Mitsui OSK shares jump, activist Elliott builds ‘significant’ position

Shares of Japanese shipping firm Mitsui OSK Lines surged more than 11% Wednesday to a record high after activist investor Elliott Investment Management said it had established a “significant” stake in the firm.

Elliott said it was confident in the Japanese shipping company’s long track record and position as one of the world’s largest diversified oceangoing vessel owners. 

“Despite this strong market position and high-quality assets, the market materially undervalues the business,” the investment firm said in its statement, adding that it sees an opportunity to engage constructively with Mitsui’s management to ensure its upcoming medium-term plan is sufficiently ambitious, improve market perception and unlock a higher valuation.

Mitsui OSK reported slightly higher revenue for in its latest results, but sharply lower profit, reflecting weaker earnings across key shipping segments. Revenue for the nine months ended December rose 2% year on year to 1.35 trillion yen ($8.49 billion), but operating profit fell over 16% to 102.7 billion yen. 

The decline was driven by weaker profitability across several core businesses, particularly product transport and containerships, where profits fell sharply amid softer freight rates and rising vessel supply. 

The shipper’s stock is up over 48% year to date.

Elliott Investment Management manages about $79.8 billion in assets.