In today’s briefing:
- MSCI May 2022 Index Rebalance: Flows at the Close Today & Performance So Far
- AGL Drops Demerger Proposal – Back To Square Two
- CCASS: Why Large Moves Continue To Matter
- Australian Unity Office: Aliro’s Offer Should Get Up. With A Bump
- Short LG Corp on the Unsustainable Price Spike
- JPX-Nikkei 400 Rebalance 2022: Leaderboard End-May 2022
- AOF’s Efforts to Maximise Value Draws an Offer from Aliro Group
- MFE/Mediaset España: Start of Offer Period with Lower Success Expectations
- AKM (1639 HK): 22nd June Scheme Meeting. IFA Says Fair
- Grupo Gilinski Stays Focused on BanColombia, with Political Risk Potentially Receding in Colombia
MSCI May 2022 Index Rebalance: Flows at the Close Today & Performance So Far
- For Asia Pacific, there are 48 adds/76 deletes for the Standard Indices and 166 adds/147 deletes for the Small Cap Index that will be implemented at the close today.
- The adds have outperformed the deletes on average over the last few weeks/months. A long adds/short deletes trade performed better for Small Caps as compared to the Standard index.
- There are a lot of stocks that will have same-way flow from other index trackers over the next few weeks and there could be a higher impact on these names.
AGL Drops Demerger Proposal – Back To Square Two
- After 14 months of Strategic Review and preparation for a Demerger of its generation and distribution businesses, the Board has dropped the Demerger Proposal in face of shareholder opposition.
- While it isn’t clear exactly how much opposition there was, Michael Cannon-Brookes held 11+% and General Meetings have garnered 50-75% of investors for a vote which needed 75% approval.
- CEO and Chair have announced their resignations, two other board members will leave, and now the Board will start another strategic review using preparation at hand.
CCASS: Why Large Moves Continue To Matter
- In this latest installment in a series dating back to March 2018, I’ve analysed 5,500 moves over three years inside CCASS, targeting >5% of shares outstanding of individual stocks.
- The data continues to bear out the overall underperformance of stocks that exhibit such moves.
- Additionally, the movement of large blocks of shares may illustrate that the beneficial owner of those shares has pledged them as collateral for a loan.
Australian Unity Office: Aliro’s Offer Should Get Up. With A Bump
- Over the years, Australian Unity Office Fund (AOF AU) has had its fair share of suitors. Starwood Capital made no less than six bids between late 2018 and early 2020.
- Abacus Property (ABP AU) and Charter Hall (CHC AU) were also in the mix, but their Scheme failed, ostensibly after Hume, one of the largest shareholders voted down the Offer.
- Aliro Group has now made an Offer for AOF, by way of Scheme, at $2.45 + dividends. Hume is supportive. Aliro’s executive chairman is the former head of Charter Hall.
Short LG Corp on the Unsustainable Price Spike
- The question now is whether this event can lead to a structural uptrend in LG Corp. I am skeptical about this.
- LG Corp took a preemptive action to increase its attractiveness as a dividend stock to prevent a share price decline ahead of the listing of LG CNS.
- However, this measure does not address the root cause of LG Corp’s massive NAV discount. So, I would consider a short position setup for LG Corp.
JPX-Nikkei 400 Rebalance 2022: Leaderboard End-May 2022
- JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
- A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
- Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-May 2022.
AOF’s Efforts to Maximise Value Draws an Offer from Aliro Group
- Australian Unity Office Fund (AOF AU) which has had a “for sale” sign up has disclosed an indicative privatisation proposal from Aliro Group, at A$2.45 per unit + permitted distributions.
- Hume Partners, the largest unitholder, will vote in favour of the scheme in the absence of a superior offer. However, a relatively concentrated shareholder register poses a risk.
- AOF’s ongoing engagement with various parties suggests the possibility of a counterbid and/or a bump to Aliro Group’s underwhelming offer.
MFE/Mediaset España: Start of Offer Period with Lower Success Expectations
- On 26 May, the CNMV authorized the bid. The offer period will end on 28 June. Mediaset España shareholders do not seem very excited about the offer though.
- Analysts’ median TP (Refinitiv) of Mediaset España is €6.58/share, vs. the package worth €4.452 as of 30 May, 19.4% below value upon offer announcement. Market sentiment is negative.
- As of 30 May, risk arb spread is 4.2% (MFE dividend not included). It seems increasingly unlikely that the offer is successful and Mediaset España delisted, in my view.
AKM (1639 HK): 22nd June Scheme Meeting. IFA Says Fair
- The Scheme Document Document for AKM Industrial (1639 HK), a flexible printed board player, has been despatched. The Scheme Meeting will be held on the 22nd June.
- The Offer Price is HK$1.82/share. It will not be increased. No further dividends will be added,
- Trading tight at a gross/annualised spread of 1.1%/6.4%, assuming payment in early August.
Grupo Gilinski Stays Focused on BanColombia, with Political Risk Potentially Receding in Colombia
- Indirect stake-building in Grupo Sura and related companies means Gilinski is closing in on indirect control of BanColombia; Gilinski’s latest move is the offer for Grupo Argos shares
- We believe that Gilinski’s strategy of “indirect activism” towards BanColombia has incentivised management to deliver improved performance, as seen in 1Q22, with management’s perhaps conservative 2022E ROE guidance at 15%+
- Political risk may be receding, now that the firebrand left-winger Petro confronts Hernandez in mid-June’s Presidential election run-off; Hernandez could win by uniting the right and centre anti-Petro vote
Before it’s here, it’s on Smartkarma
