Undervalued Sony poised to rise 39%

2017-06-07 12:30 - Tom Redmond, Bloomberg
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Tokyo - Sony Corp shares are undervalued and could rise as much as 39%, Oasis Management’s Seth Fischer said at the Sohn Conference in Hong Kong.

Sony has undergone a massive turnaround since CEO Kazuo Hirai took the helm in 2012, jettisoning unprofitable businesses such as its Vaio personal computer unit, the chief investment officer of the Hong Kong-based hedge fund said.

People’s devotion to gaming and the growth potential of the company’s television business within its entertainment unit are two of Sony’s strengths, he said.

Fischer said some of the best investing ideas are sometimes hidden in plain sight, noting how the so-called FANG stocks - Facebook, Amazon.com, Netflix and Google parent Alphabet - have driven the US stock market higher. Sony is another example, he said.

He also cited what he sees as good corporate governance at the Japanese company, including targeting return-on-equity of more than 10% and appointing a majority of independent directors. Under Hirai, Sony has also restructured businesses and reduced headcount.

Sony shares have risen 26% this year, outperforming the benchmark Topix index’s 5.2% gain. The stock pared losses in afternoon trade in Tokyo, closing down 1% at ¥4 126, having earlier fallen as much as 1.9%.

At last year’s Sohn Conference in Hong, Fischer presented a bearish thesis on robot-suit maker Cyberdyne. The stock has fallen more than 40% since then.

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