| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
| 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|
| 20.9% | 15.8% | -4.3% | 12.3% |
AVI Japan Opportunity Trust delivered a +1.9% NAV return in GBP during December 2025, outperforming the benchmark which returned -1.1%. The fund focuses on over-capitalised small-cap Japanese equities using constructive engagement to unlock value in under-researched companies. Key contributors included Synchro Food (+22%) following successful appointment of AVI's Head of Japan Research to the board as independent director, and Broadmedia (+21%) where AVI announced a tender offer to increase its stake to 40%. Aoyama Zaisan Networks (-16%) detracted after revising FY2025 revenue guidance downward due to tax reform impacts. The team continues deploying capital received from the Fidelity Japan Trust merger, with over half allocated by year-end. AVI maintains its constructive engagement strategy heading into 2026, anticipating benefits from the Financial Service Agency's Corporate Governance Code review expected to drive improved capital efficiency. The fund leverages additional firepower from the merger to enhance engagement initiatives and unlock substantial corporate value across portfolio companies.
AVI Japan Opportunity Trust seeks to achieve capital growth through investing in a focused portfolio of over-capitalised small-cap Japanese equities, leveraging three decades of experience in asset-backed companies to engage with management and unlock value in under-researched areas of the market.
Moving into 2026, the constructive engagement strategy remains unchanged, with focus on unlocking substantial corporate value in portfolio companies. The team looks forward to seeing results of the FSA Corporate Governance Code review in 2026 as corporate reform in Japan continues to accelerate. AVI is excited by the opportunity to utilise additional firepower following the merger with FJV to enhance constructive engagement strategy.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 14 2026 | 2025 Q4 | 3963.T, 4347.T, 8929.T | Engagement, Governance, Japan, small cap, value |
3963 JP 4347 JP 8929 JP |
AVI focuses on over-capitalised small-cap Japanese equities using asset-backed investment approach. The fund leverages three decades of experience investing in asset-backed companies to unlock value in under-researched areas of the market. The fund invests exclusively in Japanese small-cap equities. The Financial Service Agency is conducting a review of the Corporate Governance Code with desire to see improved capital efficiency through companies reinvesting excess cash and increasing shareholder returns. |
| Oct 14 2025 | 2025 Q3 | 3106 JP, 3529 JP, 6727 JP | activism, Buybacks, Corporate Governance, Japan, small caps | 6727 JP | AVI continues its constructive activism in undervalued Japanese small caps, advocating for capital efficiency and operational reform. Campaigns at Wacom and Atsugi reflect its hands-on approach, while Kurabos buyback completion underscores shareholder-friendly progress. Structural reforms and rising foreign engagement support Japans equity re-rating. |
| Jun 30 2025 | 2025 Q2 | 1926 JP, 3106 JP, 4347 JP | activism, capital efficiency, Corporate Governance, Engagement, Japan |
4347 JP 3106 JP 1926 JP |
The letter highlights value creation through constructive engagement with undercapitalized Japanese small-cap companies. Management emphasizes corporate governance reform, capital efficiency, and shareholder alignment as key drivers of rerating. The outlook benefits from ongoing Tokyo Stock Exchange reforms and rising activism acceptance. |
| May 1 2025 | 2025 Q1 | 3106 JP, 3529 JP, 4527 JP | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
JapanJapan offers tremendous value opportunities with one-third of companies trading below book value. Corporate governance reforms, record shareholder returns, and structural changes like unwinding cross-holdings are unlocking value. The investment opportunity is in early innings and could last several years. |
Corporate Governance Value Reforms Shareholder Returns Cross Holdings |
ValueManager emphasizes investing in controlled companies trading at significant discounts to NAV, with European holding companies showing discounts of 30-68%. The strategy focuses on securities mispricing where real value exists, contrasting with overvalued technology stocks. |
Discounts NAV Mispricing Undervalued Controlled | |
| 2025 Q3 |
Corporate GovernanceElliott criticizes the Toyota Industries tender offer as a test of Japanese corporate governance reforms, arguing that allowing this transaction would set a dangerous precedent and undermine minority shareholder protections. The firm views this as a decisive moment for Japan's governance modernization efforts. |
Governance Minority Rights Japan Reform M&A |
Shareholder Activism |
||
Small CapsThe fund operates a concentrated Micro and Small-Cap strategy that naturally diverges from market indexes. Approximately 60% of the portfolio consists of businesses with market caps below $500M, with the top five positions accounting for ~60% of the portfolio. |
Microcap Concentration Divergence Outperformance | |
| 2025 Q2 |
ActivismShareholder activism continues to grow with 152 campaigns in North America in 2025, a 20.6% increase from 2024. The strategy has evolved from stigmatized to accepted and now necessary as passive investing increases. Non-activist managers are resorting to activism to realize intrinsic value as fewer investors buy and sell based on fundamentals. |
