There have been a few posts and replies on this company already but I think, given the absurdity of the situation, its worth its own post, especially given the recent filings. The company is Hi-Lex 7279.T. Yesterday, the founding family upped its position from 25.7% to 27.3% (they now control a total of 35% of the vote, through joint filings). @TeddyOkuyama has a nice post about this company already. Hi Lex is trading at 30% of its tangible book! They have 54bn yen of redundant (and liquid) cross shareholdings (100% of its mkt cap). 35bn yen of net cash (64% of its mkt cap). 9bn yen of receivables and 64bn yen (120% of mkt cap) of property and other assets. Last year, the company published this "defense from TOB" document. hi-lex.co.jp/wp-content/uplo…. Within this anti-capitalist tirade, management ironically talk about corporate governance and free markets....I have no idea what motivated them to publish this, given there has not been a public activist campaign since 2007, when Steel Partners recognized the deep value opportunity here. warrenlichtenstein.com/media… Interestingly, the company meets all of the requirements to move up from TSE Standard to TSE Prime, which would result in something like 50 days of volume of passive buying. In theory they should love the idea of this, given that the stock is so illiquid, higher passive ownership would serve as an even stronger barrier to potential activism. So why are they not applying? My view is that they don't want to be on a TSE "name and shame" list of companies trading below book value...and feel like hiding out on TSE standard will help them fly under the radar. From these insider share purchase filings yesterday, one can assume that the family is either trying to secure even more voting control to block a potential activist campaign, or in preparation for some sort of family buy out (so they don't have to deal with the TSE "bullying" anymore). Buying out this company anywhere near where it is trading now, would be a form of robbery against minority investors, as its liquid securities and cash alone are significantly higher than the market cap here. This situation is somewhat of a microcosm for the governance problems Japan has faced for the better part of 3 decades now. I'm not sure there is any opportunity here. It appears like this TOB defense and insider buying is more of a battle against TSE governance reforms, and the "name and shame" campaign (they plan to launch on Monday), more so than any specific activist campaign. It would be unfortunate, if this goes the way of 4987, Teraoka Seisakusho-- where ultimately management was able to rob minority investors and take the company private 50% below book value.

Digital Garage (4819.T) is one of those Japan “stub” trades that everyone has known about, and in the past had attracted Oasis to be a huge shareholder. On most simple SOTP math, you can conservatively mark the Kakaku. com stake cash/investments implied value for the payments/platform business and it starts to look like a negative-EV situation. DG trades around 7x P/CF (4–5x EV/FCF) which is a large discount to Asia and global fintech infrastructure co's. I think the opportunity exists here because Resona, and not the SOTP math (which is all too common in Japan. Oasis’s disclosure shows 8,520,200 shares sold off-market to Resona at 5,972 just a few months ago (vs 2750 last) . So far this transaction has been a major catalyst for share price collapse... but I do think the market may be wrong here. It looks bearish, because the "big stick activist" is not there to push the SOTP discount angle on on the Kakaku. com holdings. But the market may not be considering that this is now a big strategic position for a major Japanese bank. Resona is explicitly positioning the DG payments technology to strengthen the settlement business and push cashless solutions across its 500,000 corporate customers via joint sales and product development. This is why I keep coming back to the “Resona put.” A major Japan bank now owns over 30% and just recently paid a huge premium to last price for it. They are building distribution product around DG cashless payments. If the stock keeps trading at a discount to assets (currently negative EV assumptions can be made)... then the cheapest path to unlock value eventually becomes full control. I’m not saying take-private is imminent, but the endgame is intuitive: prove the Resona channel works, scale volumes, and let Resona remove the discount the public market is assigning because it fears a lack of "big stick" activism.

wider and wider it goes, 4819 position in Kakaku is now worth $850m vs their $575m mkt cap of the whole coming.... 4819 trading somewhere between 50-70% discounted to its NAV.... thats what zero faith in mgmt will do. the interesting opportunity here would be if LY Line win with their higher bid... and do not let 4819 co -invest with them on the back end. In that case DG would be squeezed out for more than their mkt cap in cash (after tax!) to add to their already significant net cash position and thriving payments business

the scale of destructive selling going on underneath the hood in Japan now is starting to look like a moderate deleveraging event (aug 2024, april 2025, etc..)... Index is not telling the story at all

19% 1 hour rally from the open in a Japanese large cap is something I have rarely seen... .especially after a 240% 2 month rally without a drawdown. very impressive stuff going on

Hiding in plain sight is Kyocera ($6971), trading not far above its 2020 lows. Here's the kicker: the value of its 335M KDDI shares is worth substantially more than it was in 2020...now valued at $10.9bn (nearly its entire enterprise value of Kyocera when adjusted for treasury shares) If you factor in $1bn in treasury shares, and Kyocera’s KDDI stake, its EV shrinks from $14.7bn to just $2.7bn. Adjusting the March 2025 EBITDA forecast of $3.2bn for the $335M in dividend income from KDDI, brings it to $2.9--resulting in an EV/EBITDA of under 1. Governance stagnation, and the shockingly sluggish plan to sell down its KDDI stake have likely been weighing the share price down... I'm wondering why Elliot went after Tokyo Gas and not Kyocera-- an activist could do good work here.