Weekly Top Ten Event-Driven and Index Rebalance – Mar 24, 2024

1. The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)

By Travis Lundy, Quiddity Advisors

• Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
• But there may be ¥1.0-1.2trln+ to buy on one day into the close later this month, then ad hoc buys of ¥630bn and index sells of ~¥600bn  2 days later.
• Over the past ten years, the two day return on the March trade is great. This year the Nikkei funding trade makes things more complicated. 

2. Fast Retailing (9983) – Now At Double Downweight Levels

By Travis Lundy, Quiddity Advisors

• Fast Retailing (9983 JP) is the largest weight in the Nikkei 225. On Friday, it closed at 11.36% of the Nikkei 225, putting it well above the 10% cap level.
• If the stock is above 10% on a pro-forma basis on the base date of 31 July 2024, it will get a capping coefficient. 8.4mm shares (US$2.5bn) to sell.
• At Friday’s close, we were borderline above a double-downweight trigger. At Monday’s open, just below. 30mins later? Back well above. Lots of interesting issues and nuances here for a short.

3. JSR (4185 JP) – Launch of The Official Tender Offer (And the Double Arb)

By Travis Lundy, Quiddity Advisors

• The Tender Offer is finally here. JIC announced the official launch after the close today.
• JIC appears to be taking on the SUNY RF risk as-is. The Tender Offer details vs the original expectations in the late June 2023 document are unchanged. 
• Once started, unless a US court approves an injunction causing regulatory delay, this is done. But there are path events. And of course there is a double arb here.

4. Tokio Marine Cross-Shareholding – At Least US$18bn of Cross-Shareholding to Sell

By Sumeet Singh, Aequitas Research

• The Japanese Financial Services Agency has asked the general insurers to reduce/eliminate their cross-shareholdings.
• Tokio Marine Holdings (8766 JP) had a stake over US$100m in at least 33 listed Japanese stocks, amounting to a total of US$16.5bn.
• In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.

5. Quiddity Leaderboard S&P 500 Jun 24 Rebal: Many Intra-Review Changes Possible Due to M&A, Spin-Offs

By Travis Lundy, Quiddity Advisors

• The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
• The index is reviewed quarterly. The next review will be in June 2024 and the evaluation date for the rankings for the constituent selection process is 6th June 2024.
• In this insight, we take a look at the Potential ADDs and Potential DELs for the June 2024 index rebal event and the intra-review ADDs/DELETEs.

6. Shinko Electric (6967 JP): Tender State of Play

By Arun George, Global Equity Research Ltd

• Shinko Electric Industries (6967 JP) pre-conditional tender offer from the JIC alliance is JPY5,920 per share. The gross spread has narrowed from a high of 10.4% to the current 4.2%. 
• The narrowing spread can be attributed to the JSR Corp (4185 JP) tender launch, which suggests likely China SAMR approval, and Ibiden Co Ltd (4062 JP) giving up recent gains. 
• Like JSR, we expect China SAMR to allow JIC to withdraw its Shinko merger control filing. There is a good chance the tender launches before the guided late August start.

7. Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM

By David Blennerhassett, Quiddity Advisors

• Last month, a Cheng family vehicle with 24.06% of Giordano (709 HK), requisitioned an SGM to remove CEO Peter Lau, and install Colin Currie as CEO, plus three other NEDs/INEDs.
• That SGM will be held on the 3rd April. The director resolutions – both the removal and appointments – are “ordinary”, requiring a simple majority vote. 
• The outcome will likely pivot off how the shareholders under Halcyon Securities will vote. So I dug a little deeper as to who these shareholders are, with some surprising results.  

8. Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090)

By Travis Lundy, Quiddity Advisors

• Chilled & Frozen Logistics Holdings (9099 JP) last week announced its “Action to Implement Management That is Conscious of Cost of Capital and Stock Price”.
• Today it announced AZ-Com Maruwa Holdings (9090 JP) had announced its intention to launch a Tender Offer on C&F Logistics without having contacted C&F first. A HOSTILE deal. Yum.
• The deal is proposed at a 50% premium, with the goal of getting to a minimum of 50.00%. This will be interesting.

9. IntelliCentrics (6819 HK): Delisting and Special Dividend

By Arun George, Global Equity Research Ltd

• On 9 February, IntelliCentrics Global Holding (6819 HK) announced the disposal of most of its assets to symplr software. On 19 March, the antitrust condition was satisfied.
• The consideration will be distributed to shareholders as a special dividend. The minimum and maximum special interim dividends are US$0.52 (HK$4.08) and US$0.55 (HK$4.30) per share.
• The key condition is EGM shareholder approval. Due to the irrevocables from key shareholders, the EGM vote should comfortably pass. This is a done deal.

10. Quiddity Leaderboard KOSPI 200 Jun 24: Up to Five Changes Possible

By Travis Lundy, Quiddity Advisors

• KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
• In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in June 2024.
• There could be up to five changes in the KOSPI 200 index during the June 2024 index rebal event.