Lance

Nikko Cordial: Southeastern Asset Management Offers to Sell for 1900 Yen

Oh, and let me add, I was plenty happy to give Chuck my shares last spring at 1700.

Who pays these fools?

Nikko Cordial: Southeastern Asset Management Offers to Sell for 1900 Yen

As of today, January 11, 2008, Nomura is trading at a discount to the Citi-bid-supported Nikko.

Chuck Prince was/is a moron. I rest my case.

Nikko Cordial: Southeastern Asset Management Won't Sell at 1700 Yen

What clock would that be? The hedge-fund manager performance-bonus clock? Twenty-nine percent is a far cry from 50 percent.

And they probably won't tender, either, but this is just a noise-making repetition of what they have already said.

Some wag once said that you should never confuse a bull market with brains.

Again, if I was Citi I'd pay the 5 yen per share and walk, and let these fools explain to "their clients" how they fumbled a touchdown on the one-yard-line and then kicked it through the back of the end zone.

Of course Mr. Prince could rescue them, but he also could play it smart and pick up a ton of shares below 1700 simply by pulling the rug out from under these guys who are really overplaying their hands.

Nikko Cordial: Southeastern Asset Management Offers to Sell for 1900 Yen

And while SAM tries to make a market where there is none ... way above the tender, which is way above where the market would be trading the stock right now if the tender wasn't supporting it ... Harris & Associates has apparently been furiously dumping into the real market, something you would apparently never read here unless I posted it. Oops, what a difference a Friday makes, as Nikko is back trading smack on the tender price.

Honor among thieves? Chuckle.

Quote ... The process which led to the tender offer did not allow interested parties an opportunity to consider a bid for Nikko Cordial," said Hugh Gillespie, legal counsel for Orbis. "In the absence of an open process, we considered that we had no choice but to allow the market to assess the appropriateness of the tender offer ... end Quote.

What an absurd claim. Anyone can make a bid on Nikko at any time. The paragraph above is simply coming from outer space. Come to think of it, "Orbis" does sound a little bit like "orbit", doesn't it? Not enough oxygen up there?

The problem of course is Nikko Citigroup, the brokerage subsidiary that won't go away, which is 100 percent owned by the Nikko-Citigroup combination. Anyone offering to step in here as a hostile has to deal with that reality, not to mention dealing with Nikko's board, which is already on record as supporting the tender.

The market evaluates "the appropriateness of the tender" every single day that it is open. Right now the market is saying that SAM et al are coming from left field, ridiculously trying for more than the fat windfall gains they already stand to make after the TSE made their day by deciding Nikko was "too big to fail", something that I said would happen in this space months ago.

But the market is also saying that, the tender notwithstanding, things don't exactly look all that rosy for Japan's "Big Three" shoukengaisha right now. In fact, if Citi walks, Nikko probably trades at about 1550 the next day, maybe lower. I would not be surprised if it went limit down the first day. Then those shares offered at 1900 will look even more ridiculous than they already do.

That 2-yen dividend this past quarter could actually price the stock at less than 1000. Yes, I agree that it's a 2000-yen stock. Someday. More than likely during the next business cycle. Time is money.

Historically, Nikko has traded at a discount to Daiwa. Given the reverse two-for-one in 2005, lets say they trade at the same level, give or take. Daiwa closed at about 1320 yesterday. Anybody who thinks Citi is getting a good deal at 1700 in this market needs a shrink. Anybody who thinks Citi will pay more assumes that Mr. Prince is an absolute dummy, and they may be right, but for the wrong reason. Anybody who thinks a hostile bidder is coming in at a higher tender is simply wishing, not reasoning.

Nikko Cordial: Southeastern Asset Management Offers to Sell for 1900 Yen

Nikko holders ... my advice is to SELL NOW. Insanely, the stock is trading fractionally above the tender price. This is a bid you should not refuse.

Take a look at the Brokers sub index! Take a look at Nomura's price, or Daiwa's price.

Then ask yourself if Mr. Prince is worth half of his salary.

There is an excellent chance that Citi will walk from this tender. Well ... excellent if they have anybody with any market sense, but given Citi's stock performance over the past four years relative to ... anything ... that may be a stretch.

At least tender. Then pray.

Nikko Cordial: Southeastern Asset Management Offers to Sell for 1900 Yen

Fluid it has been. But if I were Citi, I'd pay the roughly 5 yen per share and cancel the tender. The approximately 6M shares that traded above the tender price today would be torched.

Let's face facts here: We are going into a US earnings season that doesn't hold too much promise. Nomura has "underperformed" Nikko, and Daiwa has vastly underperformed Nikko, since the date before the scandal.

Nikko is "hot" only because Citi says it's hot. If Citi walks, a lot of people have egg on their faces. If I were Citi, I'd say, "Okay, let's see what the market without a tender offer brings."

Nikko Cordial: Shareholders Join Campaign Against Citigroup's Takeover Bid

Until they get enough shares for sale at 1,900 to block the tender, it's more a display of weakness than anything else.

We went all the way to 1,700 today, but no buyer even one yen higher. Bloomberg got the close wrong; it was 1,695 not 1,697.

A bargaining technique? Don't make me laugh. A bargaining technique would be for the hedgies to put up a BID, not an OFFER that they know isn't going to be hit. Bid 1,725, even, if you think it's worth 1,900. I guarantee you'll get some shares, maybe enough to be more than a minority noisemaker.

BTW, I'd be careful about advising small holders to sit tight. Citi needs only 51 percent, minus its present stake. If they get it, and it looks to me like they will, TSE concentration of ownership rules may make it necessary to delist Nikko. Irony of ironies. Then who are the small holders going to sell to, and at what price?

