At this year’s annual investor conference, we had the pleasure of welcoming Seth Fischer, Founder and Chief Investment Officer of Oasis Management, for a conversation on Japan’s ongoing corporate governance transformation and the extraordinary investment opportunity it continues to create.
Seth has been investing in Japan for over 30 years, and the picture he painted was one of a market in the early innings of a profound structural shift. What began in earnest with Abenomics in 2013 has continued to evolve into a systematic, multi-decade effort to make Japanese companies work for their shareholders through better corporate governance and a greater focus on returns on equity.
One of the most compelling themes of the conversation was the hidden assets sitting inside Japanese companies: undervalued cash piles, undisclosed real estate, multiple layers of cross-shareholdings, and, in one remarkable case study Seth shared, a billion-dollar fine art collection that a Japanese chemical company had been quietly accumulating for decades without ever disclosing it to shareholders. These are not anomalies. They are remarkably common.
Seth’s framework for engagement is equally compelling. When a company is not creating value, he sees three options for management: improve on your own, go private, or be acquired. The era of persistent underperformance without accountability to shareholders is over, he argued.
Perhaps most striking was Seth’s view on where we are in the cycle: late innings for the easy, cash-rich, negative EV opportunities; the seventh inning for the unwind of hidden assets. But still the very first inning of driving returns through better management. That runway, he believes, remains long.