ltd (8267 JP) and AEON Mall (8905 JP) announced their merger ratio, and timing. 
  • The ratio is 0.65 to 1.0, meaning Aeon Mall shareholders don’t get a lot of credit for their real estate. The timing is short-dated. The AGM is end-May. Merger July1. 
  • This may be a tad light, but it is a done deal. Active shareholder base is almost all retail and crossholders+dom passive gets Aeon to 70%. 

5. Chagee Holdings (CHA US) IPO: Global Index Inclusion Timeline

By Brian Freitas, Periscope Analytics

  • Chagee Holdings (CHA US) is looking to raise up to US$473m in its IPO, valuing the company at up to US$5.2bn. The offering is expected to price today, list tomorrow.
  • Media reports indicate that cornerstone investors have indicated demand for US$205m of the offering. There is no mention of a lock-up on those investors yet.
  • The stock could be added in one global index in August (with a higher probability of inclusion in November), while inclusion in the other global index is likely in December.

6. FSS Bans Arb in Local MM Books: Identifying Opportunities from Short-Term Inefficiencies

By Sanghyun Park, Clepsydra Capital

  • The FSS is banning arb trades under the MM book, requiring separate books for any arb positions to keep them distinct from MM flow.
  • Most local shops lack the resources to set up a separate arb desk. Splitting teams, creating new workflows, and hiring extra staff isn’t feasible given their tight P&L.
  • Building a tracker for MM dropouts could spot dislocations, as the crackdown creates short-term inefficiencies—if we’re dialed in, there’s alpha to be made.

7. Aeon Mall (8905 JP): Aeon (8267 JP)’s Share Exchange Ratio Is Set

By Arun George, Global Equity Research Ltd

  • AEON Mall (8905 JP) announced a share exchange offer by Aeon Co Ltd (8267 JP) at 0.65 Aeon shares per Aeon Mall share, a 30.9% premium to the undisturbed price.
  • The share exchange ratio is reasonable compared to historical price ratios and IFA valuation ranges. The implied offer multiple is attractive compared to peer multiples.
  • Aeon’s 58.16% shareholding ensures that Aeon Mall’s vote on 22 May is low-risk. The share exchange’s effective date is 1 July.

8. TKP Corp (3479) – A Second Big Buyback In Short Order

By Travis Lundy, Quiddity Advisors

  • TKP Corporation (3479 JP) is a fascinating little company. It rents space. From people. To people. Then adds on services. Meeting, recruiting, training, seminar, banquet, party, etc rooms.
  • Last year they bought control of two small businesses to add features. Revenues are up. The new FY suggests revenue growth, OP growth, and now a buyback.
  • The buyback is the interesting bit. They did one last FY with interesting parameters, and Quiddity has a new tool we are trying out, so we showcase an example here.

9. Yageo Bigly Overbids Minebea (+20%) For Shibaura Elec (6957) At ¥5400

By Travis Lundy, Quiddity Advisors

  • In February Yageo Corporation (2327 TT) made an unsolicited bid for Shibaura Electronics (6957 JP) at ¥4,300/share after getting the cold shoulder for months.
  • Minebea Mitsumi (6479 JP) was asked to bid, and they did a week ago, bidding ¥4,500/share. Yesterday the Shibaura CEO was in an article saying an overbid would be considered. 
  • Mid-Day, I boomeranged my piece, saying I thought Yageo would overbid. Today after the close, Yageo has overbid with a whopping ¥5,400/share bid, with unchanged start date of 7 May.

10. [Japan Activism] – ValueAct Agrees to Tender to KKR Topcon (7732) Tender and Join As Buyer

By Travis Lundy, Quiddity Advisors

  • Last night, Topcon Corp (7732 JP) announced that KKR had agreed a deal with ValueAct Capital who owns 14.62% of Topcon to have VAC tender shares and invest in Bidco.
  • Topcon’s Special Committee saw nothing wrong with this in terms of fairness. I think that argument needs to be investigated at a broader level. 
  • If Bidder wants 50.1% control and expects passive to agree, and Bidder gets 50.1% to join Bidco at terms, obviously, majority of minority disappears. This is an unintended loophole. 
Apr 13
0

Weekly Top Ten Event-Driven and Index Rebalance – Apr 13, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. Minebea Mitsumi Overbids Yageo for Shibaura Electronics (6957)

By Travis Lundy, Quiddity Advisors

  • In early February, Yageo Corporation (2327 TT) made an unsolicited bid for Shibaura Electronics (6957 JP) at ¥4,300/share. They had approached in October 2024, and continued approaches through end-January.
  • Shibaura’s bankers approached Minebea Mitsumi (6479 JP) in January. Due diligence, then bids. They bid ¥4,600. Not enough said the SC. Then Trump. Then ¥4,400. Now ¥4,500 accepted 9 April.
  • But Trump tariffs relief came 9 April US time. And the Offer Price is below the mid-point of ALL three different financial advisors. I think this is not done yet.

2. Aussie Arbs: Trump Tariffs And MACs

By David Blennerhassett, Quiddity Advisors

  • Travis Lundy succinctly summarised the Trump Tariffs in Trump Team’s Weird Tariff Math – Not Meant to Be Negotiated. Do read his note.
  • From an arb standpoint, most (all?) NBIOs will likely see a downward revision in pricing. Vote risk should also be reduced.
  • Such tariffs on predominantly domestic businesses should not trigger material adverse changes (MACs) Down Under. But it is still a worthwhile project to dig a little deeper.  

