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

Shin-Etsu Reports Double-Digit Growth in Revenue and Operating Profit; Stock Is Clearly Undervalued

Shin-Etsu Revises FY03/19 Upwards Guidance Following Strong 1H Performance

Construction Activities in Key Economies and Robust Demand for Semiconductor Silicon Drive Earnings

Quiddity Advisors

Event-Driven

On 12 March 2019 after the close, <a href="https://www.smartkarma.com/entities/4481" target="_blank" data-smartkarma-citation="entities:4481:1">Shin Etsu Chemical (4063 JP)</a><a href="https://www.shinetsu.co.jp/en/news/pdf/s2019031201E.pdf" target="_blank">announced</a> a share buyback program to buy up to 14 million shares for up to ¥100 billion. If it bought all 14 million shares, that would be 3.3% of shares outstanding. Simultaneously, it <a href="https://www.shinetsu.co.jp/en/news/pdf/s2019031202E.pdf" target="_blank">announced</a> a ToSTNeT-3 buyback of 11,001,100 shares at today's closing price of ¥9,090/share which if all bought would complete the buyback program. As I write, the shares are up 4-6% in thin trading in the ADRs. There was some speculation across the Street there would be a buyback because of slowing earnings expectations and a surfeit of capital, which was itself important because of the company's lack of recent history of buybacks (the last and only time the company has bought back shares (to date) was a repurchase of 3 million shares for ¥13.6 billion in late October 2008 when things were hairy (and cheap)). The shares are down over the past year, but the price in the past few days is not dramatically at the low end of the range of the past six months or so.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/081/816/original/Screen%20Shot%202019-03-12%20at%207.09.56%20PM.png?1552417868" class="editor-image img-responsive" data-smartkarma-image-id="81816"></figure>There may be some information in the context and structure of this buyback which tells you something different than people's first reaction.

On 12 March 2019 after the close, Shin Etsu Chemical (4063 JP)announced a share buyback program to buy up to 14 million shares for up to ¥100 billion. If it bought all 14 million shares, that would be 3.3% of shares outstanding. Simultaneously, it announced a ToSTNeT-3 buyback of 11,001,100 shares at today's closing price of ¥9,090/share which if all bought would complete the buyback program. As I write, the shares are up 4-6% in thin trading in the ADRs. There was some speculation across the Street there would be a buyback because of slowing earnings expectations and a surfeit of capital, which was itself important because of the company's lack of recent history of buybacks (the last and only time the company has bought back shares (to date) was a repurchase of 3 million shares for ¥13.6 billion in late October 2008 when things were hairy (and cheap)). The shares are down over the past year, but the price in the past few days is not dramatically at the low end of the range of the past six months or so.There may be some information in the context and structure of this buyback which tells you something different than people's first reaction. 

Shinetsu Buyback - Maybe More Than It Appears