YouSaid · the spoken record

David Baran

lines on the record: 79
first: 2021-02-08
most recent: 2021-02-08
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“No, no, no. That's happy wife, happy life. That doesn't work. Everybody thinks that works. No, no, no, no. The truth is Unhappy wife, unhappy life.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“Be honest with you. My plant didn't teach me anything, but I'm kind of black sheep in my family. Uncompleted different. I'm the only one who went to university and make much money. Only things I learned from parents is don't follow them. Your very best always and hope for the best. Let's learn from them, not poach.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“When you guys are ready to go, you're ready to go. And that's probably one of the greatest takeaways. It's something that you notice when other people don't do it. I don't want to say it's the same as inefficiency, but when other people are supposed to be professionals and they're not prepared, They're scrambling, they're not professionals.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“My dad was like, Hyper focused on professionalism. One of his sayings was professionals wait. When I was growing up, I was like, oh, Dad, what are you talking about? Professionals wait. Professionals get it done. He said, no, no, no. They're always waiting for the other people. My dad was in film business. And when I go to the sets and whatnot. Be there at six in the morning, and like you wouldn't do anything till nine. I'm like, Dad, what do you have to come here so early for? I said, Professionals wait. So even at Symphony. There is symphony time. Like our call was at eight o'clock. Shabbat San and I were logging on at 7 45 because that's just what we do. We're here, we're ready, we're professional, we're prepared.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“Being stuck in an inefficient situation, whatever it may be, you're just like, okay, this could go so much faster, or let's think about it this way. Why are we wasting time doing this? I mean, that does go being stuck in traffic in a taxi. But it just becomes inefficiency that can obviously be avoided and move on to the next thing is just kind of a waste of time”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, but other than that, well, this is an exciting time, and Japan is changing. It's my pleasure that I will be still in the business and doing what we have been looking for a long time. Our dream is coming true.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“Not much well here and there some small ones but not big things on me, maybe one thing which will give me a headache is I need to go back to Singapore and need to go through 14 days quarantine. That's a headache.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“exercise. The whole concept of it sounds cliche now because everybody talks about cellular health, being longevity. There's so much to do and so much to learn. That's a daily thing. At some point, it happens every day.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“I got four kids and two of them are young. But between family and markets, both in Japan and international. Looking at other interesting businesses, I get kind of interested in hearing, for example, Luminar, which kind of backdoor IPO'd into his back. I'd looked at that company four years ago when it was still a skunkworks project and had been thinking about it. So looking at new technology and how these new technologies are going to change what we do and how that will... Impact the world and productivity. It's very interesting to hear how all these bright young minds are using technology and deploying it to problems in our age group. We wouldn't see it as a problem. They're like, no, no, no, that's stupid. Let's fix it.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“I have so many hobbies. Well, the running, for example, and I have completed more than 20 full marsh on in my life, and my best time is three hours and nine minutes. And sometimes when I was running, new idea coming popping up. So that's great. And refresh myself and keep me in good shape.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“When we started investing in Infomart, I remember the first day it had a market cap of sixty million dollars, and I couldn't understand for the life of me, like, what is this? It's like a series B round in the valley. This is a profitable company with $60 million. Let's buy all we can. current market cap is $2.6 billion Well, it's probably worth $5 to $7 billion based upon where Snowflake or Tesla or PDD is trading, but these kind of things where you can come in and I'll say, well, I can deploy $100 million into InfoMark. Would have been 140% of the market cap when we started. So it's an interesting dilemma.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“Which is fine, but as it becomes more willing to rationalize, that creates many more opportunities for us. So I could see how the opportunities for symphony to continue to both grow the asset base because there'll be more things to deploy it to. Back when we started, we're deploying into $3,000, $500,000, $700 million market cap companies and trying to buy 10, 20 percent. And now companies of $12 billion market cap size can become a target. Because those management teams are willing to do the things that we would have been limited to doing with smaller companies. So all of a sudden you want to, wow, I can do this with a $2 billion company because maybe the company's grown in size since we started looking at it in terms of its market gap, but it's still damn cheap. To give you an example,”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“Hopefully the next generation will still have our hand in the next generation will be doing their job and taking over and engaging with management. We've been working with our guys. This team has been cohesive. So I think it's a place that will continue hopefully in perpetuity and become a real fixture in financial markets in Japan. We could see both a change and a broadening of the opportunity set. As things become more competitive. Because the market itself being less willing to rationalize itself means more work for us.