Tuesday, September 24, 2013

BlackBerry's Takeover by Fairfax (Prem's Parts Value Play)

Prem Watsa, CEO of Fairfax Financial is not dumb money. Billionaires rarely are when they are self made. What then really is the motivation for the takeover of BlackBerry and why now? Prem has been a shareholder for some time and already owns almost 10% of the firm. Why is the consortium wanting to take it over non-exclusive at this point? Fairfax Financial Holdings (FFH) has a current market cap of US$9BN today and is up 1% after the deal was announced. The acquisition target BlackBerry is also up 1%, that does not often happen in the market. Is this another confirmation case of the wisdom of crowds at play? 

Who is Prem Watsa anyway and is he a flash in the pan? No would be a clear answer. Born in India in1950, he joined his brother in Toronto, Canada in 1972, and has not looked back. Like Warren Buffet, he is a disciple of the classic investor Benjamin Graham, who wrote "the Intelligent Investor".  He started his career in 1974, with many of the people that he still works with today. Warren Buffet has worked with Charlie Munger, for a very long time. Long term executives know each other, respect each other and find the long-term professional career balance as a team are rare. Not loosing key executives and not having to change the executive team at Fairfax or it predecessor is a solid management strength. That kind of HR proof pays dividends too, and does so long term.

As explained, it could be the break up value of the various parts. Patents are now at a premium so if they could be sold separately, what would they sell for? Once private, the rest of the BlackBerry brand may be much cheaper.  It may also be worthwhile for a smaller player wanting to get into the space like Bloomberg terminal systems itself. Perhaps the financial information service is waiting for the patents to be sold before making a bid for the handset business on its own. During the recent Apple iPhone for the 5C/5S press conference recently, fingerprint reading on a mobile device received attention. This is already a technology in use by Bloomberg terminal users, so it may be a logical next step. For the right price, post any patent sale, it could indeed make the final price very attractive. Security is of vital importance to many financial users and if the device is good enough for the President of the USA, it may be safe enough with a fingerprint security system for less powerful executives in the financial world. 

For more Buy-Side and Sell-Side roles in Asia-Pacific, contact our TMJ Partners Japan & Asia Finance team.

Tokyo                                                              Tokyo
       Mark Pink                                               Shinichi Nagasawa

Thursday, September 12, 2013

東京オリンピック2020 (現地の声)

2020年の東京オリンピックの開催が決まった。安堵の相場上昇が始まった。今週と来週の始めは、多くの投資家の"株式を追いかけ"にともなう利益が見込まれるため、経験豊富な投資家は利益を確定している。野村、 MUFJ 、大和やその他の証券会社の動きはアクティブである​​。各証券会社は既に価格上昇が見込まれる主な株式詳細レポートをクライアントに送っていた。このブログではこの件に関する詳細には触れない。代わりに、東京及びその他の地域で実際に起こっていることを紹介しよう。

先週の日曜日に東京を歩いていると、多くの小売店で、 2020円の特別なランチセットを提供された。それは、通常の2倍のランチ価格だ。これは(A2人のための特別なランチ、または(B)高級ランチである。寿司屋、アイスクリームパーラー、コーヒーショップ、クレープショップなどで見受けられた。また秋葉原の小売業者は、3500円の扇風機を2020円に値下げし提供していた。




大量の英語レッスンが、若い世代に求められるであろう。彼らは、新たな観光客の波に対する英語でのサービスの必要に迫られるが、これは一晩では達成できない。ホテル、レストラン、小売店、サービススタッフは英語の学習を開始するであろう。この現象が大きくなればECC 、イーオン、 GABA 、ココ、ベルリッツ(ベネッセグループ)を含む "英会話"として知られる会話学校の多くは、スモールキャップスペースでのIPO可能性もある。

For more Buy-Side and Sell-Side roles in Asia-Pacific, contact our TMJ Partners Japan & Asia Finance team.

Tokyo                                                                 Tokyo
             Mark Pink                                                   Shinichi Nagasawa

Monday, September 9, 2013

Tokyo 2020: The REAL TRADES (Under Construction)

The Tokyo Olympic bid for 2020 is clear and the first relief rally in is now play. The early days of this week and next week will see many investors "chasing stocks" that will benefit, but the smart money will be selling the winners on the news to the maximize P/L in a price exit. Nomura, MUFJ, Daiwa and others have all sent out research on the major stocks that had a winning bid priced in. This blog post will not explain this but instead explain the local story right here on the ground in Tokyo and other parts of Japan.

