Activist Happenings

This post was first published on substack at https://8percentpa.substack.com/p/activist-happenings-9-yen-toyota

1. Activist Happenings #9: Japanese Yen, Toyota Industries, Warner Bros, Cybersecurity & More!

✳️ Welcome to our ninth issue on activist happenings around the world. In this issue, we discuss some of the high profile stories - Toyota Industries, Warner Bros, London Stock Exchange Group. We hope to provide some differentiated insights that can be useful to your investment process.

💴 Japanese yen remains weak as f*ck. That’s because yen remains the cheapest funding currency, fuelling not just plain vanilla yen carry trade but stock, property and other purchases. Banks are offering 1% yen funding via wealth management loan facilities in Singapore.

🇯🇵 While Japanese activist stocks can help generate alpha, do make sure you hedge some of the yen → by borrowing yen i.e. do a yen carry trade!

↗️ With that in mind, we shall be discussing the top Japan activist names in recent weeks - Toyota Industries. One top idea - Trend Micro (current portfolio name) and a recent new activist stock, Niterra.

🌎 We will also discuss two global names: Warner Bros Discovery (our previous portfolio name) and London Stock Exchange.

2. Global Activist Developments

1. Toyota Industries ($6201.JP, Mkt Cap: USD42.3bn, PER: 27.5x (NTM^), PBR: 1.0x, EV/EBITDA: 17.8x, Dividend Yield: 0.7%) : Parentco of Japan’s largest company and automaker has been under attack for months by Elliott and other activists. Activists cried foul when Akio Toyoda from the founding family and Toyota Motors tried to take the parent private on the cheap. Share price step-functioned upwards twice to 20,000 yen, roughly doubling from its undisturbed price. This will be 2026’s Japanese Management vs Activist Showdown. Currently, it seemed that the Toyota camp is on the back foot but should Akio’s privatization plan collapse (i.e. he walks away), it might be lose-lose. Share price collapses and the parent-child listing conundrum remains.

2. Warner Bros ($WBD.US, Mkt Cap: USD69.9bn, EV/EBITDA: 11.5x (NTM), PBR: 2.0x, FCF Yield: 4.3%) : Content powerhouse owning Harry Potter, DC comics, Game of Thrones amongst other top IPs was our portfolio stock but we sold too early 😮‍💨. Thereafter, Netflix and Paramount Skydance went into a bidding war for this trophy, which was trading at 40% free cash flow yield just two years ago (see chart below). Activist Ancora Holdings Group joined the fray and probably made a quick 15-20% return based on the price chart below, assuming they bought in late 2025. 🎬 It was announced that the marriage will be between Paramount Skydance and Warner Bros. This brings two legacy studios together. Thanks to Larry Ellison and Oracle’s backing. David Ellison, you may kiss your bride, Daenerys Targaryen. Yeah, Game of Thrones is Warner Bros’ IP. Looking forward to see Superman and Autobots teaming up to fight Skynet or whatever the f*ck AI comes up with.

3. Trend Micro ($4704.JP, Mkt Cap: $4.7bn, PER: 17.9x, PBR: 5.2x, EV/EBITDA: 6.1x, Dividend Yield: 3.6%) : Japan’s cybersecurity play’s stock collapsed after Citrini Research’s epic future letter destroyed SAAS software, food delivery and gaming companies globally. 👇 In case you haven’t read it, we have the link below.🦾 Obviously, AI can now write anti-virus code and companies can just employ two one geeks to proofread AI security software codes, so who’s gonna pay billions to CrowdStrike, McAfee and Trend Micro?

📉 So, share price collapsed to its 7-year low and free cash flow yield is nearing 10%. This is not as spectacular as WBD’s 40% FCF yield but Trend Micro pays a decent 3.6% dividend and has USD1.5bn on its balance sheet. This company was also engaged by ValueAct Capital in the past and was rumored to be in talks with private equity to be bought out at 9,000-10,000 yen per share. Today’s share price is about 5,000 yen per share.

The rest of the post can be read at https://8percentpa.substack.com/p/activist-happenings-9-yen-toyota