In today’s briefing:
- Liontown Resources (LTR AU): Passive Selling on Lower Float
- Liontown Warms To Albemarle’s Bump
- Allkem/Livent (AKE AU | LTHM US) Merger Update: MUCH More Than Meets The Eye
- Japan – Increase in Shorts on Some Interesting* Stocks
- Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, TOPIX FFW, SSE50, AS51, ChiNext, Kenedix, Liontown
- Last Week In Event SPACE: EOFlow, Fast Retailing, JMDC, Origin Energy
- EOFLOW/Medtronic Tender: Pretrial Timetable and Latest Court Filings
- TSI Holdings (3608) – Yet Another Big Buyback; Still Good, Still Cheap, Now W/ Engagement Investors
- S&P/ASX200 Index Ad Hoc Rebalance Preview: Replacement for Invocare (IVC)
- Light & Wonder CDIs Replace United Malts in ASX200 – Be Careful Is All I Can Say
Liontown Resources (LTR AU): Passive Selling on Lower Float
- Liontown Resources (LTR AU) is trading near A$3/share, the level of Albemarle Corp (ALB US)‘s revised offer and where Hancock Prospecting has been buying recently.
- With Hancock Prospecting accumulating a stake of nearly 17% over the last month, there will be a float reduction for Liontown Resources (LTR AU) in the next few months.
- Short interest has been increasing and the passive selling could provide an exit for the shorts. But Hancock Prospecting could also use the opportunity to buy more Liontown Resources stock.
Liontown Warms To Albemarle’s Bump
- Back on the 28 March, Liontown Resources (LTR AU) rejected the third proposal of $2.50/share from Albemarle (ALB US), the world’s largest lithium producer, citing terms were opportunistic.
- Then everything went quiet. There appeared to be an interested party building a stake ~$2.75/share, but nothing concrete emerged.
- Now Albemarle has returned with a revised indicative proposal of $3.00/share – best and final. Due diligence has been granted. The board is supportive if terms are firmed.
Allkem/Livent (AKE AU | LTHM US) Merger Update: MUCH More Than Meets The Eye
- The Allkem/Livent “merger of equals” discussed in Allkem/Livent (AKE AU | LTHM US) Merger Of Lithium Equals Has Index Surprises and Allkem/Livent: Enlarged Charging Unit is on track.
- As of the end of last month, all approvals are received or are expected to be received. The Scheme Booklet is expected next month. Deal is expected to close end-CY2023.
- The deal STILL has interesting side issues with index. Even more interesting than Newcrest/Newmont. This is an update with more detail as we probably have 8-10 weeks left.
Japan – Increase in Shorts on Some Interesting* Stocks
- CyberAgent, Lixil Group, Hakuhodo Dy Holdings, Kobayashi Pharmaceutical, Welcia Holdings, Persol Holdings, GMO Payment Gateway, Kurita Water Industries and Open House have all underperformed the Nikkei 225 over the recent past.
- The underperformance could lead to adjustments in global passive portfolios and liquidity events on some of the stocks.
- Short interest has increased on some stocks and there could be more pre-positioning to come over the next few weeks.
Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, TOPIX FFW, SSE50, AS51, ChiNext, Kenedix, Liontown
- An ad hoc S&P/ASX 200 (AS51 INDEX) rebalance will be implemented at the close on 17 October with Light & Wonder (LNW AU) replacing United Malt Group Ltd (UMG AU).
- The rebalances of Wisdomtree Emerging Markets (DEM US), Wisdomtree Em Small Cap (DGS US) and Wisdmtree Emerg Mkt Ex-St Ow (XSOE US) will be implemented on 18 October.
- There were net outflows from onshore China ETFs with inflows to larger cap ETFs and outflows mainly from the CSI Smallcap 500 Index and CSI 1000 Index trackers.
Last Week In Event SPACE: EOFlow, Fast Retailing, JMDC, Origin Energy
- Should the nominated directors, to be voted on by EOFlow (294090 KS)‘s shareholders at the November EGM, include Medtronic Plc (MDT US) executives, then game on.
- Fast Retailing (9983 JP) STILL has a Nikkei 225 problem, which means it probably has to underperform Nikkei 225 slightly between now and the Base Date (31 July 2024).
- JMDC (4483 JP) has been one of the more annoying partial tenders out there. Even post-facto, it is tough to know what the disposition was. This is extraordinarily vexing.
EOFLOW/Medtronic Tender: Pretrial Timetable and Latest Court Filings
- Latest filings on Insulet Corp (PODD US)’s voluntary dismissal without prejudice only to Flex (FLEX US), Eoflow (294090 KS)’s motion to restart Korean sales, dismiss a count and a timetable.
- Examining the court filings suggests Medtronic Plc (MDT US)’s access to court unredacted documents is restricted. Medtronic’s limited access makes evaluating the transaction’s potential litigation risk challenging.
- Eoflow’s defence in the court documents is based on reverse engineering and procedural arguments. The KRX will rule on Eoflow’s share trading suspension by 1 November.
TSI Holdings (3608) – Yet Another Big Buyback; Still Good, Still Cheap, Now W/ Engagement Investors
- In April 2022, I wrote about Tsi Holdings (3608 JP) saying in the first three bullet points it could double in two years. It doubled in one.
- They bought back shares held by JDB in April 2022, then they launched another buyback program in January 2023, and completed it last month.
- Now they have launched another to buy back 8.46% with a ToSTNeT-3 for half on Monday AM. The rest is expected on market through end-March 2024.
S&P/ASX200 Index Ad Hoc Rebalance Preview: Replacement for Invocare (IVC)
- Light & Wonder (LNW AU) will replace United Malt Group Ltd (UMG AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 17 October.
- Invocare Ltd (IVC AU) is expected to stop trading after the close on 3 November and Boss Resources (BOE AU) is best placed to be the replacement.
- There are stocks that are close on the heels of Boss Resources (BOE AU) and will compete for a place. Two of those could be added at the December rebalance.
Light & Wonder CDIs Replace United Malts in ASX200 – Be Careful Is All I Can Say
- Post-Close Friday it was announced that Light & Wonder (LNW AU) Chess Depositary Interests would replace United Malt Group Ltd (UMG AU) at the close on 17 October.
- This was announced before US markets opened. Light & Wonder (LNW US) shares popped 5.65%, closing 5.8% through the Aussie line.
- This is a possibly deceptive index add. I’d be quite careful.
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