Big Change Candidate

Hello everyone.

My “Fundamental and Mental Investment” focuses mainly on medium- to long-term swings.

Among them, the most appealing are the so-called “Big Change” stocks. These are stocks that undergo a large transformation, and over the medium to long term their stock price can multiply by several times, and in some cases can grow tenfold to several tens of times. Such Big Change stocks look “obvious” in hindsight, but spotting them in advance and catching the early moves isn’t so easy.

However, there are several tips to discern the potential for a Big Change.

As a candidate for a Big Change, I always check three points that carry the possibility of becoming a “huge breakthrough.”

① Change of company name
② Change of management
③ Business restructuring

①Change of company nameis a very symbolic change. It’s well known that “Tokyo Tsushin Kogyo” decided to go global and changed its name to “SONY.” This often carries a very strategic intent and is one of the major changes to pay attention to. That said, there are also cases where troubled or scandal-ridden companies change their names and survive with a blank expression, which people sometimes mock as “name laundering.”

②Change of managementis another major change. When management changes occur through orderly personnel moves, they are simply that—ordered changes. But when changes occur through disputes and are not conducted smoothly, those are noteworthy from a Big Change perspective. In particular, when a new CEO is installed after a shareholder proposal, that often carries Big Change potential. The risk is that management may become beholden to large shareholders, and such entities can be used as so-called “shell companies,” so distinguishing this is also crucial.

③Business restructuringis another signal of a Big Change. When unprofitable or underperforming businesses are exited and resources are concentrated in growth areas or new ventures, a so-called “selection and concentration” strategy is implemented, and the normally stagnant company can undergo significant transformation. Sometimes the new ventures succeed, sometimes they do not, so discerning this is important. Last year, many troubled companies ventured into new businesses in the cryptocurrency sector, but only a few succeeded.

Now, this time, I will introduce a stock that clearly suggested Big Change potential through the combination of ② Change of management and ③ Business restructuring.

Before that, this information is quite “premium,” but still early-stage, so I am offering it for free this time. If you find it helpful, I’d be grateful if you “like” or “share.”

Now, the stock to introduce.

2667 Image One

After the close on 7/3, there was an IR update on earnings, announcing the sale of business assets and an upward revision of earnings.

Zaimaru News reported with the headline: “Image One, revisions to current year net income to positive for the first time in 24 years, marking a new peak.”Actually, Image One underwent a management overhaul last December due to a shareholder proposal and is currently in the middle of a business transformation.

Since the new management took office, they have been rapidly pursuing “selection and concentration” through entering new businesses, forming business alliances, and divesting other operations. Here are the main steps in order.

2018/12/26 - Articles of incorporation changed
2019/3/15 - Business withdrawal (recognition of extraordinary loss): Duranta business
2019/3/15 - New business starts; business alliances; LLC established: Solar power business
2019/3/22 - Mid-term plan formulated
2019/4/08 - New business starts; sales代理契約：Electronic medical records business
2019/5/24 - New business starts; business alliance: Regenerative medicine-related business
2019/7/03 - Sale of business assets (recognition of extraordinary profit): Solar power plant sale

For me, seeing the entry into solar power on 3/15, I honestly thought, “What? Solar power now?!” And when I looked at the mid-term plan, I wasn’t excited at all, so I immediately shorted the stock. As expected, the stock price dropped sharply and I made a nice profit. After that,careful observation showed that this management team is not to be underestimated. In particular, the sale of the solar power plants seems to be a very symbolic event.

The new management team achieved the highest profit in 24 years in the first year,which is very symbolic. This can be seen as a rallying cry from the new management: “We’ll do it.” Some people say, “Is this just extraordinary profit and temporary?” But for me, the sale of the solar power plants shows the “selection and concentration” strategy and gives me a spark of sense.I feel a keen sense of this. At this stage, I think Image One is in the process of selecting and concentrating, i.e., implementing it in the form of “withdrawal” and “advancement.” And one move of withdrawal has already arrived, so I suspect there may be another move toward expanding into a significantly potential business.

Today (7/4) is likely to open with a large gap up, but

I think it is good to buy on the open with the aim of filling the gap (though it might not fill the gap) with real assets, and wait for the next new business or partnership while watching Big Change with a patient approach.