On March 7, 2024, it was announced that Varecs, a Japan-based activist investor, increased its ownership in Medikit (7749) by 1.47%, bringing their total stake to 14.17%. This development piqued my interest in understanding—and learning to emulate—what Varecs values in the companies they invest in. After all, imitation is the sincerest form of flattery.

Below is the top 6 holdings of Varecs in which they own more than 10%. (The list is available for the clients)

The common characteristics of these names are:

1) Market cap of around Y 50 Bn.

2) Market leaders in their respective industries

3) Strong equity position

4) Discounted valuations, particularly when considering net cash relative to market capitalization.

5) High OP margin

6) High barrier to entry

7) Solid dividend payers

Please let me know if you think I should explore different sets of ratios or characteristics. Also, feel free to DM me if you’d like me to work on these names.