Activist investors took advantage of Japan’s stock rout earlier this month to boost their holdings, seeking more influence over companies ranging from drugmakers to construction firms.
Funds affiliated with prominent Japanese activist investor Yoshiaki Murakami, Tokyo-based Strategic Capital and the United Kingdom’s Nippon Active Value Fund were among funds that added to their holdings during the Aug. 5 selloff, according to filings made to 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 automotive retailer Yellow Hat.
Activist investors have been adding to pressure on Japanese companies to improve shareholder returns, a goal they share with the nation’s policymakers, who are trying to make domestic stocks more attractive for global investors. The activists’ willingness to buy shares during the Japanese stock market’s biggest tumble since October 1987 on Aug. 5 is an indication that they don’t mind taking significant risks to boost their stakes in target companies.
Activist funds are contrarian value investors and “they probably thought the rout was the best buying opportunity,” said Masatoshi Kikuchi, pan-Asian chief equity strategist at Mizuho Securities in Tokyo. Traders follow funds with track records including Murakami’s and 3D Investment Partners on expectations of more upside price potential after increasing their stake, he said.
Other activist funds that increased shareholdings on Aug. 5 included Effissimo Capital Management and 3D Investment Partners, both based in Singapore, and U.S.-based Dalton Investments, filings show.
Shareholders that own more than a 5% stake in a company are required to submit a filing when their holdings change more than 1%. The filings only go back 60 days.