A Fanuc robot arm operates on Nissan Motor vehicle parts on the production line of the Nissan Oppama plant in Yokosuka. Fanuc is renowned for its innovative automation technology and its minimal engagement with investors.

Reuters/Tokyo

Activist investor Daniel Loeb said Fanuc Corp’s plan to boost investments was not enough to fix its “blatant capital inefficiency”, stepping up calls for the Japanese industrial robot maker to reward shareholders through major buybacks.
Loeb, whose hedge fund Third Point holds an undisclosed stake in Fanuc, told Reuters by e-mail the plan to double investment in a new factory would go little towards addressing the “an embarrassment of riches” on the firm’s balance sheet.
“We like that Fanuc is investing and expanding capacity,” he wrote. “But we take great issue with the inefficient balance sheet.” Fanuc, one of the world’s largest industrial robot makers, has operating margins of around 40% compared with under 10% for some of its peers.  Loeb is one of the most closely watched, and influential, investors in the hedge fund industry. He said his fund Third Point is likely one of the largest shareholders in Fanuc.
Fanuc is renowned for its innovative automation technology and its minimal engagement with investors: it doesn’t have an investor relations department.
Fanuc’s reluctance to engage shareholders stands out at a time when many Japanese companies, long criticised for neglecting investors in favour of employees, are taking steps to boost communications and governance.
Loeb called Fanuc a “great company” and said his fund was not calling for operational change.
“But I am deeply concerned that the board of Fanuc is not looking out for the interests of shareholders,” he said, adding more independent directors should be elected to the board.
Fanuc has no debt and ended its last fiscal year with cash and equivalents of ¥824bn ($6.9bn) and total assets of ¥1.3tn.
Loeb has called on Fanuc to conduct a large buyback soon and increase its dividend payout ratio. He said he sent a letter in late January to the board, saying the shares could be worth ¥35,000 with better capital allocation, but added that Fanuc had not responded.
The shares last traded at ¥23,270, up 1% from a day earlier and around 16% higher from levels before Third Point disclosed it had taken a stake.
Fanuc is considered to be one of the more unusual companies in Japan. It built its headquarters in a forest at the foot of Mount Fuji and holds annual general meetings there, obliging interested investors to make the three hour trip from Tokyo.
Yellow – the favourite colour of founder Seiuemon Inaba – dominates many of its facilities and is also the colour of the workers’ uniforms and Fanuc’s robots.
Third Point’s fourth-quarter report shows the fund increased its stake in companies including drugmaker Actavis and Chinese e-commerce giant Alibaba.
The fund said in October it had sold its stake in Sony Corp after trying and failing to persuade the company to sell part of its entertainment division. Third Point still walked away with a 20% return on that investment.