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2021.11.25

Interview with Hedge Fund Manager on SMACOM Utilization - Mr. Takamatsu, CEO, Village Capital Pte. Limited

In March 2021, Nikkei Financial Technology Research Institute (hereinafter "Nikkei FTRI") began offering services for the new SMACOM information distribution platform, which provides corporate analytical information (https://www.nikkei.co.jp/nikkeiinfo/en/global_services/others/providing-services-for-the-new-smacom-information-distribution-platform.html). SMACOM makes valuable information available in order to support the decision-making processes employed by leading financial market professionals. It evaluates more than 40,000 companies in 51 major economies using the sophisticated technologies and unique analytical skills of Nikkei FTRI.

We recently sat down for an interview with Mr. Ichiro Takamatsu, CEO of Village Capital Pte. Limited (hereinafter "Village Capital"), which is a SMACOM user. We asked him about his impressions of SMACOM, giving specific attention to the types of information that are used in his business.

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Mr. Takamatsu, CEO, Village Capital

Interviewer: You joined Village Capital in 2014 and are currently serving as CEO. Could you give us an overview of Village Capital?

Mr. Takamatsu: We are a Singapore-based asset management company that focuses on Japanese equities. We also have an office in Tokyo, where our analysts conduct bottom-up research and corporate surveys. Most of our clients are Japanese financial institutions and pension funds, with the majority of them being Japanese regional banks.

Interviewer: What first attracted you to SMACOM?

Mr. Takamatsu: Your satellite office was located next to ours, and one day you asked me to take a look at something called SMACOM. Upon examination, I thought that it could be useful in many ways. This was followed by numerous exchanges, and now here we are.

One excellent feature of SMACOM is that it has a huge amount of data that can be customized to meet the needs of our management team. Normally in stock management, quantitative analysis is basically a review of the past; a rear-view mirror, so to speak. It is mainly used to check the status of the portfolio and to protect it. However, quantitative analysis also has some implications for future returns and proactive use, and in the case of SMACOM, we discovered that it could be employed for both "offense" and "defense." We are now using it in various ways.

Interviewer: Thank you very much for your words. As the developers of SMACOM, we are grateful to hear such comments. Could you tell us more about the defense and offense you mentioned?

Mr. Takamatsu: The selection of CDS stocks in particular is a key factor for a fund that we are now going to start managing. In connection therewith, we think that SMACOM's accrual score (or fraud accounting score) and other metrics can serve as very useful tools to help us make investment decisions. In terms of protection, we are planning to have your company conduct various analyses (mainly performance analyses) as a third party. The results will be very reassuring to our investors.

The fund in question is a multi-asset fund; I think that normal funds are not subjected to such deep analysis or reporting on correlations among the assets in which they invest. I expect that your company will conduct in-depth work in such areas.

Interviewer: How do you feel about the model for predicting CDS spreads that we created by customizing a part of SMACOM based on the CDS data provided by your company?

Mr. Takamatsu: As a result of the verification, we were able to arrive at a scoring that gives a leading edge against the movement of CDS spreads, which I think is highly significant.

Interviewer: Once again, we greatly appreciate your comments. If you have any questions about SMACOM, please let us know so that we can improve the service and incorporate the outcome into our development. Thank you very much for your time today.

Mr. Takamatsu: Thank you very much.

Mr. Ichiro Takamatsu, Representative Director, CEO and CIO, Village Capital Pte. Limited
In 1989, he joined Taiheiyo Securities (currently Mitsubishi UFJ Morgan Stanley Securities) to engage in equity analysis and sales activity. In 1997, he began to work at CIGNA International Investment Advisors as a portfolio manager in charge of JPY 60 billion in equities in Japan, Korea and Taiwan for both Japanese and overseas institutional investors. In 2000, he became responsible for all the firm's equity investment. The research conducted by InterSecResearch, for which many global institutional investors registered, ranked his performance for the first seven years in the top 13% and in the top 1% for the last two years. In July 2004, he established Alphex Investments, where he achieved superior returns in the Japanese equity long/short strategy and short-biased strategy, even during the global financial crisis. In July 2010, he and his team moved to another Japanese investment management firm. He joined Village Capital in 2014, and in 2018 he acquired the entirety of the firm's equity and was appointed President.

Throughout the interview, Mr. Takamatsu, who has had a spectacular career as an asset manager, gave us the impression that SMACOM scores were very useful. We will continue to deepen our collaboration with Village Capital and develop SMACOM from a more hands-on perspective.

SMACOM provides not only scores but also an enormous volume of processed data that users can employ to perform financial analysis and model building by themselves. This enables deeper and more detailed analysis. We also offer consulting services to meet client needs, such as by building a model to predict CDS spreads, as we did for Village Capital.

If you are interested in our services, please contact us.
https://www.ftri.co.jp/eng/index.html#company

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