Activist investors took advantage of Japan’s stock market crash earlier this month to increase their holdings, seeking to gain influence over companies ranging from pharmaceuticals to construction firms.
Funds tied to prominent Japanese activist investor Yoshiaki Murakami, Tokyo-based Strategic Capital and Britain’s Nippon Active Value Fund were among those adding to their holdings during the Aug. 5 sell-off, according to documents filed with the Finance Ministry. They bought a total of 2.8 million shares, the most in at least 60 days, in companies including Sumitomo Mitsui Construction and auto retailer Yellow Hat.
Activist investors have been increasing pressure on Japanese companies to improve shareholder returns, a goal they share with the country’s policymakers, who are trying to make domestic stocks more attractive to global investors. The activists’ willingness to buy shares during the biggest Japanese stock market decline since October 1987 on Aug. 5 is an indication that they are not averse to taking significant risks to boost their stakes in targeted companies.
Activist funds are contrarian value investors and “they probably thought the rout was the best buying opportunity,” said Masatoshi Kikuchi, pan-Asia chief equity strategist at Mizuho Securities in Tokyo. Traders follow funds with track records, including those of Murakami and 3D Investment Partners, based on expectations of more upside price potential after raising their stakes, he said.
Documents show that other activist funds that increased their holdings on August 5 included Effissimo Capital Management and 3D Investment Partners, both based in Singapore, and US-based Dalton Investments.
Shareholders who own more than 5% of a company’s stake must file when their stake changes by more than 1%. The filings only go back 60 days.
