The chaos caused by Covid-19 this year has left an indelible mark on global economies. Financial markets experienced historic falls in value as the crisis reached a tipping point in March and whole countries were plunged into public lockdowns.
Patience is key, as everything takes longer than anticipated. Nonetheless, in an inefficient market where we have the ability to submit shareholder proposals with only 1% ownership, being able to sit tight and wait can certainly reap rewards.
It is important to focus on a variety of issues. It is not enough to focus only on the balance sheet and ask for cash back - investors also need to focus on corporate governance, operational issues and shareholder communication.
That is what shapes a positive constructive relationship with management, building up trust and encouraging them to adopt the measures that will maximise value.
The landscape for activism in Japan continues to shift, and while we have seen huge strides forward in the environment, there is still further to go and more improvements to be made.
Importantly, we must hope for more high-profile success stories to emerge. Among the notable developments over the past 12 to 18 months has been the steady increase in the presence and action of high-profile activists.
These larger organisations are targeting the big players such as Softbank and Sony, and seeing success. It is important to see those campaigns succeed because there is a significant trickle-down effect.
The management of smaller companies look to their larger counterparts for examples of change and development that they will reflect in their own organisations, so this shift in attitudes is a welcome development that must continue if we are to take further encouraging steps forward.
Fifteen years ago, the last activist boom in Japan, the approach lacked an understanding or care for the culture, structure, and history of the country and environment in which these companies had grown.
Today it is different, and investors are approaching companies in a way that is far more sympathetic to their culture, and far more conciliatory.
As a result, we have the beginnings of a more constructive and fruitful approach to shareholder engagement and corporate improvements, with the benefits being felt on both sides.
Joe Bauernfreund is CEO and CIO of Asset Value Investors and portfolio manager of the AVI Japan Opportunity trust