Investors see potential in AVI Japan Opportunity – AVI Japan Opportunity Trust has published its annual report for the year ended 31 December 2020. Over the year, the NAV and share price fell by 1.4% and 1.1% respectively. However, the benchmark (MSCI Japan Small Cap Total Return Index in sterling) rose by 3.2%.
The chairman notes that a steady stream of additional investors from around the world is now attempting to unlock often extreme value in Japan. For example, Warren Buffett buying a portfolio of trading companies in the second quarter of 2020. There were two takeover bids in 2020. Nitori Holdings bid for Shimachu and Colowide bid for Ootoya Holdings. The chairman thinks this significant domestic hostile takeover activity would have been unimaginable just a few years ago.
AVI’s successes during 2020 included two public campaigns at Fujitec and at Teikoku Sen-i. Both stocks rose in value. Fujitec added 3.4% to the NAV. We told the story of Fujitec in our note on AVI Global Trust (see page 12 of the pdf version of the note). Other notable positive contributions to returns came from; Pasona (+2.0%), SoftBank (+2.0%), Teikoku Sen-i (+1.3%) and Aichi (+1.15%).
However, market moves, some of which were COVID-19 related, offset this success. SK Kaken, 6.0% of NAV at year end, was the largest detractor (-2.2%).
The trust has been able to grow in recent months as investors get more excited about the opportunity in Japan. 3.5m shares were issued in 2020 and 13.9m since.
AVI Japan Opportunity’s annual report has much more detail. It should be available at its website.
AJOT : Investors see potential in AVI Japan Opportunity