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

Tokyo Dome – Assessing the Realism of Oasis Estimates

ISS Takes Umbrage with Tokyo Dome, Recommends Booting the CEO from the Board

Smartkarma North Asia Weekly: Xiaomi, Tokyo Dome, POTUS Executive Order, and Sell Zozo, Nio, & M3

Mitsui Fudosan Tender For Tokyo Dome (9681) Mooted

Yomiuri Land (9671) Takeover - Probably The Wrong Price But Whaddya Gonna Do?

Quiddity Advisors

Event-Driven

Friday morning, the Nikkei said there was a deal in the offing where Mitsui Fudosan would bid for <a href="https://www.smartkarma.com/entities/tokyo-dome-corp" target="_blank" data-smartkarma-citation="entities:6421:1" rel="noopener">Tokyo Dome Corp (9681 JP)</a>.  As someone concerned with the governance weakness shown too many times in Japanese takeover situations, I am almost automatically disappointed to see such headlines. It leads me to expect that later the same day I will be mumbling words at my monitor that I should not say aloud. 
I did Friday.
My constant question is HOW can independent directors of companies with unique and valuable assets deign to sell them at such inexpensive prices? Often those unique and valuable assets are uniquely valuable items such as cash, portfolios of listed securities, and land and property assets with an easily external valuation. 
Sometimes cash and securities get tossed into a DCF as being assets which need to be discounted 9-11% a year on their ability to throw off cash, never mind the fact that the equity holdings are purchased at cash flow yields of 2-3% and bonds are bought with yields of 0-1%. Real estate holdings are usually purchased at yields of 4-6%. So automatically, anything of any real value and inherently low cash-flow yield gets marked down for the friendly buyer. Extra cash is almost never dividended out, and there is never (with the one exception of the takeover of <a href="https://www.smartkarma.com/entities/asatsu-dk-inc" target="_blank" data-smartkarma-citation="entities:8715:1" rel="noopener">Asatsu Dk Inc (9747 JP)</a> a few years ago) any tally of what the non-operating assets are worth to create an Adjusted Enterprise Value. 
This time is no different. 
This is a big fat piece of land in central Tokyo, and a fair number of unique, quite unreplaceable assets and businesses which should command a moat. And earnings have been penalized for years by a total lack of effective maintenance and stewardship by management. 
Oasis proposed buying the company at ¥1300/share in January but said the stock was worth well over ¥2000/share in its public <a href="https://static1.squarespace.com/static/5dd62b05f226644911c6d4e1/t/5efabd9b2d98f71482b79156/1593490878125/OASIS+-+A+Better+Tokyo+Dome+Presentation.pdf" target="_blank" rel="noopener">presentation</a> at the same time. Mitsui Fudosan - a professional strategic owner of prime property assets - bid ¥1200/share earlier this month before being asked to bid ¥1350/share. They bid ¥1300/share.
I am not sure the conversation ends there.
My analysis continues below.

Friday morning, the Nikkei said there was a deal in the offing where Mitsui Fudosan would bid for Tokyo Dome Corp (9681 JP).  As someone concerned with the governance weakness shown too many times in Japanese takeover situations, I am almost automatically disappointed to see such headlines. It leads me to expect that later the same day I will be mumbling words at my monitor that I should not say aloud. 
I did Friday.
My constant question is HOW can independent directors of companies with unique and valuable assets deign to sell them at such inexpensive prices? Often those unique and valuable assets are uniquely valuable items such as cash, portfolios of listed securities, and land and property assets with an easily external valuation. 
Sometimes cash and securities get tossed into a DCF as being assets which need to be discounted 9-11% a year on their ability to throw off cash, never mind the fact that the equity holdings are purchased at cash flow yields of 2-3% and bonds are bought with yields of 0-1%. Real estate holdings are usually purchased at yields of 4-6%. So automatically, anything of any real value and inherently low cash-flow yield gets marked down for the friendly buyer. Extra cash is almost never dividended out, and there is never (with the one exception of the takeover of Asatsu Dk Inc (9747 JP) a few years ago) any tally of what the non-operating assets are worth to create an Adjusted Enterprise Value. 
This time is no different. 
This is a big fat piece of land in central Tokyo, and a fair number of unique, quite unreplaceable assets and businesses which should command a moat. And earnings have been penalized for years by a total lack of effective maintenance and stewardship by management. 
Oasis proposed buying the company at ¥1300/share in January but said the stock was worth well over ¥2000/share in its public presentation at the same time. Mitsui Fudosan - a professional strategic owner of prime property assets - bid ¥1200/share earlier this month before being asked to bid ¥1350/share. They bid ¥1300/share.
I am not sure the conversation ends there.
My analysis continues below.

Tokyo Dome Sells Itself For the Wrong Price