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An Aggressive Hedge Fund Bucks Stock Rout by Pushing Japan Firms

  • Strategic Capital targets companies with cross-shareholdings
  • Tsuyoshi Maruki’s fund started three proxy fights this year

One Japanese hedge fund posted a gain in the first three months of 2018, even as a rout rocked global equity markets.

Its secret, says founder Tsuyoshi Maruki, was twofold. First, Strategic Capital Inc. invested in companies that were so beaten down that their shares wouldn’t fall much further. Second, the activist fund picked firms with room to improve their governance, and pressed them to do just that, including by eliminating the decades-old Japanese practice of having a web of friendly shareholdings.