Nikko Cordial: 6.6% Shareholder Southeastern Says Citi Bid Too Low

Mason Hawkins might note that Harris et al sold a bunch of their stake, just to "lock in" profits of, course. Why might they do that? And of course what do you think will happen to that stake that they sold? (It gets tendered, naturally.)

Eisai is tendering. Mitsubishi Logistics is tendering.

Maybe Mason would like to, ahem, explain, his valuation metrics?

And put a time frame on his valuation?

I didn't think so.

Have fun with your stubs, Mason, and kiss your bonus down a notch.

But then, you'll tender at the last second, won'tcha, big mouth. ^_-

I don't see you in there bidding, say, even 1725, you pompous smoke generator.

Lance

Nikko Cordial: 6.6% Shareholder Southeastern Says Citi Bid Too Low

CSAM and Harris are playing a busted flush and blowing smoke. If Citi walks from the tender, they both lose perhaps as much as 100 million US$ in potential profit, possibly overnight, and possibly a lot more later. I'm sure they understand this, even though they apparently think that no one else does. They will tender, although they will try to disguise their play up until the moment that they make it.

Sure, Nikko, someday, is probably a 2000 yen stock. But exactly when, and for how long? As we enter the 5th year of the bull in Tokyo, it could also be a 1200 yen stock by, say, August. The hedgies aren't stupid, we have to presume; it seems that they just enjoy sounding that way sometimes.

Lance

Nikko Cordial Up 13% on Rumor Citigroup May Boost Stake

2:20 PM, Wednesday last of February in Tokyo:

Nikko down limit. Nihon Keizai Shimbun (now called "Nikkei") apparently validates Nikko delisting for April.

Try to find a bid. Somewhere. Anywhere. Pink sheets???

Nikko Cordial Up 13% on Rumor Citigroup May Boost Stake

Nikko reaches limit down (1147) at 9:50 am, and stays there, 2:1 order imbalance in the 10 to 12 million share differential range.

At 10:39, Mr. Deep Pockets steps in and bids for the entire offer, and gets it of course. The stock rockets off limit down to reach 1184, but closes the AM session 3 yen off limit down (1150).

Volume ~22 million, with ~16 million of that done on the open or before 10:40.

Fun stock. Fun situation. Guess right, win big. Guess wrong, go home naked.

Nikko Cordial Up 13% on Rumor Citigroup May Boost Stake

One of the tabloids (not NHK or Nihon Kezai Shimbun) is reporting this morning that Nikko will be delisted. This cannot be confirmed by mainstream journalists as yet, and may in fact be price more of the blatant manipulation that is part of this "modern" market in Tokyo.

Seven minutes before the open, Nikko is being quoted limit down (but so are a lot of others today, and that will change) 1147, about 6.5 million to sell and 3.8 million bid. If it stays that close, the stock will almost surely *not* open limit down.

But it might close there.

Bid is increasing now with 5 minutes to go -- should be unpleasant for speculators who have recently joined the fray, but I would expect an open above limit. Ya never know here, however. ^_^

Nikko Cordial Up 13% on Rumor Citigroup May Boost Stake

Ah yes. The manipulators are in full force today, what with a somewhat weakish futures market. 12:40 PM here, and Nikko has suddenly resumed its rock-like behavior, trading now at 1271 (-100 roughly) off an order-imbalance up opening.

As I said weeks ago, there is no sense trying to trade this stock. Money management cannot be accomplished under these circumstances. You either believe what you believe and are in ... or out.

The market is beginning to suggest that "out" is the way to go. But the Tokyo market is known for blatant deception.

Before I can even get this off, Nikko is back to 1308, which is only comforting to the people who did not buy yesterday, or this morning.

Nikko Cordial Up 13% on Rumor Citigroup May Boost Stake

It's also important to note relative valuations here. While Nikko Cordial has recovered a lot but is still about 10 percent off the pre-scandal mark, in the meantime Daiwa and Nomura, not so mention some of the other brokers, have advanced a quick 20 to 30 percent. So the valuation of Nikko has cratered compared to the group.

For the past 4 weeks, buy (any broker other than Nikko) and short an equivalent amount of Nikko on any rise, has not been a bad trade. Yesterday, some of the air in the Securities group escaped. I would not be suprised to see profits taken and a reversal of this type of trade come to the fore.

Nikko Cordial Up 13% on Rumor Citigroup May Boost Stake

Pre-scandal (12-15-2006) Nikko was cresting 1500 yen. So no, it has *not* recovered fully yet.

Insiders are both manipulating price, and of course acting on information not known by the public, which I suspect would include the likelihood or not of a delisting.

To wit, on Thursday (2-22-2007) at about 1 PM in the afternoon session, a dull Nikko Cordial market (sub 1200 yen) suddenly exploded in 15 or 20 minutes to 1337. In another 15 or 20 minutes, remarkably, it was trading all the way back at 1220, closing the day finally at 1240, and opening lower Friday.

Yesterday, it's up limit on the news, but it doesn't *stay* up limit even one minute. Someone with 5 million shares hits the lock-limit bid of 1411, and after some jostleling just below the limit price, the stock closes the morning session at 1371, a rebound off the morning low, then drifts sideways to lower in the PM session.

There is a lot of speculation going on here of course, but someone with a very large bag of shares is selling into it. Today's action should be very interesting.

Note, the 5 million dumped against a limit-up market yesterday morning at 9:46 could easily have been picked up over the past couple weeks at around 1200. So it's quite possible somone simply wante to pocket 10 million dollars very quickly. But in any market where there is no uptick rule, one has to be very careful when an issue becomes highly speculative.

Interestingly, volume yesterday was essentially equal to Thursday's intraday circus (which had been running low until volatility ran amok in the PM session): about 24 million shares.