For Freeze, one obvious solution is solar power. He’s the largest shareholder in Daito Bank Ltd. with a 16 percent stake, and he owns 10 percent of Fukushima Bank Ltd. The prefecture’s second- and third-largest banks should support solar plants through loans and equity investments, he says. Fukushima Bank declined to comment, while Daito Bank didn’t respond to calls requesting comment.
About 7 percent of Fukushima is still uninhabitable because of radiation, according to government data. The prefecture has set a target of being 100 percent powered by renewables by 2040, or at least to have that capability. Since the meltdowns, Fukushima has become host to the world’s biggest offshore wind turbine.
Farming, Tepco
“The area surrounding the nuclear plant isn’t suitable for farming anymore, and likewise a lot of that can’t be lived in for many years,” Freeze said. “The other reason solar power makes sense is because it’s a natural reaction to Tokyo Electric Power Co.’s disaster.”
Freeze sees the investments as a chance to do good for Fukushima and also do well for his fund’s backers. Of the cash he manages, 17 billion yen ($152 million) is for external clients, and most of that comes from about 10 investors, he says. Freeze says the banks received “indirect but powerful” aid after the disaster as reparations reduced the potential for loan losses and helped push up real estate prices. Most loans to individuals and small businesses are secured by property. He says he bought the lenders’ shares at less than half book value.
“That’s why I chose those banks,” Freeze said. “I have a fiduciary duty to my investors.”
Long-Term View
The American hasn’t declared the holdings as activist positions, and says he’ll take his time and be friendly when engaging with management. They aren’t speculative investments -- in fact, he may hold them for the rest of his life, he said. Shares have further to fall in the short term, according to Freeze, after the two firms dropped at least 13 percent in 2016 through Tuesday. Daito Bank slid 1.1 percent on Wednesday in Tokyo, while Fukushima Bank lost 1.2 percent.
“A lot of regional banks are going to come under pressure for a number of reasons over the next 15 or 20 years,” said Mac Salman, head of research on Japanese financial firms at Jefferies Group LLC in Tokyo. “One of the them is the general demographic situation. The second thing is the hollowing out of Japan, the centralization of population to Tokyo. That’s also going to put pressure on a lot of these regional banks. Then, there’s definitely a feeling that some of these regional banks have had little or no shareholder oversight.”
Freeze’s claim to be Fukushima’s largest institutional investor is hard to verify, but what’s certain is his firm is one of the biggest. The prefecture has just 11 listed companies, including the three banks, several retailers and a provider of funeral services. Their combined market value is about $2.8 billion, and Freeze’s $50 million investment makes up about 1.8 percent of the region’s listed equity. Very few other money managers are named on the companies’ registers, and with the exception of trust banks their holdings are smaller.