Rights protection investment institution Elliott disclosed a 5% stake in Tokyo Gas, causing its stock price to reach its largest increase since 1987.

In the United States, the prominent activist investor Elliott Investment Management has stated that it currently holds shares in Tokyo Gas Co. and may immediately make a "significant proposal" to the utility company. As a result, domestic investors in Japan as well as some foreign institutions have flocked to this low-profile utility company. The stock price of Tokyo Gas Co., which has remained relatively stable for a long time, surged by over 15% on Wednesday. According to a document submitted to the Japanese Ministry of Finance on Tuesday, the investment firm has acquired a stake of up to 5.03% in Tokyo Gas Co. through substantial purchases of the stock. Reports from sources familiar with the matter suggest that this globally renowned activist investor believes that Tokyo Gas Co. should sell properties and real estate projects, including the Tokyo Bay Hotel, with a total value potentially reaching 1.5 trillion yen (approximately 9.7 billion dollars). Tokyo Gas Co. currently has a market value of around 10.7 billion dollars. The increase in Tokyo Gas Co.'s stock price on Wednesday marked the largest single-day gain since 1987. As of the time of writing, the stock had risen by 12% to 4,291 yen per share. Elliott, the world's largest activist investor, has been striving to unlock the potential value of Japanese listed companies in recent years. This year, Elliott has increased its holdings in Sumitomo Corporation, SoftBank Group, and Japanese real estate developer Mitsui Fudosan. However, this is the first time since 2019 that Elliott has acquired over 5% of a Japanese company's shares. Tokyo Gas is Japan's largest natural gas fuel supplier, with approximately 30% market share of fossil fuels in Japan. The company's main business is the production and importation of liquefied natural gas, along with retail electricity services. The company also has significant overseas assets, including investments in an offshore wind power fund and a shale gas subsidiary in the United States. For Elliott, the focus is on Tokyo Gas Co.'s real estate investment portfolio. Sources reveal that the activist investor believes that the company can improve capital efficiency by selling a large amount of real estate. This strategy aligns with domestic activist investors in Japan, who see a significant gap between the book value of real estate assets and their actual market costs. "Requesting the company to increase enterprise value through investment in core business and share buybacks is a very reasonable standpoint," said Naoki Fujiwara, Senior Fund Manager at Shinkin Asset Management. "It's fine for them to hold some properties for data centers, as clean natural gas is essential for AI power supply on a large scale, but the company does not need a large amount of office buildings and rental properties." Major tech giants such as Google, Microsoft, and Amazon AWS, under the large data centers, continue to demand clean energy sources such as natural gas, largely due to the global decarbonization trend focusing on renewable resources like wind power, geothermal energy, and efficient energy sources like natural gas, which may be crucial resources for future AI power generation systems. Tokyo Gas Co. has positioned real estate development as a key part of its current medium-term management plan and has stated its commitment to enhance its development model with an "ESG-oriented" approach. The company's subsidiary, Tokyo Gas Real Estate Co., has been managing the properties and assets owned by the company for over 70 years, and has been working towards building a nearly carbon-free clean town near the main fish market in Tokyo. Elliott Investment Management is a globally renowned activist investor known for its core strategy of acquiring significant stakes in target companies in the secondary market, then pushing for transformative proposals to unlock substantial shareholder value. Typically, Elliott drives target companies to enhance shareholder value by improving operational efficiency, divesting non-core assets, optimizing capital structure, and increasing shareholder returns (such as raising dividends and share buybacks). Elliott usually targets undervalued companies with market values lower than book values or inefficient management, deeply analyzing these companies to unearth hidden value, such as the substantial real estate assets of Tokyo Gas Co. Elliott often applies pressure through shareholder letters, public statements, or even aggressive tactics like Proxy Fights to compel management to take action. Therefore, Elliott's strategy is not limited to arbitrage like some hedge funds, but aims for long-term shareholder value reversal through structural adjustments. In 2019, Elliott disclosed a whopping 3.7 billion-dollar investment in the American telecom giant AT&T, highlighting the company's inefficient capital allocation issues (such as unnecessary acquisitions). Under Elliott's pressure, AT&T eventually divested DirecTV and adjusted its capital allocation plan.