(Bloomberg) -- Shares in Japanese train operators Keisei Electric Railway Co. and Keikyu Corp. jumped Monday following reports that a fund linked to activist investor Yoshiaki Murakami has built stakes in both companies.
Keisei’s stock closed up 14%, its sharpest rise since 2008, and Keikyu climbed 11%, the most since March 2020. A Murakami-associated fund has taken an almost 5% stake in Keikyu and owns fewer than 1% of Keisei shares, according to a Monday report by Toyo Keizai, citing an unidentified person.
Keisei was the biggest gainer on both the Topix and Nikkei 225 gauges on Monday, which advanced 0.7% and 1.3%, respectively.
A representative for Keikyu declined to comment on the Toyo Keizai report while a spokesperson for Keisei was not able to immediately respond to a request for comment.
The news is a positive for both companies and delivered a boost to Japan’s rail sector stocks, said Andrew Jackson, head of Japan Equity Strategy at Ortus Advisors. Odakyu Electric Railway Co. climbed as much as 4.9%, with Central Japan Railway Co. and West Japan Railway Co. both rising around 2% at one point.
“It’s a knee-jerk reaction, as (rail operators) are generally all seen as value plays, but I’m not expecting much follow-on,” said Jackson.
Keisei provides rail and bus services in Tokyo and Chiba prefecture, including the Skyliner express train that runs between central Tokyo and Narita Airport. Keikyu operates trains and buses in Tokyo and Yokohama, including the Keikyu Main Line.
A spokesperson for Keisei told Toyo Keizai the company was not aware of a Murakami-related stake, with a representative for Keikyu saying the operator does not comment on individual shareholders. It is unclear exactly which fund, or funds, have taken stakes in the railway providers, according to the report.
Former bureaucrat Murakami’s funds are among a rising number of activists campaigning to unlock hidden value in Japan’s companies, many of which are trading below book value. Last week, US firm Elliott Investment Management said it had taken a 5% stake in Tokyo Gas Co., prompting the utility’s stock to rise 13% on Nov. 20.
Fellow US activist Oasis Management Co. increased its stake in drugmaker Kobayashi Pharmaceutical Co. and was reported to have invested in struggling carmaker Nissan Motor Co. earlier this month.
Oriental Land stake
Activist investors will likely push for Keisei to sell its 19% stake in theme park operator Oriental Land Co., said Amir Anvarzadeh, Japan equity strategist at Asymmetric Advisors. “We have known for a long time that Keisei is under pressure to dump its stake in Oriental Land,” he said.
London-based activist fund Palliser Capital, which owns 1.9% of Keisei’s stock, according to data compiled by Bloomberg, has been calling for the train operator to trim its stake in Oriental Land, which operates the Tokyo Disney Resort.
Oriental Land’s shares closed 2.9% higher on Monday after the Toyo Keizai report. Its stock has fallen 34% so far this year as bad weather, including extreme heat and heavy rain, pressured visitor numbers.
Murakami-linked funds have also previously taken stakes in machinery maker Exedy, Aozora Bank Ltd. and Cosmo Energy Holdings, among others.
(Adds closing prices, efforts to contact Keikyu and Keisei, and more detail on activist impact in Japan.)
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