In today’s briefing:
- JAPAN ACTIVISM: Is Murakami-San Going To Do A PacMetals Rug Pull on Aozora? Or Is This For Real?
- Aozora Bank (8304 JP): Murakami Becomes a Substantial Shareholder
- Alibaba Group Holdings: EM Fund Positioning Update
- Goodman Group (GMG AU): Positioned for Outperformance
- NIFTY50 Index Rebalance: Shriram Finance to Replace UPL
- NIFTY NEXT50 Index Rebalance: Five Changes on Expected Lines; Big Turnover
- Woori Financial Placement – While the Overhang Remains, the Deal Would Be Easily Digested
- TOPIX “Big April Basket” 2024 Expectations: More High-Conviction Names; Better Trade Ideas
- Clearing up Confusion About Bringing Back Short Selling in Korea
- Sankei Real Estate (2972) Sponsor Buy Now On And It Isn’t Small (Even if the REIT Is)
JAPAN ACTIVISM: Is Murakami-San Going To Do A PacMetals Rug Pull on Aozora? Or Is This For Real?
- Yesterday after the close, well-known Japanese activist Murakami-san’s preferred entity City Index Eleventh filed a Large Shareholder Report.
- The blast across Bloomberg was “*AOZORA 5.4% STAKE REPORTED BY CITY INDEX ELEVENTH.” Sounds exciting after the shares dropped 34% in two days earlier this month after reporting big writedowns.
- But there has to be a question here. Why? And Why this way? And what kind of activism would be possible?
Aozora Bank (8304 JP): Murakami Becomes a Substantial Shareholder
- Murakami’s entity, City Index Eleventh, reported a 5.42% shareholding in Aozora Bank Ltd (8304 JP). Murakami started buying a day after the disastrous 3QFY23 results.
- Murakami’s average buy-in price is JPY2,137.88 per share, a 34% discount to the pre-3QFY23 results share price.
- Murakami’s disclosure suggests two possibilities: the start of an activist campaign or a short-term trading play replicating the Pacific Metals (5541 JP) playbook.
Alibaba Group Holdings: EM Fund Positioning Update
- Despite average weights falling from over 6% in 2020 to under 2% today, 73% of EM funds remain invested in Alibaba.
- The make up of the investor base has changed, with a rotation between high growth investors (out) and Value investors (in).
- Of the 73% of current holders, the core portfolio weight range sits between 1.5% and 3%, with the most bullish topping out at 5%+
Goodman Group (GMG AU): Positioned for Outperformance
- Goodman Group (GMG AU) has been moving higher recently and the stock has outperformed its peers handily over the last year.
- The stock trades marginally expensive compared to its peers and that could be partially attributed to the stock being a part of large indices.
- There is another index inclusion to come and that could lead to further outperformance in the short term.
NIFTY50 Index Rebalance: Shriram Finance to Replace UPL
- Shriram Finance (SHFL IN) will replace UPL Ltd (UPLL IN) in the NIFTY Index (NIFTY INDEX) at the close of trading on 27 March. This was a high probability change.
- Trent Ltd (TRENT IN) missed out on inclusion and that results in Bharat Petroleum Corp (BPCL IN) staying in the index.
- There is over 11 days of delivery volume to trade in the add and delete and there appears to be significant positioning in one of the stocks.
NIFTY NEXT50 Index Rebalance: Five Changes on Expected Lines; Big Turnover
- There are five changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) that will be implemented at the close on 27 March. Changes are on expected lines.
- Estimated one-way turnover for the NSE Nifty Next 50 Index (NIFTYJR INDEX) is 10.1% resulting in a one-way trade of INR 22.2bn (US$268m).
- Apart from the impact on the adds and deletes, there will be a big impact on some of the non-F&O stocks due to capping and funding flows.
Woori Financial Placement – While the Overhang Remains, the Deal Would Be Easily Digested
- IMM PE, via Obis1, is looking to raise US$136m from selling a portion of its stake in Woori Financial Group (316140 KS).
- While the deal doesn’t look particularly well-flagged, the PE has been invested for quite some time now.
- Despite the overhang, the deal is a small one to digest at just 1.7% of total shares outstanding, representing 5 days of the firm’s ADV.
TOPIX “Big April Basket” 2024 Expectations: More High-Conviction Names; Better Trade Ideas
- The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation.
- For companies with “low liquidity” the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation.
- Every April, the application of this liquidity factor is reviewed by the TSE. In this insight, we take an early look at what could happen in April 2024.
Clearing up Confusion About Bringing Back Short Selling in Korea
- Government sees foreign investors as key for Corporate Value-Up success, considering reinstating short selling.
- Planning to expand short selling beyond 350 stocks, but anticipating pushback from retail investors, likely capping additional stocks around 100.
- The head of the Financial Supervisory Service will formally disclose these plans during the upcoming short selling conference scheduled for March 13th.
Sankei Real Estate (2972) Sponsor Buy Now On And It Isn’t Small (Even if the REIT Is)
- Last October, I wrote about the plan the sponsor of Sankei Real Estate (2972 JP) had to exchange buildings with the REIT to clean it up, then buy more units.
- Today they announced the completion of the Portfolio Rebalancing Plan started in March 2023. And the plan to buy more units. The assets transferred out were gone at end Jan-2024.
- Now that’s done, and there are units to buy. Maximum 46,652 units over maximum 220 days.
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