Nippon Active Value Fund (LON: NAVF) has made a name for itself by focusing on unlocking value in Japanese companies. Listed on the London Stock Exchange, the fund employs an active management approach aimed at identifying and capitalising on undervalued small and mid-cap companies. While NAVF’s share price has quietly climbed in 2024, the real story lies in its strategic investment choices and the fund’s disciplined approach to finding growth opportunities in the Japanese market.

NAVF’s investment strategy is centred on companies that exhibit strong asset bases or significant cash reserves, yet are undervalued by the market. The goal is to engage with these companies, working with management to realise shareholder value through buybacks, restructuring, or other strategic initiatives. The fund’s portfolio provides a snapshot of this approach, with recent investments in diverse sectors such as logistics, chemicals, and media.

One of NAVF’s notable investments is Trancom Co. Ltd, a logistics company that specialises in freight matching services. Trancom operates as an intermediary, connecting shippers with carriers to optimise freight logistics and reduce costs. In September 2024, Trancom was taken private in a management buyout led by Bain Capital. NAVF, part of a consortium that had accumulated a significant stake, capitalised on the buyout with a tender offer at a 40% premium, achieving a record valuation for the stock.

Another example is its investment in Ishihara Chemical Co., a producer of surface treatment chemicals and a key player in precious metal recycling. The company executed a share buyback in September 2024, repurchasing 6.25% of its outstanding shares. NAVF, which held a 5.61% stake in the company, sold over 75% of its holdings as part of the buyback, yielding a return of more than 100%.

The fund’s portfolio also includes a significant position in Fuji Media Holdings, a prominent broadcaster with diverse media interests. By acquiring over 5% ownership, NAVF seeks to capitalise on the company’s low valuation relative to its book value, especially as Japan’s regulatory environment shifts to encourage higher standards of corporate governance and shareholder returns.

A recent video update from the managers of Nippon below: