This has become a lot of fun.
First there was a poison pill proposal. Then a fight. Then the govt got involved. Then Shinsei called off the fight at the last minute (the poison pill EGM was meant for tomorrow).

Now the TOB is "clean" but if SBI gets its 58.2mm shares (27.68%
of voting rights), then afterwards it will be fun/complicated/messy.

It was knowable from the start but few seem to have thought it through.

The Tender going through as designed creates real problems.

Toys will fly out of prams.
It can be partly resolved through a technical action, and better resolved with some astute structuring, but it is not as clean as it should be.

Without TOO much hassle, it is resolvable.

But it is technical, and helpfully for all probably involves more accretion.
I'm gonna wait to see whether people figure this out.

[I wonder if that is why activist Murakami-san bought 9% of float - I kinda think it must be]

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More from @bauhiniacapital

22 Nov
Why are so many people selling subscriptions?

Why are so many people working in finance?

The difference? One group of people works for and gets paid by a single entity. The other group gets paid by lots of people.
Interestingly, a fund - regular or HF - often has many customers who pay a "subscription fee" by investing in the newsletter writer's ideas.

Of course, those particular newsletter writers front-run their own newsletters by investing realtime but only releasing newsletters
once a month, at best.

Those newsletter businesses have a higher cost base so they charge more, and they also often charge performance fees - sometimes for alpha, often for beta.

But there are LOTS of subscription-based financial services out there.
Read 13 tweets
17 Nov
For those following the Evergrande situation, there is one special commentator who deserves singling out.

The "former Fitch analyst" Dr Marco Metzler is the key man. He is a veritable fount of misinformation and bad analysis. And he is absolutely prolific. Today he had this out.
The "recent DMSA study" to which he refers, where he concludes that there must be massive CDS exposure to Evergrande, is today's press release.

It shows that Asian high yield bond funds held (and still hold) Evergrande bonds. Some are active, some are passive.
The first bit:

Top 10 Evergrande holding funds have lost $7bn this year. They own Evergrande which trade at 25cts on the dollar. Fitch says they are going to 5cts, therefore there is 20cts left, therefore they will lose $2bn more.

If they'd owned $10bn of EG to start 2021...
Read 16 tweets
14 Nov
@therobotjames For the sake of playing devil's advocate, I will take the other side of that, "for most" for a couple of reasons.

I will start with the following assumptions (which may be wrong-footed, but their mine):
a) there is no tax differential between high turnover and low turnover
@therobotjames b) we are talking institutional - comms are 2-5bp, cost structure in mgmt fees is, say 15-20bp/yr
c) end investors WANT active share risk which is why they pay you the big bucks to provide active risk.
@therobotjames What IS certain in this case is that
a) you are in the active mgmt business so it is CERTAIN you have inherent expectations of creating positive alpha vs benchmark. You may not succeed every week, but on average, that's your business model.
b) Moving from say 4.5bp/yr comm
Read 27 tweets
14 Nov
Weirdest thing, but getting less weird as time goes on.

Just had the third kingfisher (trying to figure out what it is - there are more different kingfishers than I knew) fly inside in the past 6 weeks.

Cute little buggers.

Got the cat ALL excited.
Kingfishers are year-round, but as we approach winter, LOTS more migratory birds show up. The striated heron we had standing on a railing 1 meter outside my front door yesterday when I woke up is non-migratory but I think came when his friends started showing up 2-3wks ago.
Over the winter, we get about a half dozen types of heron/egret, some cormorants, a number of other shore birds as well as a variety of songbirds. Going to try to attract more songbirds this year. The seabirds can stay further away. Pretty, sure, but cleaning up after them? Nah.
Read 4 tweets
13 Nov
An interesting 🧵.

The process described is commendable. The optimisation tweaks (i.e. lower turnover) are debatable.

In my experience if one has significant conviction in single name alpha and conviction in the sizing methodology, higher turnover can lead to significant value
add as long as one also has an understanding of the behavioral drivers of the alpha. If one has "fundamental driver" alpha, that will lead to longer horizons, and less confidence in one's ability to harvest cross-position noise. If one has confidence in non-LT fundamental driver
alpha (could be valuation, style bias, investor class bias, intracorrelation clusters, flows analysis) then alpha can be harvested over a much shorter horizon, and comms are low enough that the increase in Sharpe from changes in weighting will offset those cleanly.
Read 7 tweets
12 Nov
This is a man of determination and action, a man of profound thoughts and feelings...
...a man who inherited a legacy but dares to innovate...
...A man who has forward-looking vision and is committed to working tirelessly...
Read 4 tweets

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