The Capital Cycle Podcast Japanese Crown Jewels
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Sep 6, 2024 Toma Kobayashi, Portfolio Manager Japan at Marathon Asset Management, dives into Japan's corporate governance reforms through the lens of the Olympus scandal. He discusses how the scandal reshaped shareholder value and corporate practices. The conversation explores Olympus' shift to core competencies, its leading role in gastrointestinal endoscopy, and strategic share buybacks to enhance shareholder value. Kobayashi highlights promising investment opportunities stemming from corporate restructuring and Olympus' strong profitability and valuation.
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Whistleblower Scandal That Shook Olympus
- Michael Woodford whistle‑blew after discovering dubious payments and accounting fraud at Olympus and was sacked for it.
- The scandal collapsed the stock and became a global warning about corporate governance in Japan.
Conglomerate Structure Masks Valuable Units
- Japanese conglomerates often hide valuable divisions inside underperforming groups, reducing investor interest in the good parts.
- Breaking up or focusing businesses can unlock undervalued high‑return units for shareholders.
Transformation Into A Pure‑Play Medical Company
- Olympus sold off non-core units and became a pure‑play medical equipment company focused on high return operations.
- This shift exemplifies a broader Japanese move toward capital efficiency and shareholder focus.