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

Japan Asia Group MBO Fails, Now JAG Against Murakami's Higher Bid

Japan Asia Group (3751) : Defense Against Hostile TOB Is Bad News

Murakami-San Launches New JAG (3751) Tender Offer

Japan Asia Group (3751): Murakami Wins the Mother Of All Bumps +100%

Murakami Fund's Tender for JAG (3751):  May Be Rangebound Near-Term

Japan Asia (3751 JP) Management Buyout: Should There Be a BUMP?

Quiddity Advisors

Event-Driven

<div>
<p>On the 26th of January 2021, after two+ months of trading through the original, entirely inadequate, ¥600/share terms, and two weeks after it became clear that renowned Japanese activist Yoshiaki Murakami might launch a counter Tender Offer at ¥840/share, the original bidder consortium re-arranged their finances to come in and bid double - ¥1,200/share.</p>
<p><a href="https://www.smartkarma.com/profiles/janaghan-jeyakumar-cfa" target="_blank" data-smartkarma-citation="accounts:3173" rel="noopener">Janaghan Jeyakumar, CFA</a> originally wrote about this deal on 5 November asking <a href="https://www.smartkarma.com/insights/japan-asia-3751-jp-management-buyout-should-there-be-a-bump" target="_blank" data-smartkarma-citation="insights:44928" rel="noopener">Japan Asia (3751 JP) Management Buyout: Should There Be a BUMP?</a> (where the obvious answer was yes because a) it was too cheap, and b) the substantial debt meant that buying it one turn of EBITDA higher meant a 40% bump in share price, and c) it wasn't going to be that easy to get to the minimum because the acquirers did not have that many friendly shareholders on the register).</p>
<p>I followed up with <a href="https://www.smartkarma.com/insights/murakami-fund-s-tender-for-jag-3751-may-be-rangebound-near-term" target="_blank" data-smartkarma-citation="insights:47158" rel="noopener">Murakami Fund's Tender for JAG (3751):  May Be Rangebound Near-Term</a> which did NOT expect the overbid soon (because Murakami-san's tender offer still needed regulatory approval) and <a href="https://www.smartkarma.com/insights/japan-asia-group-3751-murakami-wins-the-mother-of-all-bumps-100" target="_blank" data-smartkarma-citation="insights:47437" rel="noopener">Japan Asia Group (3751): Murakami Wins the Mother Of All Bumps +100%</a> when the bidders overbid themselves. </p>
<p>I called the overbid <strong>"patently offensive"</strong> - not because the bid itself was offensively priced but because the independent directors were willing to support the first one. I believed that Murakami-san, by shedding light on the money being left on the table, had effectively "shamed" chairman Yamashita-san into paying somewhere near the right price. I concluded this was <em>probably</em> a knock-out bid, but that if a bidder was willing to change his bid from ¥600 to ¥1,200/share, he'd probably be willing to pay more, and I'd be willing to buy tight to terms.</p>
<p>Quasi-miraculously, on the 28th of January when the shares traded freely again, they traded below terms for about an hour. And then went higher. </p>
<section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/775/original/Screenshot+2021-02-04+at+8.49.28+PM.png?1612442985" class="editor-image img-responsive" data-smartkarma-image-id="186775"></figure></section><p></p></section><p></p>
<h3>The NEW News</h3>
<p>Today we have new news (<a href="https://www.japanasiagroup.jp/wordpress/wp-content/uploads/2021-2-4.pdf" target="_blank" rel="noopener">announcement</a> (Japanese-only) that the Murakami-affiliated bidder City Index Eleventh has launched an overbid at ¥1,210/share. </p>
<p>The explanation is an eye-opener, and the strategy is very well done.</p>
<p>More below the fold.</p>
<p></p>
</div><div><p></p></div>


On the 26th of January 2021, after two+ months of trading through the original, entirely inadequate, ¥600/share terms, and two weeks after it became clear that renowned Japanese activist Yoshiaki Murakami might launch a counter Tender Offer at ¥840/share, the original bidder consortium re-arranged their finances to come in and bid double - ¥1,200/share.
Janaghan Jeyakumar, CFA originally wrote about this deal on 5 November asking Japan Asia (3751 JP) Management Buyout: Should There Be a BUMP? (where the obvious answer was yes because a) it was too cheap, and b) the substantial debt meant that buying it one turn of EBITDA higher meant a 40% bump in share price, and c) it wasn't going to be that easy to get to the minimum because the acquirers did not have that many friendly shareholders on the register).
I followed up with Murakami Fund's Tender for JAG (3751):  May Be Rangebound Near-Term which did NOT expect the overbid soon (because Murakami-san's tender offer still needed regulatory approval) and Japan Asia Group (3751): Murakami Wins the Mother Of All Bumps +100% when the bidders overbid themselves. 
I called the overbid "patently offensive" - not because the bid itself was offensively priced but because the independent directors were willing to support the first one. I believed that Murakami-san, by shedding light on the money being left on the table, had effectively "shamed" chairman Yamashita-san into paying somewhere near the right price. I concluded this was probably a knock-out bid, but that if a bidder was willing to change his bid from ¥600 to ¥1,200/share, he'd probably be willing to pay more, and I'd be willing to buy tight to terms.
Quasi-miraculously, on the 28th of January when the shares traded freely again, they traded below terms for about an hour. And then went higher. 

The NEW News
Today we have new news (announcement (Japanese-only) that the Murakami-affiliated bidder City Index Eleventh has launched an overbid at ¥1,210/share. 
The explanation is an eye-opener, and the strategy is very well done.
More below the fold.



Overbid: JAG Special Committee Plays Stupid so Murakami Plays Hardball