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TSI Holdings, was the largest detractor, reducing performance by -62bps as its share price fell -7%.

The apparel holding company, with a diversified collection of brands, had enjoyed a period of very strong share price performance to start 2025. Since TSI Holdings announced the sale of its former HQ building for a value equal to 30% of the market cap on 14th January, the share price remains up +16%.

During the month, TSI Holdings announced sales in February were down -11% YoY due to the temporary site closure before the launch of a new e-commerce platform. The company also discontinued certain brands, which weighed on sales, as part of the restructuring of its brand portfolio.

Our investment thesis was predicated on valuation of their real estate assets, investment securities and net cash exceeding the market cap at the time of investment, as well as their diversified brand portfolio and diminishing founding family influence. Pleasingly, in line with our suggestions, in April 2024 the company announced a mid-term plan focusing on improving EBIT margin as well as optimising non-operating assets to improve capital efficiency.

As the largest shareholder, owning more than 8% of the shares, AVI will continue to engage extensively with management on ways to enhance operations, capital efficiency, governance and shareholder communications.

TSI Holdings accounted for 6.8% of the portfolio at month-end as the third-largest holding. We see significant upside to the current share price, and to month-end, our investment has generated an ROI of +20% for an IRR of +36%.

TSI Holdings (3608) – February sales down YoY

TSI Holdings, was the largest detractor, reducing performance by -90bps as its share price fell -7%.

The apparel holding company, with a diversified collection of brands, had enjoyed a period of very strong share price performance to start 2025. Since TSI Holdings announced the sale of its former HQ building for a value equal to 30% of the market cap on 14th January, the share price remains up +16%.

During the month, TSI Holdings announced sales in February were down -11% YoY due to the temporary site closure before the launch of a new e-commerce platform. The company also discontinued certain brands, which weighed on sales, as part of the restructuring of its brand portfolio.

Our investment thesis was predicated on valuation of their real estate assets, investment securities and net cash exceeding the market cap at the time of investment, as well as their diversified brand portfolio and diminishing founding family influence. Pleasingly, in line with our suggestions, in April 2024 the company announced a mid-term plan focusing on improving EBIT margin as well as optimising non-operating assets to improve capital efficiency.

As the largest shareholder, owning more than 8% of the shares, AVI will continue to engage extensively with management on ways to enhance operations, capital efficiency, governance and shareholder communications.

Added to the portfolio in July 2022, TSI Holdings accounted for 9.4% of NAV at month-end as the third-largest holding. We see significant upside to the current share price, and to month-end, our investment has generated an ROI of +136% for an IRR of +52%.

TSI Holdings, now the largest position in the portfolio accounting for 7.5% of NAV, was the largest contributor over the month, adding +151bps to performance as its share price rose +17%.

TSI Holdings is an apparel holding company with a diversified collection of brands including Pearly Gates, HUF, and Margaret Howell. AVI have provided several suggestions to management across all engagement areas including enhancing business operations and capital efficiency.

Our investment thesis was predicated on valuation of their net assets exceeding the market cap at the time of investment, as well as their diversified brand portfolio and diminishing founding family influence. Pleasingly, in line with our suggestions, in April 2024 the company announced a mid-term plan focusing on improving EBIT margin as well as optimising non-operating assets to improve capital efficiency.

During this month of January 2025, TSI Holdings disclosed the sale of its former HQ building located in central Tokyo, for a price higher than the company’s appraisal value and equivalent to c. 30% of the market cap. Accordingly, this sent the share price +30% higher on the following day of trading. The company also announced its Q3 earnings results, with operating income growing +41% YoY.

As the largest shareholder, owning more than 10% of the voting rights, AVI will continue to engage extensively with management.

TSI Holdings has been in the portfolio since fund inception in April 2024. We see attractive upside remaining to the current share price, with TSI Holdings 7.5% position in AJSS reflective of our conviction.

TSI Holdings (3608) – Sold former HQ building in central Tokyo

TSI Holdings, now the largest position in the portfolio accounting for 10.7% of NAV, was the largest contributor over the month, adding +209bps to performance as its share price rose +17%.

TSI Holdings is an apparel holding company with a diversified collection of brands including Pearly Gates, HUF, and Margaret Howell. AVI have provided several suggestions to management across all engagement areas including enhancing business operations and capital efficiency.

Our investment thesis was predicated on valuation of their net assets exceeding the market cap at the time of investment, as well as their diversified brand portfolio and diminishing founding family influence. Pleasingly, in line with our suggestions, in April 2024 the company announced a mid-term plan focusing on improving EBIT margin as well as optimising non-operating assets to improve capital efficiency.

During this month of January 2025, TSI Holdings disclosed the sale of its former HQ building located in central Tokyo, for a price higher than the company’s appraisal value and equivalent to c. 30% of the market cap. Accordingly, this sent the share price +30% higher on the following day of trading. The company also announced its Q3 earnings results, with operating income growing +41% YoY.

