Investment
service

Equity: Long Short
Fundamentals Bottom-Up Approach

Fund Manager

Equity Investment Management
Takato Tanikawa

Hiroshi Misu

(logo)Bayview Asset Management

Investment Philosophy

Achieve stable returns by making investment decisions not only based on fundamental analysis of individual firms, but also from fresh viewpoints by discerning stock market trends with the eyes of a bird (macro viewpoint), an insect (micro viewpoint), and a fish (trend viewpoint).

Investment Process

The fund conducts active idea-driven management based on independently constructed scenarios, without limiting the potential investment universe. The stock selection perspectives emphasize (1) the potential to become a next-generation leading firm in growth markets, (2) comparative advantages versus other firms in the same industry and how long those advantages will continue, and (3) turnaround potential during periods when business performance declines. The fund manager and the analysts work flexibly together in investigating, analyzing and evaluating target firms, so the fund manager can selectively invest in specific issues with high conviction.

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Investment Strategy

Long/Short:
Bayview Japan Equity Long Short Fund
(Inception day: July 15, 2002)

The Fund pursues solid and stable absolute returns. On the long side, the portfolio combines an "active strategy" for the short- to mid-term returns and a "buy & hold strategy" for long-term returns. On the short side, it has two strategies; a "hedging strategy," a hedge against the market as a whole and individual issues, and an "opportunistic short strategy," where the source of returns is from individual stocks when short- to mid-term price declines are seen. (Hedging against individual short stocks by the long book is also possible.)

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Since July 16th, 2013, a fund deploying the same strategy as Bayview Japan Equity Long Short Fund has become available for retail investors (under the same fund name). The fund is managed by BVAM as its first publicly offered investment trust, and is distributed by Mito Securities, etc.

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Takato Tanikawa

Bayview Japan Equity Long Short Fund under bottom-up approach that incorporates investor behavior analysis

The eyes of a bird, an insect, and a fish

Takato Tanikawa first became interested in the financial industry when he was exposed to venture financing as a university student. As he learned how difficult it is for venture firms to raise fund in the course of researching the key elements for venture firms to succeed, he became interested in supporting the financing of start-up firms that would grow in the future, and so, he joined a domestic securities firm.

As a member of the firm窶冱 Japanese equity research and sales team, Tanikawa provided investment information and ideas on individual companies to investment management firms. During the five years of service, he realized that information provided by sell-side analysts are only extension of the past, and in many cases, already incorporated in stock prices. On the other hand, many fund managers he contacted captured changes in the stock market and companies speedily and conducted investment actions based on their own ideas, which fascinated him to buy-side investment management. A fund manager who had a big influence on this growing fascination was Sakuma of Bayview Asset Management.

Unlike fund managers of other companies, Sakuma would not listen to Tanikawa unless Tanikawa explained the stock issues he unearthed from the market with his own words, and even making an appointment was difficult at first. Sakuma, however, gradually started to listen to Tanikawa窶冱 explanations, which were backed by in-depth research and analysis. Sakuma said during a discussion with Tanikawa on a game related company 窶弩ithout understanding the history of game development process, we cannot accurately judge the company窶冱 capital policy.窶� Tanikawa was inspired by Sakuma窶冱 insights in the historical background of companies, which many market participants overlooked. This made Tanikawa want to work with Sakuma, and Tanikawa decided to join Bayview Asset Management in 2012. Tanikawa refined his ability to find promising individual stocks as an analyst under Sakuma and recommended stocks by newly incorporating investor behavior analysis, which Tanikawa found extremely important during his experience in the research and sales days. These bore fruit and Tanikawa became the co-fund manager of Bayview Japan Equity Long Short Fund in April 2016.

In the stock market today, investor behavior that has significant impacts on market movements changes every minute, such as that the trading turnover of leveraged ETF exceeding that of large-cap stock. Tanikawa starts taking on challenges as a fund manager, with the belief that when investing in stocks, good returns can be achieved only when investment decisions are made based on not only analysis of individual companies fundamentals, but also from fresh viewpoints that discern stock market trends, with the eyes of a bird (macro viewpoint), an insect (micro viewpoint) and a fish (trend viewpoint).