3. HK Merger Arb: Opportunities Amidst the Market Selloff

By Arun George, Global Equity Research Ltd

  • The gross spreads of large HK merger arb situations have increased due to the unfortunate fallout from Trump’s trade war. The HSI closed down 13.2%.
  • We assess the widening spreads of HK’s merger arb situations based on offer structure, preconditions, conditions, and other factors.
  • The deals, ranked in terms of increasing deal risk, are Tam Jai, Soundwill, Vesync, Goldlion, Canvest, ESR, OneConnect, HKBN, and ENN Energy.

4. 7&I (3382) – FY24 Better, FY25 OK, Surprisingly Large Buyback

By Travis Lundy, Quiddity Advisors

  • Today, Seven & I Holdings (3382 JP) reported full-year earnings. The FY2025 guidance looks OK. Not overly exciting. Optically, it falls short, but 7&i guidance includes York only for H1. 
  • The basic outlines of strategy in the Presentation are unchanged from the 6 March strategy report. The company seems convinced an IPO of SEI is a good thing. I’m underwhelmed.
  • The company also announced that it would bring forward ¥600bn of its planned 6-year ¥2trln buyback program, and execute it this year. That’s good. 

5. China ETF Inflows & Implications: Central Huijin’s Huge Buying

By Brian Freitas, Periscope Analytics

  • Nearly US$22bn has flowed into mainland China listed ETFs over the last 3 trading days, reversing outflows that started in mid February.
  • Central Huijin has announced that it will be increasing its ETF holdings to maintain smooth operation of China’s capital markets. The rest of the National Team will be buying too.
  • There are multiple implications of the huge ETF creations in a short time frame and a reversal of flows will lead to a reversion in a bunch of trades.

6. Suzuki Motor (7269 JP) Placement: Limited Index Buying & Weak Markets Could Pressure Stock

By Brian Freitas, Periscope Analytics

  • Tokio Marine & Nichido Fire Insurance and Sompo Japan Insurance are looking to offload their entire stakes in Suzuki Motor (7269 JP) by way of a secondary offering.
  • With the size of the secondary offering less than 5% of the number of shares, there could be no index buying in the short-term and that will pressure the stock.
  • If the overallotment option is exercised and the seller of the shares is currently considered as non-float, there could be small passive buying in the short-term.

7. Hong Kong Arbs: (Largely) Immune From Trump Tariffs

By David Blennerhassett, Quiddity Advisors

  • In Aussie Arbs: Trump Tariffs And MACs, I ran a ruler over the fifteen live deals Down Under, and how they may be affected by the Trump Tariffs.
  • This insight canvasses the ongoing Hong Kong arbs and wording surrounding material adverse changes (MACs). Hong Kong MACs are typically less onerous, and lack specificity, versus Aussie arbs.
  • Although the framework exists for an Offeror to enforce a MAC, I’m not aware of any evidence of this occurring under Hong Kong’s Takeovers Code.

8. Korea Short Selling: Biggest Changes in Shorts & Trade Performance

By Brian Freitas, Periscope Analytics

  • The resumption of short selling in Korea came at a good time for investors, giving them some additional tools to manage market volatility.
  • Short interest has increased from 0.17% to 0.23% of market cap for the KOSPI market and from 0.46% to 0.63% for the KOSDAR market.
  • The KOSPI/KOSDAQ ratio has reverted a bit on profit taking, and the forecast index deletions have recovered a bit but should continue to see increase short interest.

9. MitCorp (8058) BIG Buyback – Share Demand Will Help Weather The Storm

By Travis Lundy, Quiddity Advisors

10. Abacus Storage King (ASK AU) Gets an NBIO from Ki Corp & PSA

By Brian Freitas, Periscope Analytics

  • Abacus Storage King (ASK AU) was demerged from Abacus Property Group in 2023 and the stock has traded in a range since listing.
  • Now, Ki Corp and Public Storage (PSA US) have made a conditional and non-binding proposal to take Abacus Storage King (ASK AU) private at A$1.47/share.
  • The offer is a 27% premium to the last close of the stock and is higher than the price that the stock has traded at since listing.
Apr 06
0

Weekly Top Ten Event-Driven and Index Rebalance – Apr 6, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. Trump Team’s Weird Tariff Math – Not Meant to Be Negotiated

By Travis Lundy, Quiddity Advisors

  • For weeks, if not months, the world has been wondering what the “reciprocal tariffs” would be, and what the logic would be behind them.
  • There is talk of VAT, and NTBs, and huge tariff step-ups after quotas are exceeded (US exports of milk and cheese to Canada – high tariffs, but quotas not exceeded).
  • But a quick check of the math on the Trump Executive Order and Annex I tells you the logic is different than what everyone expected. 

2. BYD (1211 HK): God’s Eye & Potential HSTECH Index Inclusion

By Brian Freitas, Periscope Analytics

3. Korea Short Selling: Off to the Races

By Brian Freitas, Periscope Analytics

  • Short selling in Korea resumes in a couple of hours. Expect heightened volatility for a few days before things settle down.
  • Foreign investors have increased their holdings over the last five weeks and there could be further buying in select stocks on stock price drops.
  • The KOSPI 200 INDEX has outperformed the KOSDAQ 150 Index, and the forecast index deletes have underperformed the indices indicating that there will be positioning for the short-sell resumption.

4. Korea Short Selling: What Happened on Day 1?

By Brian Freitas, Periscope Analytics

5. T&D Holdings (8795) – A Really Good Look (Divs Up, Big Buyback, Good Historical Stats)

By Travis Lundy, Quiddity Advisors

  • Yesterday, post-close, T&D Holdings (8795 JP)  announced ¥40 for 31-Mar-25 FY-end dividend (¥80/yr) and ¥120/share/year in the year to March 2026 on a higher planned payout ratio.
  • The company also announced guidance for Adjusted Profit for 2025 at ¥130bn (up), and guidance for March 2026 at ¥140bn (lower growth than this past year). 
  • They announced the current ¥50bn buyback was 87.5% complete (they have until 13 May to complete) and a new buyback starting 19 May to spend up to ¥100bn over 10.5mos.

