Japan Post Holdings IPO => How Hedge Funds Think! Short and Long Term! 日本郵政ヘッジファンドのアイデア!

Financial history was made on November 4, 2015, when the Japanese government finally privatized Japan Post. It was the 10 year brainchild of former prime minister Koizumi. This was the biggest IPO privatization since 1998. With 15%, 25% and 55% returns on day one of the IPO, all seems to have gone well.

There have been many big Japanese IPO privatizations, and most have done well well for retail investors. Back in 1998, it was NTT Docomo, and before that 1987 saw the privatization of NTT itself. The price per share was on the high end of the initial range,and was full of interest. However, is it a short term trade? or a longer term investment? Manys factors indicate it will do even better longer term.

How do hedge funds think about this IPO? How are they figuring out this trade? How many angles need to be figured out before next week, after the IPO? are there different layers of this trade? if so, how many ways are possible for further returns via retail or institutional buying actions? 

The big picture is that this IPO may trigger the retail investor in Japan to finally buy equities more broadly. For many years, savings with the more risk averse elderly, have remained within JGBs & CDs. This month could see a huge trend in the savings pattern of "Mrs Watanabe". Only this kind of offering could change her habits by moving from debt to equity. All this, providing liquidity within the TSE. 

Unlike in 1998, the amount of online trading in Japan by day traders, has increased many multiples. This relatively new active retail investor base has not been seen for an IPO of this scale. The mythical "Mrs Watanabe investor" is more buy and hold. There are many ways to trade, and day traders will have a strong spin on the first days of trading. The larger number of less active retail investors though will watch and wait for a much longer period. 

Institutional investors who did not get as much initial allocation pre-IPO may use those extra funds to buy post IPO if the first days move positively. How much money is "waiting in the wings" may be underestimated. Given the limited 11% or so of float, a lot of frustration may see post IPO buyers and boost the price higher than with other privatizations. 

A lot of government credibility is behind this deal more than others of the past, so momentum may be much stronger than seen on the surface. So far, 8 out of 10 Japanese privatizations have gone well longer term, and Japan Post may be another. The "feel good factor" may continue beyond this first trade. The retail taste for more equity returns may force more bond savers to re-allocate towards equities this year and next at a retail level. 

The overall market works in pure beta, and may be evolving, so anticipating this core change is where hedge funds are thinking now. Will the other 8 privatizations get a second wave of buying interest? Will the 0.47 book value on the Japan Post Bank rise to equal and surpass 0.7 with most mega banks? will this be the first exit before some profits are taken off the table? 

If the IPO goes well, which vendors will benefit most from the raised cash? Are there local pockets of Tohoku industries that are best positioned to benefit? The questions are endless, but the mind set remains the same. The market knows what it is doing but hedge funds need to figure out what that is. Seeing the pattern first, and being in front of it, is the core way of making money when small and nimble. 

This is a very historic IPO, and could be the first domino of many that may be positive for Japanese equity markets. This means not just today, but for some time to come. Let's keep an eye on how things are changing because global hedge funds already are.

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あなたがアジアや日本のセールストレーディング,
バンキング、フィンテックの役割に興味がある場合は、こちらをクリックしてください。ティエムジェィパートナーズをTwitterでフォローしてください！ 世界中のTwitterで第1位の採用企業、45,000以上のフォロワーが既に持っています！クリックしてください。

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

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Point72 expands its Family Office, ポイント72は、そのファミリーオフィスを拡大 it's not just SAC version 2.0 it is better

Point72 Asset Management, the new family office for Steven A. Cohen, will re-open its London branch again in 2016. This former SAC Capital office, was closed years before, in a different trading period. With the US Fed now considering raising interest rates, a very debt heavy European market would seem ready to trade with "risk on", as a result. If the Greek crisis and China peak have now passed, perhaps a European economic recovery will finally start. These seem to be the background factors in the re-opening its London branch again. 

Why now, and why so publicly? Family Offices like Point72 are known to be extremely secretive, like the hedge funds they compete with, so why now? President of Point72, Doug Haines said on Wall Street Week, that a key reason to be public is the hunt for talent. They now have over 850 staff and 350 investment professionals. He confirmed that the firm is hiring, in fact they hired over 100 analysts recently across 6 offices including Hong Kong, Singapore and Tokyo. In addition, they have promoted in-house analysts more than before. 

