By Kosaku Narioka
One of the most prolific activist investors in Japanese companies is targeting Nissan Motor, setting up a corporate standoff that investors hope will translate into a higher stock price.
Singapore-based Effissimo Capital Management disclosed it had built a stake in Nissan Motor, days after the carmaker unveiled sweeping restructuring and cost-cutting efforts and in the wake of months of share-price declines.
Shares in Nissan Motor soared on news of the stake, rising more than 20% at one point on Tuesday. They rose again on Friday when Japanese magazine Diamond reported that another activist investor, Oasis Management, has also bought Nissan Motor stock. Oasis didn't immediately return a request for a response, while Nissan Motor declined to comment.
Still, Nissan Motor stock is down more than 20% for the year, lagging Toyota Motor and Honda Motor.
Effissimo is known for often taking large stakes in prestigious Japanese companies--which are seen as insulated from public criticism--and shaking things up. An investigation proposed by the firm at a Toshiba shareholders' meeting in 2021 led to a board overhaul before the industrial giant was taken private last year.
Last week, Nissan Motor revealed restructuring plans that include cutting 9,000 jobs globally and reducing its global production capacity by a fifth. It lowered vehicle-sales forecasts for all major markets, particularly in China and North America, two of its biggest markets. The company has been struggling with weak sales in recent months, especially in China, where a price war and a surge of local electric-vehicle offerings have hit foreign brands.
The carmaker's stock also fell in July after disappointing first-quarter results.
Even before the earnings-related drop, the company's shares had been under pressure amid worry about a consumer shift away from fully electric vehicles, a product the company had bet big on. After a global boom in EV sales, fired up in part by the popularity of Elon Musk's Tesla and others, consumers in Europe and the U.S. have pulled back over their generally high price tags and the still-uncertain buildout of charging infrastructure.
Nissan Motor is also navigating a partial weakening of its once-powerful alliance with French peer Renault and Japan's Mitsubishi Motors. Forged by Carlos Ghosn, the alliance's former chairman and chief executive, bonds between Nissan Motor and Renault have frayed over years of acrimonious exchanges that surfaced publicly after Ghosn's arrest in Japan in 2018 and the subsequent legal fallout.
Renault last year reduced its ownership stake in Nissan Motor. The Japanese carmaker last week said it would sell down its shareholding in Mitsubishi Motors and has said it is studying potential collaboration with Honda Motor on electric cars, core components and software.
Amid those headwinds, Effissimo made its move.
Nissan Motor, in a report filed Monday, said a trustee of ECM Master Fund was its fifth-biggest shareholder with a 2.5% stake as of the end of September. ECM Master Fund is managed by Effissimo. A representative for Effissimo has confirmed that it invested in Nissan Motor, but has declined to comment further.
Effissimo already held a 30% stake in Nissan Shatai, Nissan Motor's specialty- and commercial-vehicle unit.
Effissimo is one of the most prominent activist investors in the Japanese market and is led by Japanese executives who have adopted Western practices such as seeking operational changes or board representation. The firm's moves are followed closely by other investors and news that it has taken stakes in companies often triggers buying by others in hopes that the companies will carry out changes that are favorable to shareholders.
Some analysts say the market may be overly pessimistic about Nissan Motor, potentially giving Effissimo an easy win. Fumio Matsumoto, chief strategist at Okasan Securities, said Nissan Motor's earnings may improve going forward as the company slashes costs and introduces new models.
"[Effissimo] may have thought there might be good opportunities to sell the shares" down the road, Matsumoto said.
Nissan has said it appreciates "all existing and new shareholders that support and believe in the future potential of Nissan."
Activist investors, once shunned by Japanese management, have gained more mainstream recognition over the years as the government presses companies to communicate better with investors as part of efforts to spur investment in Japan and revitalize the market. Financial regulators, meanwhile, have been pushing for companies to include more independent directors, exposing corporate management to more outside influence.
At Toshiba, one of Effissimo's highest-profile investments, it unsuccessfully sought board seats for its founder and executive director Yoichiro Imai and two other individuals. It then proposed an investigation to look into whether the shareholders' meeting was conducted fairly. The report issued as a result of the investigation alleged Toshiba collaborated with Japan's Ministry of Economy, Trade and Industry to block foreign shareholders from gaining board influence.
Toshiba and the ministry declined to comment in detail on the report's allegations at the time. Toshiba said at the time that it would use the lessons of the report to enhance transparency, while the head of METI said it was acceptable for government officials to talk to companies about national-security implications of shareholder actions.
Effissimo has also invested in companies like major shipper Kawasaki Kisen and insurer Dai-ichi Life Holdings.
Ryuhei Uchida, an Effissimo director and critic of some of Kawasaki Kisen's management decisions, joined the shipper's board in 2019 following a deterioration in its earnings. Kawasaki Kisen's earnings have since improved, backed by the strength in its container-shipping business.
Write to Kosaku Narioka at kosaku.narioka@wsj.com
(END) Dow Jones Newswires
November 15, 2024 00:31 ET (05:31 GMT)
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