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“So when we're looking for who may either help propel the valuations of things that we own higher, Or compete against us for assets we want to buy, worried so much about other funds. We worry about Japanese corporates.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“So you really need an operator to come in and do the transaction. It's not like dead money sitting there. So I think we're at that point in the cycle. Where people are once again emboldened to take a flyer on Japanese companies because of the general trend towards, quote-unquote, better governance and more openness towards control. And then Japanese companies really looking to Preserve their future. And within that comes acquisitions. I want to twist your question around a little bit because The competitive landscape for us is not really other funds, it's Japanese corporations Other funds are great, they can go out and do things, but the best buyer and the biggest proponent of change in valuations in corporate Japan is corporate Japan. And they're out buying other companies. Very successful.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“Thirdly, people in the past two, three years have started to really take notice and try and deploy more assets to Japan, try and shake things up. I think some of them have been successful in their one-off, two-off trades, whatever. A little bit too hostile for us, but I think the environment is a little bit more accepting of that. I don't think those players, I wouldn't necessarily call them value guys. Maybe there's some value in it, but everybody can use a different definition of value. There are a couple of balance sheet optimization transactions that might be in there, but not clear. Tokyo Dome, which is in the midst right now. Yeah, it's got a lot of real estate, but it needs a lot of money to fix it.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“know what is a year year and a half so if they can ramp up production they'll make more money they'll sell more product we'll make more money i mean it's classic stuff that you learned in business 101 oh if i can make more than my cost of funds i should be expanding So it was a good conversation we had with them. I mean, we helped put the new president into the company and move the family out, which, let me tell you, that's no small feat.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“So if you're a corporate and loan cash, you tend to think that cash is free. I mean, we just were able to steer management of Ziko, which is one of our big portfolio companies. They're building a new factory. And they were like, they got tons of cash on the balance sheet, and they were getting ready to go and use it. And we're like, no, no, no, no, no. Go out and borrow money, issue a bond. Money's free. Don't use our money So they went out, and for the first time ever issued a five-year straight bond at 48 basis points. This is a company that's making money hand over fist and they can borrow money at 48 bips. They've grown so much that they way outgrew their current facilities and they were using satellite rental factories to complete works. And it's like their order backlog is...”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“The first mover in just about everything. That's actually helped us think about the rest of the world because the old MMT and concepts that you can't have debt to GDP soaring over 100% without some impact on the economy. It's like, well, I don't know. It's been going on for a pretty long time here, and life in Japan gets better and better because costs keep going down. I think a lot of companies are less impacted, and I don't want to say they've gotten lazy, but everybody's long cash.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“They've shifted substantially from Pi Net Worth family office and funda funds to very large institutional investors. Sovereign public pensions, private pensions, endowments, health care, I think the understanding that we're not fund for traders, people who are moving in and out of funds every couple of years, if your mandate is Wealth accumulation over five years, over 10 years, no longer where the kind of place that looks at that as our mission. We can't care about monthly PL. looking for a general annual increase in the overall portfolio value. And that's the kind of investor that has matriculated to us over the past decade.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“We were there to help protect the company, the share price, and that launched a series of share buybacks and the shares, I can't remember. After that, I think it was a thousand yen or 1,100 yen at that time. And we're 9,000 yen now. We've owned this company for probably close to 10 years now, and it's up 10 times. And that's way better than looking for the next snowflake every day.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“And of course the stock plummeted. The stock was down like, I don't know, 10, 15% on that. We're like, okay, that was kind of the wrong message. So they didn't have an IR department at all. And so the next day we contacted the Yanosan, who's a CFO, and kind of had a conversation with him. and said there's no problem with anything that you said, but you have to understand how the market's going to react to that. They think that your trajectory of earnings is going to drop. Maybe what you should do is start a share buyback program now. And within, I don't know, a week. They launched their first ever share buyback program. So at that point, we knew that they were taking what we said very seriously. They understood that we were not the enemy.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, the best thing you could do is buy your own stock. You want to make money, buy your own stock. And of course, then we started competing with them for stock. So we didn't tell it to them right away. I think we bought 10% first. But after the first major natural disaster, the big earthquake, they were wildly profitable. I mean, embarrassingly profitable. And it was kind of a problem because you don't want to let everybody know you're making money during a time of national disaster. So when they announced earnings, it was a big number, but then they turned around at the same time and projected forward earnings as flat to the previous year.