Shiseido Shares Rally After Activist Investor Takes Stake

Shiseido Co. shares erased earlier losses and jumped as much as 12 percent, the most since May 2018 on Wednesday, after London-based investor Independent Franchise Partners announced a stake in the Japanese cosmetics company.

IFP reported a 5.2 percent stake in Shiseido and said that it may make important proposals to the company, according to a filing to Japan’s Finance Ministry. Still, the company’s shares are down around 5.2 percent this year compared to the broader Topix index’s 0.7 percent fall.

The investor has in the past made corporate action proposals to company managements, such as the one in 2019 when it advised Kirin against diversification. In 2020, it had urged Kirin to make a ¥600 billion share buyback using proceeds from selling of the brewer’s stake in cosmetics and supplements maker Fancl Corp. and its pharmaceutical business.

“Its being short squeezed, that’s why it’s rising so fast,” said Andrew Jackson, head of Japan Equity Strategy at Ortus Advisors Pte Ltd. “Its still in need of restructuring.”

“Far too many staff and a clear inability to react swiftly to changing fashion trends etc which the smaller local brands seem to do much better,” he added.

By Aya Wagatsuma

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