Shareholder activism Proxy contests Board representation Value creation Catalyst |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 14, 2025 | Fund Letters | Joe Bauernfreund | 6727 JP | Wacom Co., Ltd. | Information Technology | Computer Hardware | Bull | NYSE | Activism, AI, Digitalization, Governance, innovation, Margins, restructuring, Tablets | Login |
| Jun 30, 2025 | Fund Letters | Joe Bauernfreund | 4347 JP | Broadmedia Corporation | Communication Services | Alternative Carriers | Bull | NYSE | Education, Elearning, Engagement, Governance, Margins, restructuring | Login |
| Jun 30, 2025 | Fund Letters | Joe Bauernfreund | 3106 JP | Kurabo Industries Ltd. | Industrials | Textiles | Bull | NYSE | buybacks, diversification, Governance, Margins, materials, restructuring | Login |
| Jun 30, 2025 | Fund Letters | Joe Bauernfreund | 1926 JP | Raito Kogyo Co., Ltd. | Industrials | Construction & Engineering | Bull | NYSE | — | Login |
| Jan 14, 2026 | Fund Letters | Joe Bauernfreund | 3963 JP | Synchro Food Co., Ltd. | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | New York Stock Exchange | cashflow, Engagement, Governance, Marketplaces, Platforms | Login |
| Jan 14, 2026 | Fund Letters | Joe Bauernfreund | 4347 JP | Broadmedia Corporation | Communication Services | Media & Entertainment | Bull | New York Stock Exchange | Capital, Engagement, Governance, Tender | Login |
| Jan 14, 2026 | Fund Letters | Joe Bauernfreund | 8929 JP | Aoyama Zaisan Networks Company, Limited | Real Estate | Real Estate Services | Bear | New York Stock Exchange | assets, Delays, guidance, realestate | Login |
| TICKER | COMMENTARY |
|---|---|
| 3963.T | Synchro Food operates a service matching platform for restaurants in Japan, with much of its sales coming from job listings. The company operates Inshokuten.com which provides an end-to-end business platform for restaurants, including supplier search, accountant search, interior design, food truck support and bulk ordering services. The EGM requested by AVI was held by Synchro Food on December 26th 2025, having initially received our request on October 2nd 2025. The results of the EGM were highly positive, with AVI's Head of Japan Research, Kaz Sakai, successfully appointed to the board as an independent director. Additionally, internal directors Morita and Nakagawa were both dismissed, with both a new CEO and Chairman stepping up consequently. Added to the portfolio in March 2025, the company accounted for 5.5% of AJOT's NAV at year-end. We see significant upside through our constructive engagement and to month-end, our investment has generated an ROI of +28% for an IRR of +78% (in JPY). |
| 4347.T | Broadmedia mainly engages in online education and IT service businesses. It is a leading player in Japan running online-learning secondary schools with the brand name Renaissance High School Group, allowing students to learn at their own pace remotely and to focus on their individual learning interests. Broadmedia also operates an IT service business, specifically for distributing Akamai Technologies' software and solutions to domestic clients. On December 9th 2025, AVI announced its intention to increase its combined stake across client funds from c.29% to c.40% via tender offer, at a price of 2,200 Yen per share, a 29% premium to the undisturbed share price. The Board of Broadmedia took a neutral stance, leaving it up to shareholders to decide whether to accept the tender offer. We believe this larger stake will support our constructive engagement initiatives and be beneficial to minority shareholders. Broadmedia serves as an example of AVI's constructive and creative approach to value enhancement in Japanese small-cap companies. AVI expects Broadmedia to continue driving business growth supported by rising demand in online education and IT services sectors. Broadmedia was added to the portfolio in April 2024 and now accounts for 4.2% of AJOT's NAV, with the investment having so far generated a +31% ROI for an IRR of +30% to month-end (in JPY). |
| 8929.T | AZN specialises in providing wealth management consulting services across areas such as property, succession planning, corporate finance and strategic management of individual assets. AZN is set to benefit from the aging Japanese population as the need for inheritance and business succession consulting is on the rise. In December 2025, AZN revised its revenue guidance downwards by -11% for FY2025 due to revenue from transactions at Advantage Club, AZN's real estate co-ownership platform, being pushed into later periods due to the announcement of upcoming tax reform. While operating profit remained unchanged at Y3.85bn, the market perceived this as a negative signal for future earnings potential, with the share price drifting -7% lower in the following 5 trading days. At the time we initiated our investment in March 2024, AZN's stock price had been flat for the previous five years, despite operating income that had continued to grow steadily and non-operating assets that had expanded to c.47% of its market cap as of the end of December 2023. AZN was added to the portfolio in March 2024, and at month-end accounted for 3.1% of AJOT's NAV. To date, the investment has returned an ROI of +7% for an IRR of +7% (in JPY). |
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