As the largest shareholder, owning more than 10% of the voting rights, AVI will continue to engage extensively with management.

TSI Holdings entered the portfolio in July 2022, and the investment has so far generated an ROI of +144% for an IRR of +59% to month-end. We see attractive upside remaining to the current share price, with TSI Holdings 10.7% position in AJOT reflective of our conviction.

TSI Holdings, the apparel ecommerce operator and the largest position in AJOT, which accounts for 9.4% of NAV, was narrowly the second largest detractor over the period as it reduced performance by -43bps.

As noted in our Q2 newsletter, TSI announced a new mid-term plan in April, which for the first time, disclosed a quantified shareholder return policy, aiming for a 4% dividend on equity target by FY27/3, coupled with an ambitious cost improvement plan to elevate operating margins to 6% (from the current 1%). The plan was initially met with excitement; however, the share price quickly fell back again. Despite the -9.2% share price fall over the quarter, since the announcement of the MTP in April the share price has appreciated by +6.3% overall.

As TSI’s largest shareholder, holding 10% of the vote across AVI funds, we were pleased to see that the Company had actioned many of our suggestions. TSI has received substantial engagement from us this year, and we commend management for their proactive approach in listening to shareholders. However, we remain frustrated by the lack of concrete answers to several of our recommendations and we are continuing our intense engagement.

Despite already achieving an +80% return to date, we estimate a further +105% upside from the current share price. TSI is just one example of the enormous upside potential of our investments. We still do not believe the market fully comprehends the scale of TSI’s transformational program and its commitment to improving capital efficiency. Full credit from investors for the MTP and cost reform will only happen once TSI demonstrates improvements over the coming quarters, with the next announcement to come in mid-October.

TSI Holdings, our second largest position, announced a new transformative mid-term plan in April. For the first time, TSI disclosed a quantified shareholder return policy, aiming for a 4% dividend on equity target by FY27/3, coupled with an ambitious cost improvement plan to elevate operating margins to 6% (from the current 1%). The plan was initially met with excitement; however, the share price quickly fell back again. It took a few weeks for the market to digest the significance of the plan, but by the end of the quarter, the share price had appreciated by +20%.

As TSI’s largest shareholder, holding 10% of the vote across AVI funds, we were pleased to see that the Company had actioned many of our suggestions. TSI has likely received the most engagement from us this year of any portfolio company, and we commend management for their proactive approach in listening to shareholders. However, we remain frustrated by the lack of concrete answers to several of our recommendations and we are continuing our intense engagement.

We see a further +100% upside to the current share price, which underscores the enormous upside potential of our investments, which is not unique to TSI. We do not believe the market fully comprehends the scale of TSI’s transformational program and its commitment to improving capital efficiency. Full credit from investors for the mid-term plan and cost reform will only happen once TSI demonstrates improvements over the coming quarters. In the meantime, we are happy to wait.

TSI Holdings, our largest position, announced a new mid-term plan in April. For the first time, TSI disclosed a quantified shareholder return policy, aiming for a 4% dividend on equity target by FY27/3, coupled with an ambitious cost improvement plan to elevate operating margins to 6% (from the current 1%). The plan was initially met with excitement; however, the share price quickly fell back again. It took a few weeks for the market to digest the significance of the plan, but by the end of the quarter, the share price had appreciated by +20%.

As TSI’s largest shareholder, holding 10% of the vote across AVI funds, we were pleased to see that the Company had actioned many of our suggestions. TSI has likely received the most engagement from us this year of any portfolio company, and we commend management for their proactive approach in listening to shareholders. However, we remain frustrated by the lack of concrete answers to several of our recommendations and we are continuing our intense engagement.

Despite already achieving an +96% return to date, we still see a further +100% upside to the current share price. This underscores the enormous upside potential of our investments, which is not unique to TSI. We do not believe the market fully comprehends the scale of TSI’s transformational program and its commitment to improving capital efficiency. Full credit from investors for the mid-term plan and cost reform will only happen once TSI demonstrates improvements over the coming quarters. In the meantime, we are happy to wait.

TSI Holdings, one of our joint largest holdings, announced a new mid-term plan during the month. For the first time, it disclosed a quantified shareholder return policy, aiming for a 4% dividend on equity target by FY27/3, coupled with an ambitious cost improvement plan to elevate operating margins to 6% (from 1% last year).

As TSI’s largest shareholder, holding 10% of the vote, we were pleased to see that the Company had actioned some of our suggestions. However, we remain frustrated by the lack of concrete answers to several of our recommendations. TSI has likely received the most engagement from us this year compared to any other portfolio company, and we commend management for their proactive approach in listening to shareholders.

Despite already achieving an impressive +81% return to date, we still perceive a further +118% upside potential to the current share price. This underscores the enormous growth prospects of our portfolio companies. We don’t think the market fully comprehends the scale of TSI’s transformational program and its commitment to improving capital efficiency. Our engagement will continue, and TSI’s 10% weight in the portfolio reflects our conviction in the upside we envision.