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“Very interesting business, but it makes really good money. And I was kind of like, what? Well, that's an interesting thing for you guys to say. And so effectively, it's a leasing business. Make these things, they lease them. And the return on the lease was 24%. So Shabbatazan and I are sitting there going, wait a second. So it's trading at 12 cents on the dollar. It's got a cash flow that you can't get anywhere else unless you're running a credit card company. And we would own 100% of this business. I remember the day. We looked at each other and we said, well, let's just buy it all because we don't have to work anymore. We'll just be clipping coupons like these guys do. It was a very typical conversation. And as we met with management and understood there, these guys were there to make money.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we were like, wait, wait, this can't be right. And of course, going back to our balance sheet forensics conversation, they had depreciated all of the units. It's a seven-year depreciation cycle. They were all depreciated to zero. They had a market resale value of $3,000. There's a robust market in the reselling of these things, and the company controlled that market Okay, so you've got eight times your market cap in units. And this was in the midst of a depression in the construction industry. So after we met with the brothers who owned the company Cousins, Takashi, they were third generation. And the first thing that was interesting to me, at least, is they were like, well, you know.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“Nago as a company, one of our long-term favorites, they make temporary shelters, kind of trailer-like offices that you rent to put on a construction site or maybe use it as a temporary storage, temporary housing in an earthquake or other natural disaster relatively high spec. An average unit is about $3,000. The company makes them, rents them, and refurbishes them and then resells them. The interesting thing about this company was when we found it, they were trading at a discount to the value of the units that they owned. If the company at the time said we're going to sell all the units, And take the cash and dividend it out, it would have been an 8x.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“Someone from the outside looking at it would say, wow, it's a concentrated portfolio of a lot of names that don't trade much on the exchange. We're like, yeah, that's the opportunity. If you think something that trades $10 million a day is going to be mispriced, your own arrogance is just too big.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“If we watch them change and respond to the business environment in such positive ways, we're like, well, why would we sell this? I mean, they're doing exactly what they should be doing. If we owned 100% of the company, we'd be happy. So the fact that we own 10, 15, 20%, I was like, okay, we're not going to sell it and replace it. I always found it very interesting where people would poo-poo Japanese companies and say, oh, you know, their return on investment is so slow, their margins are so bad. I'm like, I don't know what you're talking about. We own companies that have like 60% heavy bell margins. I mean, I'd be hard-pressed to find that in the U.S. market. And they're making money. They're profitable. So I think overall, the portfolio is a tight, concentrated portfolio that”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“We don't short and we don't borrow money. You're like, why do you have a PB account again? Well, because we have currency swaps, so you need to have the ISDA agreement. An ISDA agreement, you can't have a regular account. So thinking about the portfolio, we have 12 to 15 super cheap names. Certainly when we buy them, hopefully they get less cheap over time. We have a plan for each company at some point in time. The plan may have multiple options, optionality going to get out, relationships with many of the presidents, of all the companies. And the timeline for each name is a little less important to us. Some of these things just take time. And some companies have, in a very Peter Lynch kind of way, I mean, they've evolved. I mean, we know so much about the company.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“12 to 15 names in the portfolio in various degrees of progress. Right now we've probably got three or four that are well advanced and we're doing a lot with management. We're pretty happy with what's going on. Maybe one that we might consider exiting for the right price. There are six names where we're building positions. We tend to have 5% cash in the portfolio somewhat opportunistically. never lever. We're a terrible prime brokerage client.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“A portfolio management perspective, it's a completely bottom-up portfolio of companies that excel in their field, whatever they're doing, have Teflon balance sheets, generally have zero debt. It's usually negative net debt, have a mode around their business. Sometimes there are more than one company in a similar industry, like healthcare for a very long time. We've had two or three companies in healthcare because they were very cheap, maybe chemicals, one or two. But there's not a whole lot of industry concentration by number of companies. Again, because it's so bottom up. There's usually”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“So getting the second half of the transaction is where the guys who came in early just assume, well, the market's rational and therefore it will pay me the price. And it's like, no, that's actually, if it was rational, you wouldn't be buying it at the cheap price. So you have to recognize that the definition of this irrational market is why you're here. Your presence, your aura doesn't make it rational. Somebody else was selling it. They're probably pretty smart too. So you have to do something else. You have to add something to it.