Morten Paulsen, head of Japan research at CLSA Asia Pacific Markets, said there have been some small signs of a thaw since late 2013 when Seiuemon stepped down, leaving his son, Yoshiharu, firmly in control. On rare tours of his factories, a retinue of secretaries would sweep leaves from the chairman’s path as he walked. He also instilled the company with an authoritarian culture and its ubiquitous yellow color, which he chose because “it promotes clear thinking,” according to Fanuc lore. An engineer who studied artillery design during World War II at Tokyo University, Inaba invented the electro-hydraulic pulse motor in Fanuc’s first controls. “Big picture - they’ve got great clients like Apple, and with technology and productivity improvements and labor costs going up, it’s an obvious area of growth,” Loeb said.įanuc’s success and its insularity stem from its founder. Sales have jumped six-fold in the last five years, according to Loeb. Its computerized controls, used in more than half of the world’s machine tools, give lathes, grinders and milling machines the agility to turn metal into just about any manufactured product, from a titanium hip implant to the aluminum strut in the wing of a Boeing 747.įanuc’s Robodrill, an all-in-one machining center that’s like a giant pocketknife for carving steel, is used to shape the shiny metal band that wraps around the iPhone. in 1972 and over the next four decades founder Seiuemon Inaba built it into the world’s biggest supplier of industrial robots. Fanuc is its own biggest shareholder, with 18 percent.įanuc spun-off from Fujitsu Ltd. Loeb wouldn’t say exactly how many Fanuc shares he bought – – his policy is to disclose only what’s legally required - but he said Third Point would rank among the top-ten shareholders that choose to show their positions.įanuc’s 10th biggest owner, Nikko Asset Management Co., has a 1.8 percent stake, according to data compiled by Bloomberg News, so that suggests Loeb has at least as much. It’s a very good business, but they run that thing like it’s a family farm.” Their level of tight-lipped-ness is markedly different. “They are less prone to grant access to management than most companies in Japan or the world. “Yes, we made an effort to talk to the top people and, no, we did not succeed,” Herro said. He ultimately abandoned his takeover bid for beer-maker Sapporo Holdings Inc.
In 2007, Warren Lichtenstein, founder of Steel Partners, said he planned to “educate” Japan’s corporate managers. An oil tycoon who helped pioneer hostile takeover tactics in the 1980s, Pickens gave up on Japan in 1991 after losing a battle to gain a board seat at a supplier to Toyota Motor Corp. There isn’t much history of home-grown investor activism in Japan, and foreigners who’ve tried have been sent home humbled. The shares rose 0.3 percent to close at a record today in Tokyo. Fanuc’s stock has jumped more than 10 percent since Loeb’s letter. The company did disclose this week how it plans to spend some of its money, with an investment in new production capacity and research worth $1.1 billion. Gate Crashingįanuc spokesman Keisuke Fujii declined to comment. “They could afford to do all of it,” Loeb said. Still, Loeb said, the debt-free company would be worth “significantly” more if it bought its own shares back, using some of the $8.5 billion in cash sitting idle on its balance sheet. in its tight focus on a small lineup of technologically superior products. He also compared the robot manufacturer to Apple Inc.
With operating profit margins topping 40 percent, Fanuc makes 25 percent more income per employee than Goldman Sachs Group Inc., according to Loeb. “From a capital allocation standpoint, not so much.” “This company is so incredibly innovative and forward looking in terms of its operational culture,” Loeb, 53, said Thursday in a telephone interview.
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