6. [Japan Activism] – KKR and JIC Buy Out Topcon (7732 JP) At ¥3,300/Share

By Travis Lundy, Quiddity Advisors

  • The difference between an LBO (Leveraged Buy Out) and an MBO (Management Buy Out) is that an MBO is usually just an LBO where the buyers don’t replace the CEO.
  • After 4+mos  of speculation/noise since a Bloomberg article said Topcon was weighing takeover bids, we have a deal. KKR and JIC will buy out Topcon in an “MBO” at ¥3,300/share.
  • Unusually, the lower limit is 50.1%. This is an OK exit for the “Bad Cops” but not a great one. It should be higher. Start delayed for 4 months.

7. Nikkei 225 Sep25 Rebal: One ADD, One DELETE Still Probable Unless Kokusai Elec (6525) Offering/Split

By Travis Lundy, Quiddity Advisors

  • The March 2025 Nikkei 225 review came out with a sparse set of changes. That gives us hints for the September 2025 review.
  • Kokusai did NOT get added, waiting for a split, an offering, or time to pass. Only one sector change was made. So we see One ADD and One DELETE.
  • The lack of effort to address sector imbalances within the rules suggests the rules are not as hard as people thought. Intra-review changes could be more interesting in years ahead.

8. ENN Energy (2688 HK): This Is An Avoid

By David Blennerhassett, Quiddity Advisors

  • Back on the 26th March, ENN Energy (2688 HK) announced a cash/scrip Offer from ENN Natural Gas (600803 CH), its largest shareholder.
  • Investors hoping for a clean (er) exit, or one where the back-end terms were clearly defined, will be disappointed. And minorities are active in this name.
  • The Offer pivots on where the newly-listed H-shares trade. The IFA’s assessment on the theoretical value of these H-shares is unrealistic. 

9. Shin Kong (2888 TT)/Taishin (2887 TT) Deal Gets FSC Approval – Still A Good Swap

By Travis Lundy, Quiddity Advisors

  • Late Monday, The Financial Supervisory Commission approved the merger where Shin Kong Financial Holding (2888 TT) is to be absorbed by Taishin Financial Holding (2887 TT). Announcement here.
  • Yesterday, the chairmen of both Shin Kong and Taishin decided the merger base date, which has been set a bit further out than even I expected, at 24 July 2025.
  • The terms tightened yesterday. There is still a worthwhile switch to be done (or arb if you have cheap borrow), and NEWCO is cheap to peers, STILL.

10. Merger Arb Mondays (31 Mar) – ENN Energy, ESR, Vesync, Seven & I, Topcon, Sinarmas Land, Gold Road

By Arun George, Global Equity Research Ltd

Mar 30
0

Weekly Top Ten Event-Driven and Index Rebalance – Mar 30, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. Xiaomi (1810 HK)’s US$5bn Placement: Unfavourable Index Dynamics but Strong Momentum

By Brian Freitas, Periscope Analytics

  • Xiaomi Corp (1810 HK) is looking to place 750m shares at a price range of HK$52.8-54.6/share, a 4.2-7.4% discount from last. That could raise up to HK$40.95bn (US$5.27bn).
  • There will be limited passive buying near-term. There will be more passive buying at the end of May. Then there will be passive selling early June.
  • Shorts will be hurting from the relentless move higher in the stock and there could be short covering if the stock moves lower from these levels.

2. ENN Energy (2688 HK) Privatization: Details & Index Implications

By Brian Freitas, Periscope Analytics

3. Shinko Electric (6967) – Chicken and Logistics

By Travis Lundy, Quiddity Advisors

  • The Tender Offer closed end of last week. The bidder JICC-04 got 59.281mm shares. Most of what was left over – perhaps even more than 100%, was passive-owned.
  • More than 100%? How does that work? It works because of how the logistics goes. 
  • And right now, the reason why the stock is trading well through terms is a matter of Chicken and Logistics.

4. Sun Corp (6736) – Still Cheap

By Travis Lundy, Quiddity Advisors

  • Eight months on from the Tender Offer which changed the shape of the shareholder register, Sun Corp (6736 JP) is as cheap to its main asset as it was before.
  • Sun Corp is cheap to its holding in Cellebrite DI (CLBT US). How cheap depends on the form and structure of its eventual exit. 
  • Understanding what the options are (and the dynamics around hedging/exposure) is worthwhile.

5. ENN Energy (2688 HK): ENN Natural Gas’ Preconditional Cash/Scrip Offer

By Arun George, Global Equity Research Ltd

  • ENN Energy (2688 HK) announced a pre-conditional privatisation from ENN Natural Gas (600803 CH)/ENN-NG comprising HK$24.50 cash per share + 2.9427 ENN-NG H Shares per ENN share.
  • The appraised offer value is HK$80.00 (HK$82.35, including the 2024 dividend), which is a tad optimistic. My calculations suggest a realistic offer value range of HK$71.47-76.32. 
  • The offer is final. The precondition satisfaction is low-risk. A high AGM minority participation is a risk, but the scheme vote should pass as the offer terms are reasonable.   

6. Seven & I Holdings (3382 JP): Uncomfortable Truths

By Arun George, Global Equity Research Ltd

  • Seven & I Holdings (3382 JP) has published two documents to respond to misinformation and detail its “constructive engagement” with Alimentation Couche-Tard (ATD CN).
  • The statements underscore the Board’s serious doubts about securing US antitrust approval. The significant discrepancies in the engagement timeline point to two parties at loggerheads. 
  • While the Board claims it is pursuing a dual-track process to create value, the reality is that the process is designed to hinder Couche-Tard’s offer to facilitate the restructuring plan.