If you walked around Tokyo yesterday a number of retail firms were offering special lunch sets for 2020 yen. That is twice the usual lunch price, so it is either A) a special for 2 people, or B) a luxury high end offering. This was observed at sushi restaurants, ice cream parlors, coffee, juice and crepe establishments. One retailer in Akihabara offered summer fans (for cooling) on sale for just 2020 yen, down from the retail price of 3500 yen. 

The consumer sector in many retail areas may be able to benefit from this new "special price point". It could bring a new bump in sales traffic that may surprise many who have been expecting retail sales declines. Trends end and the smart money gets ready for it early.

If you were anywhere near a TV in Japan yesterday, all day long, from the national broadcaster NHK to small cable news services, the Tokyo bid was covered all day. In all parts of Japan at 5:20am local time, various video scenes were replayed over and over. This was not just Tokyo, but across Japan. Many citizens woke early in the morning to celebrate. The follow up story was the price specials at 2020 yen. As the first wave learn a second wave will follow, retail sales may really surprise.

Many stories have covered the real estate increases from new offices expanding in Japan, mostly in Tokyo. Many other stories have also focused on the construction boom from the Olympic contracts. What else is being overlooked? The answer is a new wave of internationalization plus sports & health. 

The amount of English lessons that will be pursued by a new generation will to need to service a wave of visitors that cannot be achieved overnight. Hotels, restaurants, and retail service staff will all start learning more English, conversation schools also known as "eikaiwa" including ECC, Aeon, GABA, CoCo, and Berlitz (Benesse group) may all be possible IPO plays in the small cap space if things mushroom.

Many news stories yesterday focused on the prestige of being a torch carrier for the Olympic flame. The Japanese do not prepare lightly, and many joggers mentioned that a big motivation for them was to run hard and get a chance to hold the flame. Mizuno and a variety of other sports retailers will all benefit from the health and fitness boom that could be on the way in the years to come. 

For more Buy-Side and Sell-Side roles in Asia-Pacific, contact our TMJ Partners Japan & Asia Finance team.

Tokyo                                                              Tokyo
          Mark Pink                                                       Shinichi Nagasawa

Wednesday, September 4, 2013

Asia Currency Crisis Part 2 CIIT Markets

Yesterday on Bloomberg Douglas E. Cote of ING US Investment Management stated emerging markets will change. In fact, we may be in the middle of a second Asian currency crisis as indeed Thailand has many more reserves compared to the first currency crisis during 1997/1998, but they still may not be enough to stave off the crisis. The percentage impact of these reserves in relation to the economic growth of emerging markets may not have kept pace in proper ratio.

The players in the current crisis may be different from 1997, but the Asia market impact is still the same. CIIT (China, India, Indonesia, Thailand) currency markets seem to be taking the brunt of the difficulty from any US Federal Reserve tapering but will this spread to other currencies in other emerging markets, and will first world economies follow?  India's currency restrictions on the Rupee are certainly not helping the current situation.

Are these emerging markets the first wave of a short term impact, and will other markets follow? If Australia is nothing more than a proxy from China, is that a logical expectation? 

Douglas certainly gives the FX observer in Asia. There is much lot to consider in this excellent Bloomberg interview. 

Click here for the full interview, as it is certainly worth a 4 minute look.

For more Buy-Side and Sell-Side roles in Asia-Pacific, contact our TMJ Partners Japan & Asia Finance team.

Tokyo                                                              Tokyo
       Mark Pink                                               Shinichi Nagasawa

Monday, September 2, 2013

NEWS UPDATE Bloomberg's Takeover Bid for BlackBerry, the Business Mobile Marriage

Morgan Stanley needs to find a balance on how to give its core staff more BYOD (Bring Your Own Digital) choice or just stick with BlackBerry in the future - They are not alone, and yet if major CTOs at banks in Canada, like Royal Bank of Canada or Bank of Montreal are already in final stages of the Z10/Q10 upgrade, is it truly that risky? After all, well-run conservative institutions often run smoothly on purpose.

A major US bank with 100,000 staff in a testing program (perhaps even JPM who are doing the sale) may not have to wait long if the upgrades happen smoothly with other major financial firms. Regardless the timing of any upgrade, sale or the delay of a possible sale, does have corporate client implications for BlackBerry and its core financial client base. 

Timing is everything, and BB users want the latest version to work more efficiently. 

Does Bloomberg have a scheduled timing plan that could be influencing various investment banks who would want a consolidated offering? The faster a sale by RBC or JPM to a new firm, hopefully to Bloomberg, the better for all, Morgan Stanley included. The financial clients are waiting.

To read the full article click here.

For more Buy-Side and Sell-Side roles in Asia-Pacific, contact our TMJ Partners Japan & Asia Finance team.

Tokyo                                                              Tokyo
       Mark Pink                                                 Shinichi Nagasawa