This is not just media spin, as real actions have been taken to prove the point. The internal promotion culture is changing, and for the better. Again, on Wall Street Week, Doug Haynes confirmed that, "out of the 9 portfolio managers that were designated PMs within Point72, only one was an outside hire, 8 were internally developed", so joining as an analyst give you a massive edge on the road to being a PM. It worked for Fidelity, why not Point72? Compliance and technology also seem to be hiring.

It is not a hire and fire culture either. As stated on Wall Street Week, the industry average of turnover for PMs is close to 20% while at Point 72 it is less than 10%. Analysts are under 5% turnover, again very low for the industry. Doug was a programmer for the CIA in the past, and feels that "incu-tel" or the ability to incubate new technology to read documents for intelligence gathering, can be used for financial markets. This same technology is what he is hoping to drive forward support for analyst research results internally.

There are 3 mission statement points at the core of the new Point72 Asset Management. Number (1) is to the the premier asset management firm. Number (2) is to have the highest ethical & professional standards. Number (3) is to bring the best opportunities for the brightest talent. It seems that to grow top talent, you need to be public about this, and keep a healthy flow of new blood spreading across the firm.

If you want to see the full interview online, go to the following link at Wall Street Week right here. Every Sunday, they publish updates with similar high profile financial leaders every week. Keep your edge with all things financial.

Please visit us for our Friday Feature Review where TMJ Partners will review books, movies, and anything else with a financial theme.  Thank you for reading and learning more about how money is made in finance!

If you are interested in Sales & Trading, Banking or FinTech focused roles in Asia or Japan then click here. Follow TMJ Partners on Twitter, the world's #1 recruiter on Twitter, over 45,000+ followers already have! click here! 

あなたがアジアや日本のセールストレーディング,
バンキング、フィンテックの役割に興味がある場合は、こちらをクリックしてください。ティエムジェィパートナーズをTwitterでフォローしてください！ 世界中のTwitterで第1位の採用企業、45,000以上のフォロワーが既に持っています！クリックしてください。

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

    Tokyo                                                                Tokyo

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      Direct + 81 3 3505 3891                                       Direct  +81 3 3505 3891

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Top Money Trades: Volkswagen=> How Hedge Funds Think! フォルクスワーゲンのヘッジファンドのアイデア!

The biggest business story last week after the US Fed's non-move on rates, has been Volkswagen. Within every great crisis is an opportunity, and many hedge funds around the world are figuring it out, fast. Profits await!

It has been a full week since the first news broke on the diesel scandal, and a new CEO has already left and been replaced. This is fast paced work, often seen within German factories, but less so within the executive suite. 

Hedge funds in the US, Europe and Asia, have all taken notice along with internal prop teams that still exist. Time is now ticking to find the right trade to make money from this major event. It is not only the large cap Volkswagen stock, but many more interesting auto parts suppliers. 

Indeed many stocks will be impacted by the Volkswagen scandal, yet few have figured out the P/L yet with any financial precision. There is money to be made in small & mid caps within the auto parts sector perhaps.

There seem to be 3 main paths to expect, with a wide variety of profits to be made. Various analysts this week have discussed how they may play out. Let's start with the main equity in play, and the first 3 paths of possibility. What are they exactly?

A) The stock will rebound quickly and recoup losses within 6-12 months and follow in the steps of Toyota after it own recent scandal.
B) The stock will find itself in US bankruptcy or worse, and follow the experience of GM after the Lehman crisis.
C) The stock will flounder for 5+ years like BP after its own oil spill scandal, and not recover in the short term leaving investors with "Dead Money" to deal with in many portfolios.

The possibility for A or B now seem most likely, as the new CEO from Porsche, Matthias Mueller, has now been put in place. It happened in a very clear smooth fashion that Japanese corporates in particular, could never match. 

The next phase seems to be the follow up trades once a CEO is in place. A number of hedge fund and sell-side analysts seems to be focusing on 3 key areas next.

D) What auto parts manufacturers in Asia, US or Europe may suffer losses or delayed orders from diesel vehicles. Any catalytic converter impact will dominate this space.
E) Which commodities like palladium used for diesel catalytic converters,will be impacted with price falls due to less activity within the diesel space. They are often trades via ETFs.
F) Which US legal firm will be hired to defend Volkswagen as many top legal firms are listed. This new client could pay large legal costs that would positively impact the law firm's P/L for 2-3 years.