[Biography] Tanikawa joined Bayview Asset management Co., Ltd. in May 2012. He started his career at Shinko Securities in 2007 (current Mizuho Securities), where he was engaged in research and sales for institutional investors, mainly for Japanese investment firms, at the equity sales department and the institutional investor sales department. Tanikawa received his B.A. in business from Tokyo University of Science in 2007.

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Hiroshi Misu

Bayview Japan Equity Long Short Fund under fundamentals bottom-up approach

Unwavering beliefs and flexible decisions.

It dates back to his college days when Hiroshi Misu first encountered equity investment. He came across Black Monday in 1987 when he studied in the U.S.A. He, as a student not having any knowledge about or experience in equities yet, heard and saw his teachers and the adults around him assuming and telling definitely, as if they had known the truth, that the real cause for the sharp plunge is computer-programmed trading, which made him feel the immeasurable charm of market movements. Upon graduation, he joined Yamaichi Securities, and after experiencing retail and institutional sales for three years at head office, he was seconded to the Yamaichi Securities Singapore Pte. Ltd., where he devoted himself as an Asian equity trader to the activities of the local market, which was full of remarkably growing energies and dynamism, and he became confident that he loved equities.

Upon retuning to Japan, while executing trades of individual stocks as a Japanese-equity trader for domestic institutional investors on a daily basis, he witnessed professional skills of dozens of fund managers in terms of their stock selection and investment decisions, and his aspiration to move to buy-side grew stronger day by day. Then, following the voluntary closure of Yamaichi Securities, Misu joined Taiyo Life, which was one of his clients at the time, and by a curious coincidence, he started to follow the road to his long-cherished dream to be a fund manager. After being engaged in the management of insurance assets as a Japanese equity analyst to start with, he was temporarily transferred for three years to a hedge fund company that specialized in U.S. equity long/short fund management, which marked a major turning point for him.

In the above-mentioned company in San Francisco, where he was the only Japanese, he had the valuable experience of frequently visiting high-tech companies in Silicon Valley as a U.S. technology equity analyst. In addition, he not only gained a full-scale bottom-up investment approach but also had a golden opportunity to engage in the then state-of-the-art equity long/short fund management during the IT bubble and burst period. The maxim, “Do not fall in love with a company. Fall in love with the growth momentum of a company and hate the deceleration thereof,” which was hammered in by his American time-tested artisanal fund manager and was to subsequently form the basis of Misu’s fund management.

After getting back to Japan, Misu started managing Japanese equity funds on a full scale as a fund manager at T&D Asset Management. For the last 12 years, he has steadily accumulated returns through his fund management method, which is based on the idea that individual stock selection by means of the bottom-up approach is the source of excess return. He commits himself to engaging in fund management activities, always keeping it in mind that there always exist insured, employees, or individual investors on the other side of insurance companies, pension funds, or investment trust funds, and so he makes it his motto that “what’s important in managing clients’ assets is unwavering beliefs and flexible decisions.” In addition, he had hoped for an opportunity to fulfill his long-held dream to manage funds having clear features formed by the fund manager who is responsible for, which is not easy for the team management organizations of major fund management companies to appeal. Twenty years have passed since Misu started working in Singapore as a professional in the equity world, and now he has determined to take part in Bayview Asset Management as the stage of the compilation of his career with which he has had interactions for years since the days when he was temporarily stationed in San Francisco.

[Biography] Hiroshi Misu joined Bayview Asset Management Co. Ltd. (BVAM) in July 2014. He started his career in 1991 at Yamaichi Securities Co. where he was engaged in securities sales and equities trading at the Sales Department of the head office, Yamaichi Securities Singapore Pte Ltd., Financial Institution Fund Operation and Equity Trading Group I. In 1998, he joined Taiyo Mutual Life Insurance Company (current Taiyo Life Insurance Company) where he was responsible for the corporate analysis of companies in the technology, materials and public utilities sectors for investment under special accounts. Hiroshi then worked as an analyst mainly covering U.S. technology companies being seconded to the former Elijah Asset Management formed out of a management buyout from Robertson Stephens Investment Management (current RS Investments) in 1999. Since 2003, he has been responsible for growth investment mainly investing in Japanese equities in insurance assets, pension funds and investment trusts, as a fund manager at the Investment Management Division of T&D Taiyo Daido Asset Management Co. (current T&D Asset Management Co.) Hiroshi received a B.A. in literature from Rikkyo University in 1991. He is a charter member of the Securities Analysts Association of Japan (CMA).