Active Investing in Japan

A longtime shareholding on mine, Internet Initiative Japan (IIJI) (JP: 3774), is having its Annual Shareholder Meeting this Friday in Tokyo. I urge all ADR and Ordinary shareholders to submit their votes as soon as possible, but not later than this Thursday, 10:00 AM Eastern (NY) for ADR holders, or by Thursday, 11:59  PM Japan Standard Time for Ordinary shareholders. Also, please see my previous article detailing my activist work to-date with IIJ.

IIJ hit another 20-month high overnight in Tokyo, up 1.3% to ¥276,900 (ADR equiv. $7.65 at $1/¥90.5), although it traded as high as ¥288,900 in the afternoon session before giving back a good chunk of the gains into the market’s weak close. While IIJ’s stock has had a strong year, I remain convinced that its shares are still undervalued, due in some respects to management’s misuse of capital and the Board of Directors’ failure to unlock value, and in other respects primarily because of overly restrained IT spending in Japan. continue reading…

About 3 ½ months have passed since I sent my first letter and shareowner proposals in late-February to the Board of Directors of Internet Initiative Japan (IIJI) (JP: 3774), a leading ISP and related services (cloud computing, systems integration, etc.) in Japan. As a longtime shareholder (since 2006), my concerns included the company’s level of capital spending, its corresponding levels of depreciation, and its deteriorating returns on assets/equity/etc., the latter being partially suppressed by a large, low-yielding cash position. And my proposals involved items that a Board of Directors typically has more direct influence over (as opposed to my aforementioned concerns) such as stock splits, share repurchases, dividends, and shareholder say in significant non-core business investments. continue reading…

General Electric (GE) held its annual shareholder meeting on April 28th. It comes as no surprise that the same 16 directors up for reelection remain firmly in place. However, it should raise some eyebrows, since the number of shares voted against certain board members (most notably Messrs. Lafley and Penske) fell sharply compared to last year. Yet, in a fantasy land of GE proxy voting, it might not matter so much if shareholder (activist) Evelyn Davis, the “queen of the corporate jungle,” had garnered more votes for her perennial  proposal for cumulative voting, which unfortunately and curiously saw a decline in support versus years prior. Back to reality, regardless of how many additional future votes there might be for cumulative voting, the board will likely not only continue to regard it as a closed matter since it was rejected, but it will also fail to acknowledge the importance of the proposal to a not insignificant number of shareholders. Ironically, even with a majority vote in favor of the proposal, the board is not required by law to do anything at all. continue reading…

What to watch: Monday, 3/31: February Industrial Production; Tuesday, 4/1: Tankan (watch capex spending outlook and yen/dollar predictions — the FY07 second-half ¥/$ prediction for the December survey was 113.79 compared to 114.23-33 in the Sept. and Mar. surveys and a most recent quote of about ¥99). continue reading…