Please note that the testing equipment maker sued to catch Volkswagen was made in Japan by Horiba TSE code 6856. The stock peaked on July 6 at 5250, fell to 3940 on Sept 4, and recovered to 4580 as of intraday Oct 2. This is one of many long and short ideas that many hedge funds are looking at right now.

Very curious to see how a major buyer has seen value in the ordinary shares last week ending the Oct 9 price up some 8%. As the shares include voting rights, not just dividends, the most likely suspects seem to be influential investors. It may even be the two private families of Porsche and Piech, as they may be doing the additional buying. They are already two major shareholders. Confirmation details will confirm the holdings in time.

There will be other Volkswagen trade twists to come, but these seem to be at the forefront right now!

If you are interested in Sales & Trading, Banking or FinTech focused roles in Asia or Japan then click here. Follow TMJ Partners on Twitter, the world's #1 recruiter on Twitter, over 45,000+ followers already have! click here! 

あなたがアジアや日本のセールストレーディング,
バンキング、フィンテックの役割に興味がある場合は、こちらをクリックしてください。ティエムジェィパートナーズをTwitterでフォローしてください！ 世界中のTwitterで第1位の採用企業、45,000以上のフォロワーが既に持っています！クリックしてください。

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

      Direct + 81 3 3505 3891                                       Direct  +81 3 3505 3891

            Email pinkmark@tmjpartners.com                         Email nagasawa@tmjpartners.com

Friday Feature Review: Beat Takeshi explains China's Shadow Banking Bubble on Japanese TV?

Last Sunday April 5, 2015. Beat Takeshi, a well known actor and comedian in Japan, hosted his regular weekly show called TV Tackle, but the subject was far from regular. China's shadow banking system and its huge bubble, mirrors Japan's own 20 years before, and was the subject. 

As Michael Douglas said in Wall Street 2, "only a fisherman recognizes another fisherman", and only a former bubble economy like Japan, can see what a second bubble looks like for China, having fully been there. The shadow banking twist though, brings new meaning to huge bubble numbers. At its peak China current shadow banking bubble is over 8 times the size of Japan's peak.

Meeting wild--spending real Chinese, who live in large condo residences of 720 square meters or more, adds to the appeal of TV voyeurism. The US$40 million interior of this condo begs the viewer to wonder, where did the money come from? Is it real or may much of its value evaporate like it did in Japan?  Is China's economy having another "bubble movie part 2" just 8 times larger than Japan 20 years before?

To say that his show is light in content, and far from hard hitting journalism is hard to argue with. However, this week's show had a real sense of impact that only a former bubble economy could sense. Unlike the US, where investigative shows like 60 minutes have huge audiences in prime-time, Japan has similar shows, but never with the same audience numbers. I have to wonder if this is changing? 

The opening showcased huge spending of the growing tourist influx visiting Japan, often from mainland China, and the excess spending they attempt while in Japan. The authentic, and rarely fake items, sometimes only made & sold in Japan by major designers, are highly prized back in China. 

It is satisfying to see that a possible shadow banking bubble is even now discussed on prime time Japanese TV. It often is a sign that a pop may soon be around the corner. Time will tell of course, but hopefully later, not sooner. Japan needs the tourist dollars right up until the Olympics in 2020.

Please visit us for our Friday Feature Review where TMJ Partners will review books, movies, and anything else with a financial theme.  Thank you for reading and learning more about how money is made in finance!

If you are interested in Sales & Trading, Banking or FinTech focused roles in Asia or Japan then click here. Follow TMJ Partners on Twitter, the world's #1 recruiter on Twitter, over 45,000+ followers already have! click here! 

あなたがアジアや日本のセールストレーディング,
バンキング、フィンテックの役割に興味がある場合は、こちらをクリックしてください。ティエムジェィパートナーズをTwitterでフォローしてください！ 世界中のTwitterで第1位の採用企業、45,000以上のフォロワーが既に持っています！クリックしてください。

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

      Direct + 81 3 3505 3891                                       Direct  +81 3 3505 3891

            Email pinkmark@tmjpartners.com                         Email nagasawa@tmjpartners.com