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

Oriental Land: Tokyo Disney Resorts Closed, The Tender Buyback Could Be Preventing a Further Decline

OLC Ltd (4661 JP): Multiples Pose More Of A Danger To Tokyo Disney Resort Than Heatwave & Typhoons

Quiddity Advisors

Event-Driven

As discussed in <a href="https://www.smartkarma.com/insights/oriental-land-buyback-tender-offer" target="_blank" data-smartkarma-citation="insights:36204" rel="noopener">Oriental Land Buyback Tender Offer</a>, on 30 January this year when they announced Q3 results, <a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a> also launched a buyback tender offer which was designed to buy back shares from one of its large cross-holders, <a href="https://www.smartkarma.com/entities/mitsui-fudosan-co-ltd" target="_blank" data-smartkarma-citation="entities:565:1" rel="noopener">Mitsui Fudosan (8801 JP)</a>. It did so using the format of an Own Share Tender Offer, which creates strange issues around how much money actually comes out of it for most shareholders. It was launched at a price (¥13830) which was below the market and that was, itself, a reason why most people would not have wanted to sell shares into the Tender Offer. <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/121/167/original/Screenshot%202020-03-03%20at%204.09.48%20PM.png?1583223014" class="editor-image img-responsive" data-smartkarma-image-id="121167"></figure>It looked like the Partial Tender would go fine. It was below market, and there was friction in the thing (for more on the friction, which is real for all except for a small minority of market participants, please read the details in the original piece <a href="https://www.smartkarma.com/insights/oriental-land-buyback-tender-offer" target="_blank" rel="noopener">here</a>).Shares traded above ¥14000 for almost all of the next two weeks. Then coronavirus fears started, then people in the west started getting more worried. There were fears of large crowds and rumors that Tokyo Disneyland might close temporarily. In the US, Donald Trump told everyone not to worry, which of course made fears worse. Shares dropped sharply in the last week of February. This presented an opportunity for some market participants (I noted the put option in the previous insight, and only a few people contacted me to discuss).The share price fall led to possibilities, and with the results out now, leads to potential issues, discussed below.And it turns out that Tokyo Disneyland <a href="http://www.olc.co.jp/ja/news/news_olc/20200228_1/main/0/link/0228.pdf" target="_blank" rel="noopener">announced</a> a temporary closure, from 29 February to 16 March, on the 28th of February.

As discussed in Oriental Land Buyback Tender Offer, on 30 January this year when they announced Q3 results, Oriental Land (4661 JP) also launched a buyback tender offer which was designed to buy back shares from one of its large cross-holders, Mitsui Fudosan (8801 JP). It did so using the format of an Own Share Tender Offer, which creates strange issues around how much money actually comes out of it for most shareholders. It was launched at a price (¥13830) which was below the market and that was, itself, a reason why most people would not have wanted to sell shares into the Tender Offer. It looked like the Partial Tender would go fine. It was below market, and there was friction in the thing (for more on the friction, which is real for all except for a small minority of market participants, please read the details in the original piece here).Shares traded above ¥14000 for almost all of the next two weeks. Then coronavirus fears started, then people in the west started getting more worried. There were fears of large crowds and rumors that Tokyo Disneyland might close temporarily. In the US, Donald Trump told everyone not to worry, which of course made fears worse. Shares dropped sharply in the last week of February. This presented an opportunity for some market participants (I noted the put option in the previous insight, and only a few people contacted me to discuss).The share price fall led to possibilities, and with the results out now, leads to potential issues, discussed below.And it turns out that Tokyo Disneyland announced a temporary closure, from 29 February to 16 March, on the 28th of February.

Oriental Land - Buyback Interrupted, and an Overhang?