Hedge Funds Will Be Collateral Damage in Japan
Activists’ great cash grab may be ending as companies spend on post-virus rebuilding, not shareholders.
Coming off the table.
Photographer: Thomas Trutschel/Photothek/Getty Images
So long, activists. No one’s giving you any cash back, at least not anytime soon.
Companies and investors alike are stashing money as Covid-19 throws an uncertain future across the global economy. Liquidity is front of mind. Automakers and retailers in the U.S. have drawn down billions of dollars on their credit lines to deal with impending shortages. But Japan Inc. has an opportunity — to show hedge funds that have criticized serial cash hoarding and ineffective use of balance sheets that it’s had a point.
Piles of idle funds made Japan’s companies a target for global activists, including Paul Singer’s Elliott Management Corp. and Dan Loeb’s Third Point LLC. Tokyo’s stock market has become their highest priority outside the U.S. At the end of last year, activists held 3.4 trillion yen ($31.1 billion) of Japanese stock, doubled from the start of a state-led push for corporate governance reform in 2015.