Japan robotics giant soars to record high on US hedge fund investment

Japan robotics giant soars to record high on US hedge fund investment

TOKYO - Shares in Japan's Fanuc soared to a record high Thursday on news that a US hedge fund, known for pushing firms to boost their profitability, bought a stake in the factory robotics giant.

The Tokyo-listed firm jumped 6.22 percent to finish at 22,045.0 yen (S$250) after billionaire Daniel Loeb's Third Point made an unspecified investment in it and called for the company to launch a share buyback.

Third Point, which has a reputation for aggressively pushing change at target firms including Yahoo and Sony, disclosed its Fanuc investment in a February 9 investor letter.

Late last year Loeb said Third Point had sold its stake in Sony after failing to push the company into spinning off part of its US-based entertainment division - which includes a Hollywood movie studio and music label - in a bid to boost its bottom line.

The Sony spin-off call was widely portrayed as a clash of corporate cultures, pitting a hard-charging foreign billionaire against one of the bedrocks of Japan's staid corporate sector.

Shareholder activism is not firmly entrenched in Japan, like it is in Europe and the United States, and many Japanese firms are deeply suspicious of foreign private equity firms.

In its letter, Third Point hinted at plans to push for change at Fanuc, noting it was sitting on US$8.5 billion (S$11.6 billion) in cash and had no debt, "which is hard to understand given the company's business quality, growth opportunities and low capital intensity".

The US firm pointed to Fanuc's "focus on producing only a limited number of products that are technically superior with the lowest possible cost structure".

Based near Japan's Mount Fuji, Fanuc is one of the world's biggest makers of factory robotics with its products used in a range of industries, including the auto and electronics sectors.

The firm has been a leader in its field, Third Point said.

"While serving completely different, cyclical markets, Fanuc reminds us of Apple in its product approach," the fund said.

Third Point added that the company was benefitting from strong US demand, a weak yen, and mushrooming factory automation investment in China.

It said a share buyback - which usually boosts a company's stock price - would be a plus for investors.

"We believe the stock could rerate significantly if a buyback programme was initiated, which the company has done in the past and would be consistent with a trend we have recently observed at a number of far less advantaged Japanese companies," Third Point said.

Fanuc declined comment on Third Point's investment or share buyback call.

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