Sohn Tokyo Conference: Hedge Funds Recommend Japanese Machinery and Software Stocks
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At the inaugural Sohn Tokyo conference, hedge fund managers pitched a slate of Japanese machinery and software companies, anchored by one thesis: inflation is back, and Japanese firms can raise prices again — a structural shift from cost-cutting to pricing power as the engine of earnings growth.
Why were machine tools and robotics singled out?
Silq Capital's Hideki Kinuhata pitched Makino Milling Machine, calling it attractively valued even after fending off a takeover bid. The core growth driver is aerospace — demand now spans commercial aviation, space, satellites, and defense. He forecasts 80% earnings growth over three years through March 2028.
Kinuhata said Makino "is no longer that dull, traditional Japanese company" — it is sharply focused on profitability. This reflects a broader repricing of legacy Japanese manufacturers.
TriVista Capital's Masaki Gotoh pitched Harmonic Drive Systems — a maker of reduction gears for industrial robots. He said the technology "fundamentally enabled the industrial robot revolution" and is positioned for the next wave: humanoid robots and physical AI.
Why did multiple managers converge on software?
Japan Catalyst's Riho Yokozawa pitched accounting software firm OBIC Business Consultants, projecting roughly 80% revenue growth over the coming years. Even after AI-disruption fears swept the sector, OBIC successfully raised prices.
Ruane Cunniff's Marc Wallach backed financial-planning app developer Money Forward, forecasting operating margins of up to 30% and annual earnings growth as high as 25%. He called it "a resilient software franchise with a long growth runway."
This means → Japan's software market has an unusual quality: stable competitive structures let companies pass inflation costs straight to customers, so margins are actually rising.
What non-Japanese names came up?
Change Global's Thea Jamison argued Indonesian telecom operator PT Telkom Indonesia is undervalued, with roughly 90% upside driven by its dominant domestic position. But on the day she spoke, Indonesia's stock market posted its worst single-day drop in 28 years after MSCI warned the country's emerging-market status was at risk.
Pertento Partners' Eduardo Marques went long Hanwha Corp. and its aerospace subsidiary, calling Hanwha essentially "an arms factory" with 100% upside based on earnings growth in a high-defense-spending era.
He simultaneously went short battery-materials maker Ecopro and its subsidiary Ecopro BM, citing stretched valuations, declining profitability, heavy debt, and overcapacity. In plain terms = one manager, two Korean sectors, opposite calls — defense too cheap, batteries too expensive.
How do you unlock Toshiba's "hidden" value?
Blue Orca Capital's Soren Aandahl flagged Rohm Co., Chubu Electric Power, and TRE Holdings — three companies holding Toshiba equity that he calls a "hidden asset."
Toshiba went private after its accounting scandal, but has made significant progress restructuring. Several of its businesses are AI-adjacent, spanning energy and hard-disk drives. This means → if Toshiba re-lists, these three holders stand to book gains that are material relative to their current market caps.
Polymer Capital's Daisuke Nakayama pitched financial group Orix Corp., arguing it is shifting from simply owning assets to generating returns through external capital and leverage — a model change that could drive multiple expansion.
Which company is an activist targeting?
Oasis Management founder Seth Fischer continued his pressure campaign against drugstore chain operator Kusuri no Aoki Holdings, demanding the removal of Aoki family members from management — a push he has sustained for years.
He said he will keep pressing the company to explain stock-option grants to the Aoki brothers. This reflects a widening opening for activist investors as Japanese regulators push listed companies to improve shareholder returns.
What has to go right for these pitches to pay off?
The conference pitches clustered around two threads: pricing power restored (inflation lets companies raise prices) and industrial upgrading (aerospace, robotics, AI-adjacent businesses).
In plain terms = the managers are not betting on a short-term catalyst — they are betting that Japanese companies are structurally shifting from "cheap" to "valuable."
The core risk is equally clear: the earnings forecasts underpinning these calls — 80% growth, 30% margins — must actually materialize over the next several years. That remains the single variable that validates or breaks every pitch.
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