7. Tokyu Corp (9005) To Lift Stake in Tokyu REIT (8957) Again – Bigger Than You Think It Is

By Travis Lundy, Quiddity Advisors

  • Today, Tokyu Corp (9005 JP) announced it would increase its stake its family REIT, buying up to 48,880 units or 5.0% of units out over the next six months.
  • This comes a couple of days after Hankyu Hanshin announced the same for its REIT, discussed here. Others have done so before. Tokyu has. Others will do so going forward. 
  • The main reason? Squeeze the ‘share’ price higher. Get the REIT to 1.0x PNAV then stuff it with sponsor-held properties. That’s not bad. The goal is a higher price.

8. 7&I (3382) – Clarifications of Clarifications But Progress Is Apparent

By Travis Lundy, Quiddity Advisors

  • On 10 March, Seven & I Holdings (3382 JP) released a statement about its interactions with Alimentation Couche-Tard (ATD CN). The next day, ATD released its own. They didn’t match. 
  • The 7&i spokesperson admitted one technical point, but investors seemed to believe ATD over 7&i. On 13 March, ATD held a presentation in Tokyo. Materials? Unchanged. Earnings comments? Unchanged.
  • This morning, 7&i released a document which “corrects the record regarding critical false and misleading claims about 7&i’s engagement with Alimentation Couche-Tard (ACT).” OUCH. The stock fell.

9. Fuji Soft (9749 JP) – KKR Does Deal With the Family To Squeeze Out Minorities – You Can Join Too

By Travis Lundy, Quiddity Advisors

  • KKR’s Second Tender Offer for Fuji Soft Inc (9749 JP) ended 19 February 2025 and KKR got a whopping 57.9% after Bain bowed out. It was close.
  • The Nozawa founder said it would not tender. Others family members may have, but now KKR has signed a deal with Nozawa family company YK NFC, to support the squeezeout.
  • Assuming, Nozawa Hiroshi’s stake and the NFC stake remain unchanged, that cements the result of the 25 April AGM. But there may be games to play.

10. Tinycap Cash-Rich Cookpad (2193) With HUGE Buyback. AGAIN

By Travis Lundy, Quiddity Advisors

  • Hugely cash-rich Cookpad Inc (2193 JP) wouldn’t hit my radar except for two things. 1) it was the target of Melco Holdings (6676 JP) chairman Maki-san a few years ago…
  • And 2) they did a huge buyback last year which pumped up the stock very bigly. 
  • Maki-San appears long gone from the shares, but now they are doing another big buyback. Just as bigly. But there are new nuances this year.
Mar 23
0

Weekly Top Ten Event-Driven and Index Rebalance – Mar 23, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. The Japan March-End Rebal and Dividend Trade

By Travis Lundy, Quiddity Advisors

  • Every year it’s the same trade. But sometimes it is not. This year it is Thursday and Friday. Or not.
  • The month-end and quarter-end bring big flows, or not, depending on how things have gone.
  • Over the past 10 years or so, the two-day return on the March trade is pretty good. This year? Well read on!

2. HKBN (1310 HK): MBK Ups Stake Via VLN Conversion

By David Blennerhassett, Quiddity Advisors

  • China Mobile (941 HK) has made a pre-conditional HK$5.23/share voluntary Offer for HKBN Ltd (1310 HK). However, a possible separate Offer from I Squared continues to make the news. 
  • In an unusual move, MBK, via Twin Holding, has converted HK$970.5mn of VLNs, at a whopping HK$11.60/share conversion price, lifting MBK’s stake to 16.39% on a fully diluted basis.
  • Speculation is rife that MBK provides an irrevocable to I Squared for its enlarged shareholding. Maybe. I still don’t see China supporting a U.S.-based infrastructure firm over an SOE .

3. [Activism Japan] Proto Corp (4298 JP) – Kaname Capital Files an Injunction? Bold Strategy, Cotton…

By Travis Lundy, Quiddity Advisors

  • Late on the 17th, Proto Corp (4298 JP) released a filing to the TSE saying activist-ish investor and objector to the current MBO, Kaname Capital, had filed an injunction.
  • The injunction suit against two directors says procedures were unfair and the decision violated the duty of due care. They ask the Court to rule the directors halt support and…
  • …that the MBO actor YOKOYAMA Hiroichi not terminate the offer on 21 March 2025. Injunction filings against directors for Tender Offers are rare for a reason.

4. Ramelius/Spartan Merger: MergeCo Close to ASX100 Index Inclusion

By Brian Freitas, Periscope Analytics

5. Maynilad Water (MYNLD PM): Index Inclusion Timing for a Large Philippines IPO

By Brian Freitas, Periscope Analytics

  • Maynilad Water Services (MYNLD PH) is looking to raise up to US$860m by selling shares at ₱20/share, valuing the company at US$2.82bn.
  • The market cap and free float will depend on the number of shares sold in the IPO and whether the shares in the upsize option are primary or secondary shares.
  • Global index inclusions should take place in November and December, while Philippines Stock Exchange PSEi Index (PCOMP INDEX) inclusion could take place in August 2026.

6. DN Solutions IPO: Index Inclusion Timing Depends on Lock-Up Expiry Schedule

By Brian Freitas, Periscope Analytics

  • DN Solutions (298440 KS) is looking to raise up to KRW 1,573bn (US$1.08bn), valuing the company at KRW 5.66 trillion (US$3.9bn) at the top end of the IPO price range.
  • The highest probability of DN Solutions being added to the KOSPI200 Index is at the June 2026 rebalance. The stock needs to move 60% higher to be added in December 2025.
  • Inclusion in global indices could commence in August/November and will depend on institutional investor lock-up schedules. Flows are small unless the stock moves higher and is included in bigger indices.