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that's what Shabatan is saying here is crucial and it's why we're still doing this after 20 years because thinking about getting out is way more important than thinking about getting in. I can give you 150 cheap names that you can buy, but once you've bought them, okay, what causes the share price to go up and you get out? That's your job. Your job is not to find cheap stocks. Your job is to find cheap stocks and sell them expensive.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“Not the company. This is not the right management or something, then we'll skip. And if we are interested, oh, this looks familiar and seem to better company, we'll ask next visit. For example, factory visit, talking to the pledge then. And then we will start talking to the client, competitor. And in a process that we try to identify who will be a potential buyer of this company. It's a management H2B listed. That's a management buyout could be an exit, one exit. If there is only one exit option, we'll move next one. We want to have a couple of exit options. Fujia strategic buyer. Okay, this company and that company could be a strategic buyer. Okay, this company will go to TSE fast section and”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“Duterience process is like private equity fund approach. First, the analysts come up with Financial analysis and say this is chief company and the good companies, if everybody say okay, this is a good company, I will make sure that I will involve every company busy. And we'll see. And if faster impression is...”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“Company by company. It's pretty tough to generalize. You need to go visit and talk to them and sometimes have dinner and sometimes visit their factories and demonstrate that we are serious and we are not short time investor, we are long time investor. By close to 20 years experience in this industry, we are well known among Japanese corporations. And if they don't know about NAS, they will ask around and come up with a plebeius port of your company's management. How is Symphony? Oh, they help us. That makes us very accessible to Japanese corporations. And they sometimes easily open up their mind. Usually it's hard to get into and be an insider. But because of past experience and good story about us, please will show up at the fast meeting and start talking about his problems.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a give and a take, and do you want to be listed or don't you want to be listed? And then you start talking about, well, yeah, we don't really want to be listed. Okay, then there are some interesting opportunities. We can help you pursue. We do want to be listed, and we want to go buy other companies because we want to be bigger. So once you're at that point, which I kid you not, I don't think we've ever gotten to that point without like six months of visiting the company. maybe a year. It's not about what does the company do and what are their profit margins and what are their prospects. That's the easier thing to figure out It's who's running the company, who's got their hands on the pulse, and are these the right people to work with.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“one way or another just okay you're not going to be there forever we may not be here forever either but when you change you've got all the right components to be worth two or three times what you're trading at The ones that do have the right management team, then we start to engage them and try to understand how malleable they are, how much we can really kind of massage them into understanding the two-way nature of being listed.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“You have a combination of what's the mispricing, how big is the mispricing, then of course you have the issue of what's the general moat around the business. I mean, is it a protective business? And then, of course, what kind of management team is running this company? And do they have the Wherewithal, the capacity, the desire to do something about their share price. And the truth of the matter is we come to many companies where the answer is no. They don't. All the other things work and management is just like, eh. So companies we like that have that, let's call it, flawed or inappropriate management team for what we want to do, we put them to the side and wait for that management team to transition.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“They've kind of figured that out. The money's there. There's trillions of dollars sitting in the sitting. My Japanese pensioners who need the money. So they've gotten to that point. Like I said, I'm talking about governance in a specific sense is not as effective as talking about it as what's it for, the general sense of good governance is to ensure that companies aren't generally run into the ground through malfeasance and also shareholders are appropriately advised of, appraised of, and compensated for their ownership. And that has made Very substantial sea change in direction in Japan over the past really 15 years, not five. It's a pretty positive general direction. Nothing's a straight line.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think there's still a little bit of cloak and dagger stuff going on. But the general direction has been positive. It's being created. We said this 20 years ago. This is not a Calper's calsters Hermes problem. This is a Japanese pension fund problem that the Japanese have to decide for themselves. Start paying their beneficiaries properly. You can call it whatever you want. You can call it better governance. It doesn't matter. The companies are generally just not being managed in a way that rewards their shareholders and the ones who are losing the most Japanese pensioners. So once they got to the point where, wow, we really need to fix this for ourselves. Forget about what Ackman and Dan Lowe said. It doesn't matter about them. It matters that we can fund this massive pension liability for our aging population.