How ValueAct may help boost margins at this Japanese medical device company

Company: Nihon Kohden (6849.T-JP)

Business: Nihon Kohden is a Japan-based company engaged in the research, development, manufacture and sale of medical electronic equipment, as well as the provision of maintenance and repair services. The company offers a wide array of devices to aid with medical diagnoses, including electroencephalographs, evoked potential testing equipment, electrocardiographs, cardiac catheterization equipment, diagnostic information systems and related consumables. The company is also engaged in the sales promotion for its products, as well as the general affair-related and manpower dispatching businesses.

Stock Market Value: $2.6B ($31.02 per share)

Percentage Ownership: 5.01%

Average Cost: n/a

Activist Commentary: ValueAct has been a premier corporate governance investor for over 20 years. ValueAct principals are generally on the boards of half of the firm’s core portfolio positions and have had 56 public company board seats over 23 years. ValueAct has been a pioneer of U.S.-led international activism, primarily in Japan. ValueAct’s co-CEOs, Rob Hale and Mason Morfit, are also co-portfolio managers of the firm’s Japan fund. A significant amount of the portfolio is invested internationally. Hale is on the boards of Japanese companies, which is somewhat of an unprecedented and industry-leading action for U.S. activist funds. ValueAct has had 26 prior international activist investments and has had an average return of 36.19% versus an average of 4.04% for the MSCI EAFE index over the same periods. Moreover, two of their best international investments have been two Japanese companies where Hale is on the board – Olympus (109.48% versus 7.68% for the MSCI EAFE) and JSR (116.86% versus 38.57% for the MSCI EAFE).

On Dec. 25, ValueAct reported holding 5.01% of Nihon Kohden.

ValueAct has been a pioneer of U.S.-led activism in Japan. A…