7. Canvest (1381 HK): Get Involved

By David Blennerhassett, Quiddity Advisors

  • After SAFE gave the green light on the 19th Feb, I estimated only a week was required to secure the (strangely) outstanding internal guarantees. It took a frustrating three-and-a-half weeks.
  • Nevertheless, all pre-cons are now done. Canvest Environmental (1381 HK)‘s Scheme Document is expected to be dispatched or before the 25th April. 
  • Assuming the Scheme gets up – and it will – expect payment around the 20th June. This is done.

8. ENN Energy (2688 HK): ENN Natural Gas to Launch a Privatisation Offer?

By Arun George, Global Equity Research Ltd

  • ENN Energy (2688 HK) is in a trading halt “pending the issuance of an announcement pursuant to the Hong Kong Code on Takeovers and Mergers containing inside information of the Company.” 
  • ENN Natural Gas (600803 CH), also in a trading halt, is likely seeking to privatise ENN through a Cayman scheme. A high AGM minority participation necessitates an attractive offer.
  • I use several methods to triangulate the likely offer price, which suggests a price range of HK$66.50-85.01, with an average of HK$76.04, a 28% premium to the last close.

9. Makino Milling Machine (6135 JP): Proposes Countermeasures

By Arun George, Global Equity Research Ltd

  • The Makino Milling Machine Co (6135 JP) Board has proposed introducing countermeasures to nudge Nidec Corp (6594 JP) to delay the start of the tender to 9 May. 
  • The countermeasure was likely needed to facilitate a competing offer rather than force Nidec to provide the required information and delay the start (Nidec is still evaluating the request).
  • Nidec’s offer at current terms has a low chance of success, necessitating revised terms. The Board claims that there is a sufficient probability of a competing proposal.

10. EcoNavista (5585 JP) – Takeover By Eisai (4523)

By Travis Lundy, Quiddity Advisors

  • EcoNaviSta (5585 JP) has a couple of interesting product lines and platforms. That makes it attractive, and scalable. Synergies to a big buyer are reasonably obvious.
  • Eisai Co Ltd (4523 JP) is that big buyer, having decided to be interested last summer. I could imagine others could be interested too. The tech has uses.
  • For the moment, it is a high EV/Revenue bid on an interesting small company. The chairman, cross-holders, directors, and a couple of financial institutions own 66+%. But…
Mar 16
0

Weekly Top Ten Event-Driven and Index Rebalance – Mar 16, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. Rio Tinto (RIO AU/RIO LN): Unification Index Flows

By Brian Freitas, Periscope Analytics

  • At the upcoming AGM, Rio Tinto Ltd and Rio Tinto PLC shareholders will vote on the company commencing a review on the benefits vs costs of Unification.
  • Palliser Capital has been pushing for Unification while the Rio Tinto Board has recommended that shareholders vote against Resolution 21/24 citing tax costs among other reasons.
  • If the Unification completes, S&P/ASX trackers will need to buy Rio Tinto Ltd (RIO AU) while UKX Index (UKX INDEX) trackers will sell Rio Tinto PLC (RIO LN). Net positive.

2. 7&I (3382) Update – Couche-Tard Responds

By Travis Lundy, Quiddity Advisors

3. 7&I (3382) – Artisan Writes (Again) And 7&I Updates (Again) – More Positive Outlook Now

By Travis Lundy, Quiddity Advisors

  • On Thursday 6 March we got a Nikkei article then a company announcement for Seven & I Holdings (3382 JP)‘s proposed management measures and update on ACT Bid Process.  
  • It involved Isaka-san stepping down, Stephen Dacus stepping up, selling York to Bain for ¥814.7bn, IPOing 7-Eleven US, a ¥2trln share buyback over 5yrs, and ACT process update. 
  • It was OK. Good, bad, and ugly. But Artisan wrote a letter over the weekend and 7&i responded and suddenly, their concerns are mostly addressed and the outlook is different.

4. Rio Tinto (RIO AU/LN): Shareholders To Vote On Merits Of Unification

By David Blennerhassett, Quiddity Advisors

  • Palliser Capital, which reportedly holds ~$300mn in Rio Tinto Ltd (RIO AU/LN) shares across its dual-head structure, has campaigned for near-on a year to unify the primary listing in Australia.
  • Palliser’s reasonings (and others) to unify make sense, such as access to stock-based mergers and eliminating franking wastage. A recent independent assessment from Grant Thornton is also supportive of unification.
  • Shareholders will vote on the resolution on 3rd April  for UK-listed shares and 1st May for Australian-listed shares. The UK line holds the key to the vote outcome.

5. Proto Corp (4298 JP) – Activists Getting More Activish, Watch for Position Changes?

By Travis Lundy, Quiddity Advisors

  • The MBO for Proto Corp (4298 JP) where the founder/chair is buying out from minorities is being done at the wrong price. His reasons are good, but not for minorities.
  • One large foreign shareholder – the second largest shareholder of the firm – has offered substantial pushback in the form of a letter asking for discussions. That went nowhere.
  • So now they have come out harder. The solution here is a really big bump or a broken deal if investors keep the share price above the TOB price.

6. [Activism Japan] Nissan Tokyo Sales (8291) Gets An ‘Outsourced Activist’ but the Value Prop Remains

By Travis Lundy, Quiddity Advisors

  • On 12 March 2025, a minor Twitter account @nanahoshiuk started in January announced a website shiftnissantokyo.com where they point out the value proposition in Nissan Tokyo Sales (8291 JP). 
  • The writeup is by a UK company led by a young man with an equity-investing career, some experience at an activist shop, who now runs a “Shareholder Activism Outsourcing Service.”
  • The content sounds familiar to my piece in December, has a few unpolished edges, but clearly points out the value proposition. The stock deserves a re-visit. My comments are below.

