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Friday, July 20, 2007
Murakami took to stocks early, a genuine 'activist'
Yoshiaki Murakami, the self-proclaimed "professional of all professional players in the stock market," began investing while still a child.
An article of faith with Murakami watchers is that the seeds of his intense interest in investing were planted in the 47-year-old Osaka native by his father when he was only around 10 years old. At the time, the elder Murakami, a successful executive in the trading business, gave his son 1 million yen to invest in the stock market as a teaching tool.
Murakami, now a father of four, is thought to have made his first investment in Sapporo Breweries Ltd., the maker of his father's favorite beer. As a teenager, he became an avid reader of the Japan Company Handbook. After graduating from the University of Tokyo with a degree in law in 1983, Murakami joined the Ministry of International Trade and Industry — now the Ministry of Economy, Trade and Industry — where he was involved in overseeing the movie industry as well as forming legislation related to corporate mergers and acquisitions.
In this setting, the affable Murakami formed many ties with alumni and coworkers. In fact, some of Murakami's business partners were his former classmates. Murakami also forged connections within the business circle that included Yoshihiko Miyauchi, chairman and CEO of financial services group Orix Corp. Miyauchi eventually supported Murakami when he launched his activist fund.
At about the time Murakami was preparing to leave his ministry job to launch his fund in July 1999, he met Robert A. G. Monks, an American attorney and leading shareholder activist and corporate governance advocate, at the 1999 International Corporate Governance Network in Frankfurt.
Murakami reportedly held Monks in high regard. Monks, too, had been a federal government employee before establishing Institutional Shareholder Services in 1985 and Lens Investment Management in 1991.
Having grown familiar with Japan over a five-decade period in which he associated with Japanese business and political leaders, Monks said he viewed Japanese industry as having unique virtues, though hampered by "ineffective accountability of management for performance."
Monks said in an interview via e-mail that he was thus "most interested in meeting a genuine 'Japanese activist' in the person of Mr. Murakami. He impressed me as a determined and committed person."
Indeed, Murakami debuted in the media in 2000 when he embarked on a hostile takeover bid of real estate company Shoei Co., followed by a proxy fight with women's apparel maker Tokyo Style Co. in 2002.
Although his attempts failed, they were enough to make Murakami known as Japan's first "activist shareholder," and helped raise awareness of corporate governance and shareholder rights.
In his book, "Hills Mokushiroku: Saishusho" ("Roppongi Hills Revelation — the Final Chapter"), Yasuaki Oshika surmises that around the time of his defeat by Tokyo Style, Murakami's investment activities were shifting toward something more like greenmail.
Murakami was buying substantial amounts of shares in companies — often inviting other parties such as Livedoor Co. and Rakuten Inc. to join in the purchase — and then pressuring the companies to buy them back at higher prices to retain control.
This, Oshika said, was partly due to pressure from investors who complained that Murakami was too focused on pursuing ideals rather than making profits for them.
But Wen Zhou Song, founder and former chairman of Softbrain Co., a developer and marketer of business software, sees another lesson here. Wen, who hired Murakami as an outside board member to enhance corporate governance for three months until Murakami resigned upon his arrest in June 2006, said in an interview with The Japan Times in September that the country should learn from Murakami's attempted shakeup of the corporate world instead of simply attacking him for his "wrongdoing."