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Undervalued Sony poised to rise 39%, Oasis's Fischer says

Wednesday, June 7, 2017 - 18:02

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Sony has undergone a massive turnaround since chief executive officer 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.

[TOKYO] Sony Corp shares are undervalued and could rise as much as 39 per cent, Oasis Management's Seth Fischer said at the Sohn Conference in Hong Kong.

Sony has undergone a massive turnaround since chief executive officer 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.

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

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

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

At last year's Sohn Conference in Hong Kong, Mr Fischer presented a bearish thesis on robot-suit maker Cyberdyne Inc. The stock has fallen more than 40 per cent since then.

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