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“Fits and starts as a good way to describe it because it has these lurches forward, trying to lump it all together saying it's universally moving this way or universally moving that way probably does a disservice to both the people who are doing a good job and the ones who are doing a bad job. I think there are some companies that have really taken it to heart. And that's what I mean by it is considering shareholders return in how they manage the company and the listing. By and large, whether it's ESG or governance in and of itself, there are things that maybe the Japanese do better than the West. Executive pay, stock options, all kinds of things that big question mark should we be worrying about this quarter's earnings or this decade's earnings. I think some of the transparency issues have gotten better across the board.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“If they list it on a TSE second section, we encourage them to go to TSE first section. Or they don't see any merit of being listed. Why you are listed? My grandfather was recommended by Nomura in order to prove you a successful business to list. That's a reason. We don't have any merit. We are paying 5 million US dollars in order to maintain our listing. Why don't we delist? And we encourage them to delish the management buyout. Actually, we as a first hedge fund who sponsored management buyout. Central Union is a name of the company. We, together with founding family, we created the limited panorama in Japan. Remedied Panna on 40% and management founding family owned 20% together we control TUSAR and I become CFO and change a cooperation and so on with all the work to revive that company”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“How to invite people and how to set up the conference and so on. We try to be on their side and giving free advice and try to be a team. So naturally they will come to us that we face this problem. Our job is improve their governance, their financial aspect. And by giving this advice, we come to realize why they are under”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, the due diligence is assess the management, see if they are willing to co-work with us. Based on my experience advising Japanese corporation, a couple of meetings will tell us that whether or not they are willing to co-op with us. Once we identify the manager before investing, we start working giving free advice and I'm trying to be on their side, not the other side of a table and a banking table. That's not our way. We are always trying to be there advisor for free. You don't have IL department? Okay, I will talk to the pleasant and encourage him to have IL department. Well, if you don't know how to do that IL, then we will tell you the unish meetings.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“And that's how we always looked at it. When there's a real market for control here, wouldn't some of these companies be better private or as divisions of something else or as subsidiaries of something else? And if you think about where Going from triple net cash companies to just companies that would be better off somewhere else. The history of doing that, like in the US, it started in the 70s. Went on, it's still going on. Acquisitions are a part of life. So we looked at it and said, this is going to take a long, long time before you get a real market for corporate control. And it's going to take a long time to digest all the companies that could be digested even after that's understood. So let's not play the hostile game and have people against us. Let's play the cooperative game and have people working with us.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“There was a huge disconnect between who owns a company. What that means in terms of who owns the assets and who they're supposed to be working for. They're supposed to be working for the employees and the clients or they're supposed to be working for the shareholders. And it was a little too early. And all of those guys got blown out. And I was recently having a conversation trying to reflect upon Symphony's almost 20-year history now, more than that. And we've been doing this a long time. Where was everybody else from the Naughts? Where'd they go? Like, what are they doing? And we always envisioned what we do as... Career as opposed to a trade. Each transaction may look like an interesting trade. Oh, we'll buy this and flip it and do that. But there's decades worth of... where a full enterprise buyer would pay.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“and it came from all sides. First it started out, it's like, oh, it's Commodore Parry coming again. It's like, it's not foreign. It's like foreign and domestic. And the ugliest ones were, of course, domestic. The ugliest battles. But the business culture and society was not ready for the kind of hostility and just pure greed that it looked like in these transactions. And we all know who the players were and the math is pretty easy. My job as a fund manager is to buy things cheap and sell them deer and make money for my investors or my beneficiaries, whether a pension fund or whatnot, that's my job. That asset's too cheap. I want to go buy it. Of course, the people guarding those assets thought it was theirs. they were much more concerned with the ongoing concern issues as opposed to the balance sheet issues.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it was a bit of a bloodbath. We knew both some of the companies that those guys were going after personally. And obviously we knew the actors. And there was definitely a... Belief amongst the activists that, well, it's listed, so we're just going to go in and take it. And that was met with a backlash that they were pretty much unprepared for.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source
“The whole mindset of what do you need to disclose? Why do you need to disclose it? As I said, some of it is actual Japanese tax code and corporate code didn't require you to do it. Now, they've worked through all of that for the most part, but we would go to city hall and pull the land registrations based upon the company's 10Qs or whatever it will be in Japan and rebuild what their actual balance sheet was like this is insane. Why don't you do this? You know you're sitting on a billion dollars worth of real estate. Yeah, but you know we don't really need it. I said yeah, but we're the shareholder and we need it. So getting there was a harder challenge.”
2021-02-08 · Capital Allocators · David Baran and Kazuhiko Shibata – Friendly Activism in Japan at Symphony (Capital Allocators, EP.176) · IDENTIFIED FROM THE TRANSCRIPT · source