Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

HK Type 4 license through Ballingal Investment Advisors Ltd. ("BIA" or "BIAL")

BACKGROUND
I have 20+yrs experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies with most of that time spent managing money. 

4 years in fixed income macro, 8 years running internal hedge fund and 4yrs investment banking at Citi in Japan, 3 years running an Asia multi-strat portfolio at a hedge fund, 4+yrs as an independent special situations analyst.

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Well-known Japan activist first got onto the radar of electronics/semiconductor trading company and contract supply manager <a href="https://www.smartkarma.com/entities/excel-co-ltd" target="_blank" data-smartkarma-citation="entities:12635:1" rel="noopener">Excel Co Ltd (7591 JP)</a> as a large holder in July 2015. He had bought 5.15% of the stock in his own name, in a margin transaction with Mita Securities. By the end of the year, he was out but C&amp;I Holdings KK, Rebuild KK, and Minami Aoyama Fudosan KK owned 11.5%. By year-end 2016 it was 17.5% with advisor-lawyer Nakashima-sensei holding 6.00%. By end-2017 it was 24.33% and by end-2018 it was 34.49%. The last large-shareholder filing the group of Murakami-led investors made was in March 2019 at 37.46% of shares outstanding. Because the company had 4.63% of shares outstanding as Treasury shares, that gave the group just under 40% of voting rights.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/112/926/original/Screenshot%202020-01-07%20at%203.08.33%20PM.png?1578380929" class="editor-image img-responsive" data-smartkarma-image-id="112926"></figure><div class="content-caption">source: tradingview.com, Quiddity</div>Murakami-san spent an average of ¥1431.3/share to buy those shares in the months up to July 2015 and at the announcement the shares jumped 35-40% briefly. By year-end, Murakami-san's daughter and another affiliated holder had built up small positions in the ¥1400-1500/share range, and in late November, C&amp;I Holdings KK bought its 9.49% block at ¥1666/share. That block was sourced from Murakami-san who had bought it at ¥1420.6/share. By early 2016, the shares were trading lower and they traded in a range of roughly ¥1200-1600 from early 2016 through mid-2018. In July 2018, the group owned just over 30.1%. The next 4+% was purchased at significantly higher prices. Given the fact that various entities have purchased shares at different prices and different times, then sold them to each other, it is more trouble than it is worth to figure out what the net average price is to the group, but looking at the chart, it is pretty easy to figure out that they probably paid north of ¥1400/share for the bulk of it. In early December 2019, when the shares were trading in the ¥1240-1280 range for the previous month, Murakami-san's group companies and <a href="https://www.smartkarma.com/entities/kaga-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:14600:1" rel="noopener">Kaga Electronics (8154 JP)</a> - a larger electronics parts, semiconductors, PCs, and peripherals supplier/distributor and electronics manufacturing services purveyor - announced a takeover/merger. <div class="content-highlight">
It is a small company with really only about 40% of the company in float. For that it is of little interest to most.
But it is a HIGHLY unusual structure.
</div>An SPC called City Index Eleven(s) (there appear to be two names used - one with an 's' and one without) owned by two Murakami group companies will conduct a sharemerger with Excel, with the consideration delivered to existing Excel shareholders in the form of cash at ¥1610/share.Then it gets weirder. A LOT weirder. For existing Excel Corporation shareholders, it is the functional equivalent of a Tender Offer with a target company shareholder approval determining the success of the cash takeover rather than asking holders to tender their shares.But there are a couple of tricks to this.More below.

Well-known Japan activist first got onto the radar of electronics/semiconductor trading company and contract supply manager Excel Co Ltd (7591 JP) as a large holder in July 2015. He had bought 5.15% of the stock in his own name, in a margin transaction with Mita Securities. By the end of the year, he was out but C&amp;I Holdings KK, Rebuild KK, and Minami Aoyama Fudosan KK owned 11.5%. By year-end 2016 it was 17.5% with advisor-lawyer Nakashima-sensei holding 6.00%. By end-2017 it was 24.33% and by end-2018 it was 34.49%. The last large-shareholder filing the group of Murakami-led investors made was in March 2019 at 37.46% of shares outstanding. Because the company had 4.63% of shares outstanding as Treasury shares, that gave the group just under 40% of voting rights.source: tradingview.com, QuiddityMurakami-san spent an average of ¥1431.3/share to buy those shares in the months up to July 2015 and at the announcement the shares jumped 35-40% briefly. By year-end, Murakami-san's daughter and another affiliated holder had built up small positions in the ¥1400-1500/share range, and in late November, C&amp;I Holdings KK bought its 9.49% block at ¥1666/share. That block was sourced from Murakami-san who had bought it at ¥1420.6/share. By early 2016, the shares were trading lower and they traded in a range of roughly ¥1200-1600 from early 2016 through mid-2018. In July 2018, the group owned just over 30.1%. The next 4+% was purchased at significantly higher prices. Given the fact that various entities have purchased shares at different prices and different times, then sold them to each other, it is more trouble than it is worth to figure out what the net average price is to the group, but looking at the chart, it is pretty easy to figure out that they probably paid north of ¥1400/share for the bulk of it. In early December 2019, when the shares were trading in the ¥1240-1280 range for the previous month, Murakami-san's group companies and Kaga Electronics (8154 JP) - a larger electronics parts, semiconductors, PCs, and peripherals supplier/distributor and electronics manufacturing services purveyor - announced a takeover/merger. 
It is a small company with really only about 40% of the company in float. For that it is of little interest to most.
But it is a HIGHLY unusual structure.
An SPC called City Index Eleven(s) (there appear to be two names used - one with an 's' and one without) owned by two Murakami group companies will conduct a sharemerger with Excel, with the consideration delivered to existing Excel shareholders in the form of cash at ¥1610/share.Then it gets weirder. A LOT weirder. For existing Excel Corporation shareholders, it is the functional equivalent of a Tender Offer with a target company shareholder approval determining the success of the cash takeover rather than asking holders to tender their shares.But there are a couple of tricks to this.More below.

Excel Co Ltd

Excel Corp (7591) - A VERY Odd Takeover