7. CK Hutch (1 HK): Still Trading Cheap

By David Blennerhassett, Quiddity Advisors

  • To avoid a political landmine, on the 4th March CK Hutchison Holdings (1 HK)  announced a deal with Blackrock to offload its entire port ops, including the contentious Panama ports.
  • It’s an astute deal selling to a buyer, ostensibly backed by the Trump administration, at the top of the market, knowing global trade could fall under a new tariff regime.
  • The risk to the transaction is one of timing. US/Panama approvals are a shoo-in. But it’s a complex deal, which will take time to work through the system.

8. Seven & I Holdings (3382 JP): Reading Between the Lines of the Public Letter

By Arun George, Global Equity Research Ltd

  • The Seven & I Holdings (3382 JP) Board has released a public letter to address Artisan Partners’ letter and provide more details on the Alimentation Couche-Tard (ATD CN) constructive engagement. 
  • The letter effectively addresses most of Artisan’s concerns. The Board is engaging with Couche-Tard, particularly by agreeing on a strategy to find a solution to secure antitrust approvals. 
  • However, the statement suggests that the Board retains deep scepticism that the Couche-Tard is viable and is manoeuvring to shift the blame on a failed bid on a flawed proposal. 

9. Properly Interpreting Korea’s Stock Borrow Data for Short Selling

By Sanghyun Park, Clepsydra Capital

  • Local instos borrow from brokers or peers, KSD collects and cleans the data, then KOFIA reports stock borrow balances daily with a two-day lag.
  • Offshore borrows via EquiLend or PB deals don’t show up—KSD reporting only covers local institution-to-institution stock loans.
  • Assume 60% of reported borrow balance is real shortable ammo—adjusting for this helps filter out noise in short positioning.

10. Baudroie (4413 JP) – Fast Growth, Prime Promotion, and TOPIX Inclusion

By Travis Lundy, Quiddity Advisors

  • In late November of 2024, Baudroie (4413 JP) announced it would try to move to TSE Prime and that day they announced a 2.76mm share secondary offering and a buyback.
  • The buyback was a bit less than a quarter of the offering. Fast forward 3mos and in early March the company announced it would move to Prime. Yesterday it did.
  • That puts the company in line for a TOPIX inclusion in end-April , and likely other index effects later. In the meantime, earnings and guidance are out ~10 April. 
Mar 09
0

Weekly Top Ten Event-Driven and Index Rebalance – Mar 9, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. 7&I (3382) – A Starting Point for the Standalone Plan – The Good, The Bad, The Ugly

By Travis Lundy, Quiddity Advisors

2. 7&I (3382) Possibility of YUUUUUGE Buyback?

By Travis Lundy, Quiddity Advisors

  • Last Thurs the MBO died. Tuesday an article said the ACT deal had died. Then 7&i denied that. Yesterday an article said Bain’s York Holdings deal would be approved today.
  • That meant a Board meeting which would approve receipt of ~¥700bn of cash. What to do with it?
  • Just now, Bloomberg says Seven & I Holdings (3382 JP)‘s board will consider a massive buyback. THAT is the capital allocation news my last piece suggested necessary. It’s HUGE.

3. Li Ka-Ching! Cheung Kong (1 HK) Offloads Panama Ports To Blackrock

By David Blennerhassett, Quiddity Advisors

  • As part of a US$22.8bn transaction, BlackRock, Global Infrastructure Partners and Terminal Investment, have agreed to buy two contentious Panama ports from Li Ka-shing’s CK Hutchison (1 HK) (CKH).
  • The transaction also includes an 80% stake in CKH’s ports subsidiaries, which operate 43 ports comprising 199 berths in 23 countries.
  • CKH expects cash proceeds in excess of US$19bn. CKH’s current market cap was – at the time of deal – also  ~US$19bn. 

4. Toyota’s New Shareholder Benefit Program – Either a Bribe for Retail or Odd Advertising

By Travis Lundy, Quiddity Advisors

  • Today, Toyota Motor (7203 JP) announced a new Shareholder Benefit Program (株主優待 or kabunushiyutai). Often these programs are designed to give small unknown companies a way to build shareholder awareness/loyalty. 
  • Toyota, needless to say, is not a small, unknown company building awareness. So this is a bribe or inducement to own shares or get people to use higher value product.
  • This is not a great look, and not great for shareholders. It smells of Toyota trying to buy votes as crossholders sell. But below we look at the math.

5. Seven & I Holdings (3382 JP): Shares Under Pressure as Rumours Swirl

By Arun George, Global Equity Research Ltd

  • Seven & I Holdings (3382 JP) denied a Yomiuri article that the Board has decided not to accept an Alimentation Couche-Tard (ATD CN) bid in favour of the restructuring plan.
  • Despite the Board’s assertions that it is still having constructive discussions with Couche-Tard, its actions suggest otherwise.
  • Couche-Tard remains interested but faces increasing roadblocks. The valuation is undemanding but the news flow is unlikely to support a rerating in the near-term.

6. Japan Post Bank US$4bn Placement Updates-Performing Similar to Its Last. Past Large Deals Comparison

By Sumeet Singh, Aequitas Research

  • Japan Post Holdings (6178 JP) (JPH) aims to sell around US$4bn worth of Japan Post Bank (7182 JP) (JPB), trimming its stake to below 50%.
  • JPH had last sold around US$9bn worth of JPB shares in Mar 2023. That deal had a similar structure and it didn’t end up performing well.
  • We have looked at the deal dynamics in our previous note. In this note, we talk about the updates since then.

