Oasis Management Co. sees an opportunity to buy Japanese shares at “historically great prices,” thanks to the pandemic-fueled market selloff.
Seth Fischer, the Hong Kong-based hedge fund’s founder and chief investment officer, said he’s been “a big buyer of certain securities,” while declining to identify them. In terms of sectors, he said real-estate companies have declined too much, while manufacturing businesses will eventually recover after facing a tough year or two.
“We think that this, too, shall pass, even if it gets worse before it gets better,” Fischer said in an interview Friday.
The latest crisis is making clear how much cash reserves each business needs to weather a drop in demand while delivering products and services during a difficult period. This is a “great time” for share buybacks when it comes to increasing shareholder value, Fischer said, adding that there’s been no change to his view that Japanese businesses are holding on to too much cash.
“Now that we’re going through this crisis, we can have a very good understanding of how much cash is really necessary, and what is not really necessary,” Fischer said. Although cash reserves are important in cushioning economic downturns, “it’s used too much as a crutch.”
If Oasis were to ask companies to keep paying dividends, Fischer said the firm will take account of what’s appropriate at this time.
Earlier this week, Sun Corp. said its shareholders voted in favor of proposals by Oasis to remove four directors and replace them with three new directors. Fischer said Oasis will continue to work with the company’s board to improve earnings. He said he hasn’t submitted a shareholder proposal for Tokyo Dome Corp., another business where Oasis has argued for better returns.
Japanese companies are “very well placed” to come out of the crisis stronger, given their relatively low leverage, Fischer said. Both the Topix index and the Nikkei 225 Stock Average have rebounded this month after declining in March.
“I am very bullish,” he said. “The market, some stocks have gotten down too much, for what is a short-term sales issue.”
This article was provided by Bloomberg News.