TSI Holdings (3608) share price had a tumultuous quarter but ended slightly higher, with a +2.9% return adding 43bps to performance. We took advantage of the volatility to add to our holding, declaring an increased stake twice during the quarter and ending up as the largest shareholder holding 8.5% of the shares. Continued strong store sales, up +4.4%, +5.2% and +7.4% for June, July and August helped to support the share price.

Over the quarter we sent a presentation to management on suggestions to address the low market valuation and increase the share price to our Y1,500 target price (+85% upside to the current price). The presentation was well received, and we sense that management are considering actions over the coming year. We’re pushing on an open door, with the Company already completing a 3% share buyback this year after purchasing 6.5% of its shares last year.

TSI Holdings reported quarterly results over the period, which caused the share price to fall -17% in response and ended the month -8% lower. We find it hard to attribute the fall entirely to the results, but considering the shares were up +98% for the year prior, expectations had got a little ahead of themselves.

It was the lack of upward guidance revision which we suspect disappointed the market, but that aside, operating performance was in line with our expectations. Same store sales growth for June came in at +8.7% with a +15% increase in operating profit for Q1. Over the month TSI bought back 427,200 shares, equivalent to 0.5% of shares outstanding at a 6% annualised run rate, continuing to utilise its overcapitalised balance sheet of net cash, securities and real estate that accounts for 107% of the market cap. We estimate that TSI’s fair value is c.Y1,700 per share, some +137% higher than where the share price closed at month end, which is why TSI ended the month as the largest position in the portfolio.

TSI Holdings, the diversified apparel holding company, saw a share price increase of +45% over the quarter adding 242bps to returns. Results were in line with our expectations, with sales rising +11% YoY and profits falling -22% (higher raw material prices and one-off costs relating to head office move), and we think the shares likely rose on the announcement of a 5.8% share buyback (following a 6.6% buyback last year) and the resignation of the Chairman from the founding family.

While it is hard to justify the increase based solely on those announcements, TSI was trading on a remarkably low valuation at the start of the quarter. 182% of its market cap was covered by net cash, investment securities and real estate, implying a large negative value for its apparel business. We didn’t think that was justified. TSI’ share price increase might be a case of, undervalued companies don’t need a reason to rerate.

Still, the +45% share price gain does little to change TSI’s undervaluation with net cash, investment securities and real estate accounting for 128% of the market cap at the end of the quarter and we see a potential upside of +77%. We own just under 5% of the voting shares and plan to engage with management on ways in which to further rectify the undervaluation – although given the spate of buyback announcements and improved attitudes towards shareholders – we think we are pushing on an open door.

Our second largest contributor over the quarter was Shin-Estu Polymer, whose +33% share price gain added 188bps to performance. Continued strong profit growth of +43 YoY alleviated the market’s concerns over a slowdown in its core wafer carrier business. Shin-Etsu Polymer is a subsidiary of Shin-Etsu Chemical and with intertwined business relationships we think that Shin-Etsu Chemical might ultimately buy-in Shin-Etsu Polymer. We are engaging with both companies towards achieving that goal and while we wait, should continue to benefit from the strong underlying earnings growth.

TSI Holdings, the diversified apparel holding company, had another month of strong share price performance with a +20% gain taking the year-to-date return to +41%. The shares are now almost 90% higher than our first purchases in July 2022. Despite the gain, TSI still has net cash, investment securities and excess real estate worth 116% of its market cap.

We added a small number of shares to our position over the month which took us through a 5% reporting threshold. We plan to engage with management on ways in which to further rectify the undervaluation and see +78% upside from the current share price.

TSI, the diversified apparel holding company, saw a share price increase of +18% over the month. Results were in line with our expectations, with sales rising +11% YoY and profits falling -22% (higher raw material prices and one-off costs relating to head office move), the shares likely rose on the announcement of a 5.8% share buyback (following a 6.6% buyback last year) and the resignation of the Chairman from the founding family.

The +18% share price gain does little to change TSI’s undervaluation. At the start of the month, net cash, investment securities, and realisable real estate accounted for 172% of its market cap compared to 147% at the end. We still see an estimated upside to the share price of +110%. Over the month we added modestly to the holding, although eased buying following the market’s strong reaction to results. We own just under 5% of the voting shares and plan to engage with management on ways in which to further rectify the undervaluation – although given the spate of buyback announcements – we think we are pushing on an open door.

TSI Holdings is an apparel company that owns a diversified collection of brands, some globally recognised. While the apparel industry is not without its difficulties, we are being more than compensated with 124% of TSI’s market cap covered by net cash and investment securities and a further 31% covered by real estate.  Furthermore, we believe TSI’s brands are higher quality than average and are well-diversified across sports, women and men’s brands. We have built a near 4% stake and plan to engage with management on rectifying the company’s undervaluation. Including the value of TSI’s real estate we estimate that TSI is worth +130% more than its current share price.