7. A/H Premium Tracker (To 28 Feb 2025):  AH Premia Continue to Fall; Expect Widening

By Travis Lundy, Quiddity Advisors

  • AH Premia continue to fall. Spread curve torsion reverses again with narrow premia trades seeing Hs perform the best. 
  • Warning signs are starting to flash on spreads. This week I have the biggest week of changes recommended that I have ever had. By a long ways.
  • This week threatens to be a very strange week geopolitically. Being smaller in crowded trades is probably a good thing.

8. Biggest Gray Area in Korea’s Short-Selling Overhaul: What Should TRS Clients Do?

By Sanghyun Park, Clepsydra Capital

  • If brokers let shorts exceed borrow, TRS end investors risk getting caught in the legal crossfire.
  • Some TRS players are setting up short-book systems and reg numbers proactively, ensuring brokers share borrow data to stay ahead of any compliance risks.
  • With most illegal shorts tied to TRS, and TRS dominating the market, the FSS will likely introduce TRS-specific rules rather than granting exemptions.

9. Seven & I Holdings (3382 JP): Board’s Plan to Unlock Value Is a Stop-Gap Measure

By Arun George, Global Equity Research Ltd

  • The Seven & I Holdings (3382 JP) Board announced a plan to unlock and distribute significant value to shareholders.
  • The initial excitement focused on the positives of leadership changes, US Assets IPO, a higher-than-expected valuation for the Superstore Business and a considerable buyback. 
  • The negatives of a long-dated buyback, inevitable rejection of the Couche-Tard offer, an uncertain US Assets IPO and ongoing HoldCo discount suggest the initial excitement will fizzle out. 

10. OneConnect Financial (6638 HK/OCFT US): Ping An’s Fair NBIO

By David Blennerhassett, Quiddity Advisors

  • Dual-Listed OneConnect Financial Technology (6638 HK/OCFT US), a digital retail banking/commercial banking/ digital insurance play, has announced a non-binding proposal from Ping An, OneConnect’s controlling shareholder with 32.12%.
  • Ping An is offering, by way of a Scheme, HK$2.068/share, or US$7.98/ADS, a 72.33% premium to last close, and a 131.66% premium to the 30-day average. The price is final. 
  • What now? Back in OneConnect’s boards’ court whether to engage or not. Which they should. No competing Offer will emerge.
Mar 02
0

Weekly Top Ten Event-Driven and Index Rebalance – Mar 2, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. 7&I (3382) – MBO Off, SC “Engaging Constructively with ACT”, Skepticism Higher, Questions And More

By Travis Lundy, Quiddity Advisors

  • The MBO is off. Itochu Corp (8001 JP) has apparently not been able to agree with Ito-san on board composition/representation and management control. That the MBO is off isn’t surprising.
  • 7&i says they “continue to engage constructively with ACT and alternate proposals but news articles suggest that almost 6mos after proposing an NDA, ACT still haven’t had access to financials.
  • The shares are off hard today to a level below where ACT’s first bid was considered “not even worth discussing”. There will be questions at the AGM and before.

2. 7&I (3382) – Bain Gets York Holdings with a Surprising Price, And We Approach Deal Deadlines

By Travis Lundy, Quiddity Advisors

  • Over the weekend, the Nikkei and Jiji reported the 7&i Board met Saturday and decided Bain would have preferred negotiating rights to buy York Holdings. They bid “over ¥700bn.”
  • That’s a trifle lower than the ¥1.2trn Reuters reported (on Christmas Day) Bain bid but details aren’t known. Proper structuring would get the vast majority to 7&i in post-tax cash.
  • For 7&i to decide by the AGM (which could be contentious), they need time to debate. Bids are likely needed in 3wks. In the meantime, “Trump Risk” lurks.

3. Seven & I Holdings (3382 JP): A Potential Derailing of the MBO

By Arun George, Global Equity Research Ltd

4. Japan Post Bank (7182 JP): Another BIG Offering of US$4bn Expected; Overhang Will Be Removed

By Brian Freitas, Periscope Analytics

5. Korea: Short Selling Is Back in March; Trade Ideas

By Brian Freitas, Periscope Analytics

  • Since short selling was banned in November 2023, short interest has plunged in Korea as shorts were covered. Markets have not done much over the last 16 months though. 
  • Foreign investor holdings have dropped from 32.05% in July to 28.57%. The top 25 stocks bought by foreign investors outperformed the top 25 stocks sold by 128% in 16 months.
  • There will be trade opportunities across indices, pref/ords, index migrations and deletions, potential market upgrades and overvalued stocks being sold.

6. Seven & I Restructures but Discontent Rises Among Franchisees and Customers

By Michael Causton, JapanConsuming

  • York HD is due to take over operation of all group business except Seven Eleven at the end of February and press reports suggest Bain’s bid has been accepted.
  • All of which is fine but this leaves Seven Eleven Japan which is struggling against rivals. Even franchise owners are becoming more critical.
  • A recent survey by Nikkei also suggested that consumers are increasingly favouring Lawson and Familymart and 30% visited Seven Eleven stores less frequently in 2024. This is a big problem.

