In today’s briefing:
- Korea Short Sell Ban: Background, Manipulation, Holdings, Flows, Short Interest, Implications
- Lee Family to Sell 2.6 Trillion Won in Samsung Companies to Pay for Inheritance Taxes
- Chindata (CD US): Maximum Dissent Condition in Focus as Oasis Builds a Stake
- Samsung Founder Family’s Pre-Announced Block Deals: Contract Terms & Fresh Contextual Conditions
- Wacom (6727 JP) – Large, Short-Dated, On-Market Buyback Against Dense Register
Korea Short Sell Ban: Background, Manipulation, Holdings, Flows, Short Interest, Implications
- Korea banned all short selling in March 2020 and resumed short selling only on KOSPI 200 and KOSDAQ 150 index constituents in May 2021.
- News reports indicate that there could be another short sell ban as soon as the coming week. Indications are that the ban could last 6 months.
- There are many implications of a total short sell ban including futures backwardation, market manipulation, and no emerging to developed market promotion.
Lee Family to Sell 2.6 Trillion Won in Samsung Companies to Pay for Inheritance Taxes
- Lee family plans to sell additional 2.6 trillion won worth of Samsung Group companies as part of their fourth installment of inheritance taxes.
- This inheritance tax share sale is likely to have a negative impact on Samsung Electronics, Samsung C&T, Samsung SDS, and Samsung Life Insurance.
- This may be just a coincidence but the regulators announced today a temporary ban on stock short selling which should help the Lee family to unload their shares.
Chindata (CD US): Maximum Dissent Condition in Focus as Oasis Builds a Stake
- Chindata Group (CD US)’s US$8.60 per ADS offer from Bain Capital is conditional on dissenting shareholders representing less than 12% of outstanding shares.
- Oasis Management, an activist fund, recently disclosed a shareholding representing 65.9 million ordinary shares, 8.99% of outstanding shares and 1.24% of voting interest.
- Precedent transactions where the dissent condition was exceeded suggest two possibilities – the offeror waives the condition or persuades sufficient shareholders to withdraw as dissenters.
Samsung Founder Family’s Pre-Announced Block Deals: Contract Terms & Fresh Contextual Conditions
- Considering year-end dividends, it appears likely that the trading timing might extend beyond this year. In the previous case, the trade execution timing was one month before the contract expired.
- Short selling is prohibited. However, all four companies offer single-stock futures, which provide instruments for proactive positioning. Nevertheless, aspects to consider are likely to increase regarding trading convenience and liquidity.
- The potential for inadequate liquidity might increase the discounts for these deals, potentially offering us fresh trading opportunities. We should proactively prepare trading setups that consider these contextual conditions.
Wacom (6727 JP) – Large, Short-Dated, On-Market Buyback Against Dense Register
- Wacom splits its pen-tablet business into “Branded Business” and “Technology Solutions” which is not dissimilar to simply splitting based on customer type. TS is doing well. BB is not.
- But BB is doing better than it was, which means a rebound in profit this year. After Q2 there is new guidance, probably soft. And there is a BIG buyback.
- The buyback is large enough to take notice, even though practically it will be smaller than the headline. And a read of the MTMP “Wacom Chapter 3” is highly recommended.
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