The good times are rolling again in Tokyo, where the Japanese stock exchange has extended its record rally, fuelled by what UBS calls the “Takaichi trade”, says MarketWatch. But if new PM Sanae Takaichi – the country’s first female prime minister – is one symbol of the boom, another is the return to prominence of one of Japan’s most notorious traders.
Activist investor Yoshiaki Murakami was a central player in the Livedoor scandal that shook Japan to its roots in 2006 when the internet company, founded by the flamboyant Takafumi Horie, collapsed spectacularly after the exposure of a shares and accounting scam. Eventually sentenced to two years for insider trading of shares in Nippon Broadcasting System (which Horie had waged a hostile bid to acquire), Murakami’s downfall was viewed as a “victory for Japan’s traditional business community”, who regarded his “brash brand of capitalism with barely concealed contempt”, noted The Guardian at the time.
Like Horie, Murakami had risen to prominence as an enfant terrible, determined to crush established hierarchies “in the search for quick profits”. Famous for “aggressive tactics and fiery language”, the impact of his disgrace – and the wider collapse following the 2008 global financial crisis – was to bring “activist investing in Japan to a halt”, says Bloomberg. In 2009, he left the country for Singapore to concentrate on real estate investments.
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Now 66, Murakami is back with a new firm, City Index Eleventh, and his tactics haven’t changed – he spots weakness in a target and tightens the screws until he gets what he wants. The latest is another prominent broadcaster, Fuji Media Holdings, which in January became engulfed in a sex scandal. “Longtime executives quit in disgrace. Advertisers fled. Earnings cratered” – and Murakami piled in, amassing a 16% stake and demanding the spin-off of subsidiaries to boost the share price. Since his investments started picking up in 2021, his companies have made ¥170 billion (£841 million) in profit, according to Citic Securities. Indeed, Murakami, his family and affiliates now control at least £2.4 billion in Japanese stocks – two daughters, Aya and Rei, are in the business.
More significantly, the originator of Japanese activism has helped spawn a new movement. A record 146 activist campaigns were waged in the country last year, disrupting “once-clubby” executive suites and helping to revive Japan’s stock market.
After graduating from the University of Tokyo in 1983, Murakami joined the Ministry of International Trade and Industry – gaining a reputation for his financial acumen and straight talk. Murakami got into the habit of checking financial results before meetings and was astonished by how many executives were ignorant of the company’s balance sheet. They simply assumed the customary practice of their predecessors – sitting on hoards of cash rather than investing. “Frustrated by the lack of urgency”, he left the civil service, “figuring he could be more effective as an investor”.
Yoshiaki Murakami's Marmite personality
Something of a Marmite personality, Murakami is castigated by opponents for “using fear as an investment strategy”, says the Financial Times. Others view him as a brave standard-bearer. “He’s Japanese – with a thoroughly Anglo-Saxon understanding of capitalism,” one broker told Bloomberg. “He was an insider who realised Japan needed to change and became an outsider to make that happen.” Murakami’s “approach was direct, data-driven and fundamentally correct in diagnosing bloated balance sheets [and] weak governance”, adds Star Magnolia Capital. “Management teams saw him as an intruder”, and the media “portrayed him as a raider”. Yet he wrote “the first chapter of modern Japanese activism”. No doubt he plans to write a few more.
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