7. JPH Launches “MBO” (LBO with SARs for Family/Execs) For Trucker Tonami Holdings (9070). Too Cheap.

By Travis Lundy, Quiddity Advisors

  • Yesterday, Japan Post Holdings (6178 JP) announced an MBO for Tonami Holdings (9070 JP) whereby the family/execs will stay on. JPH will own 99.97%, the execs/family 0.03%.
  • This deal is yet another in a line of logistics deals dating back the last 2+ years where the premium has been quite big. This time is +74%. 
  • But this is not overly expensive. Makes me go hmmmm… 

8. CICC (3908 HK) & China Galaxy (6881 HK): The Next Mega Brokerage Merger

By David Blennerhassett, Quiddity Advisors

9. Nidec Says It Won’t Raise Price on Makino (6135)

By Travis Lundy, Quiddity Advisors

  • Nidec Corp (6594 JP) released a multi-page document regarding its bid for Makino Milling Machine Co (6135 JP) yesterday. 
  • It talked a bit about the back-and-forth with Makino, and gave Nidec’s side of the story. Makino has been making their side public too. A meeting is due early March.
  • In the document, there was a line suggesting Nidec won’t raise price even against a counteroffer. They didn’t need to say that. The question is what Makino will do.

10. Merger Arb Mondays (24 Feb) – Seven & I, Proto, Tam Jai, Pentamaster, Vesync, Canvest, Domain

By Arun George, Global Equity Research Ltd

Feb 23
0

Weekly Top Ten Event-Driven and Index Rebalance – Feb 23, 2025

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. Goodman Group (GMG AU): Much Bigger Index Impact of US$2.5bn Equity Offering

By Brian Freitas, Periscope Analytics

  • Goodman Group went into a trading halt and then announced results and an underwritten equity placement of A$4bn (US$2.54bn) to pursue growth opportunities across logistics and data center operations.
  • The stock has dropped since CIC’s stake sale in December but still continues to handily outperform peers.
  • There will be some passive buying in the stock at the time of share settlement and more a few days later to mop up around 37% of the offering.

2. Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for March

By Brian Freitas, Periscope Analytics

  • Post market close on Friday, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 7 March.
  • With no constituent changes, one-way turnover will be 2.75% with 3 stocks being capped downward. This gives the index committee the opportunity to add more stocks without significantly increasing turnover.
  • The return of the high and medium probability inclusions has matched the performance of the Hang Seng Index over the last few months, Shorts have climbed in some names.

3. Alibaba (9988 HK): Results This Week; Over US$1bn Passive Selling in 3 Weeks

By Brian Freitas, Periscope Analytics

  • Alibaba Group Holding (9988 HK) stock has rallied bigly over the last month and has gained 55% over that period.
  • That has led to Alibaba‘s weight in the HSI INDEX, HSCEI INDEX, HSTECH INDEX and HSIII Index rising above the cap of 8%/12% and passives will sell on 7 March.
  • We estimate passive trackers will need to sell US$1.2bn of stock due to capping. Shorts have been increasing, and quarterly results will be announced on 20 February.

4. India: March Rebalance Announcement Tomorrow; Round-Trip Trade Over US$2.5bn

By Brian Freitas, Periscope Analytics

  • The Index Maintenance Sub-Committee of NSE Indices will meet on 21 February to conduct a semi-annual and quarterly review of stocks in various Nifty equity indices.
  • The changes will be announced after market close tomorrow and will be implemented at the close of trading on 28 March.
  • Based on the forecast index changes and capping changes for a few indices, the round-trip trade will be over US$2.5bn and many stocks will have over 0.5x ADV to trade.

5. [Quiddity Index Feb25] Nikkei 225 Mar Rebal: 2 or 3 IN, 2 or 3 OUT, ~$3bn 1-Way, 1 Squeeze.

By Travis Lundy, Quiddity Advisors

6. Tam Jai (2217 HK): Toridoll (3397 JP)’s Scheme Privatisation at HK$1.58

By Arun George, Global Equity Research Ltd

  • Tam Jai International (2217 HK) announced a scheme privatisation offer from TORIDOLL Holdings Corporation (3397 JP) at HK$1.58 per share, a 75.6% premium to the last close price. 
  • The key condition is the scheme approved by at least 75% disinterested shareholders (<10% disinterested shareholders rejection). No disinterested shareholder holds a blocking stake. 
  • The offer price is final. While 53% below the IPO price, the offer is attractive compared to peer multiples and historical trading ranges. This is a done deal. 

7. MV Australia Equal Weight Index Rebalance Preview: Potential Changes in March; Multiple Overlaps

By Brian Freitas, Periscope Analytics

  • With 6 days left to review cutoff, there are 2 potential adds and 3 potential deletions for the MV Australia Equal Weight Index at the March rebalance.
  • Even if there are no constituent changes, capping changes will lead to one-way turnover of 3% and a round-trip trade of A$159m.
  • The final list of inclusions/exclusions will depend on price movements till next Friday and whether the provider makes any significant changes to the free float of stocks in the universe.

8. Tam Jai (2217 HK): Toridoll (3397 JP)’s Excellent Offer

By David Blennerhassett, Quiddity Advisors

9. CVC Extends Macromill (3978) Bid and Invites Two Funds To Reinvest – More Interesting Than You Think

By Travis Lundy, Quiddity Advisors

  • Today, the closing date of the Tender Offer for Macromill, Inc (3978 JP) by CVC saw the tender offer extended by an extra 10 days with new news.
  • Price had been declared final. One very large shareholder had said they would not tender. Two more were negotiating. Those two will now tender and reinvest in the back end.
  • This does not mean the tender offer is a done deal, but it is worth examining.

10. JIC Launches Shinko (6967) Deal At ¥5,920/Share

By Travis Lundy, Quiddity Advisors

  • Today quite late, the JIC Consortium announced the launch of the Shinko Electric Industries (6967 JP) Tender Offer expected “mid-February”. Price is still ¥5,920/share. 
  • This is basically going to be all arbs and passive now. And arbs gonna arb.
  • Congrats if you bought the lows in late November early December. Great trade. Congrats if you bought the last delay dip. Now we can all go home.