Tags: Fidelity | Takata | Air-Bag | Shares

Fidelity Cuts Stake in Takata as Air-Bag Crisis Escalates

Friday, 05 Dec 2014 01:04 PM

Fidelity Investments led institutional investors that sold their stock holdings in Takata Corp., the Japanese air-bag maker at the center of a global auto safety crisis linked to at least five deaths.

Fidelity Management & Research Co. sold 79 percent of its stake in Takata, or 1.24 million shares, as of the reporting period ended Oct. 31, according to data compiled by Bloomberg. At least eight institutional investors have sold all of their holdings in Takata since June, the data show.

Takata’s shares have declined 56 percent this year amid a stock-market rally in Japan as Honda Motor Co. and Toyota Motor Corp. were among companies expanding recalls of vehicles equipped with its potentially deadly air bags. The escalating crisis has frayed ties between the supplier and Honda, which turned to Sweden’s Autoliv Inc. to supply replacement parts.

“It’s going to be a very bad time for some time” for Takata, said Edwin Merner, president of Atlantis Investment Research in Tokyo. “The guys who are buying from them are switching to other companies and will give Takata much less business. There’s likely to be more selling, more bad news and a lower stock price.”

Jeff Cathie, a spokesman for Fidelity, declined to comment on the transaction, citing company policy against discussing individual holdings. Takata spokeswoman Kikko Takai didn’t immediately reply to an e-mail seeking comment.

Takata’s stock fell 0.5 percent to 1,324 yen in Tokyo trading, while the benchmark Topix Index rose 0.4 percent.

Short Interest

Wagers by short sellers that Takata’s stock price would decline reached a record on Nov. 19 after the National Highway Traffic Safety Administration demanded the company expand regional recall campaigns that have been limited to high- humidity areas. Takata this week resisted the demands, saying there’s no reliable evidence to show a nationwide recall is necessary.

A short sale refers to borrowing shares and selling them in expectation that the stock can be bought back at a lower price.

More than 3.59 million Takata shares were sold this year by major investors, compared with 3.2 million bought, data compiled by Bloomberg show.

Japan Trustee Services Bank Ltd. led buying of Takata stock this year, adding 1.08 million shares to boost its stake to 4.3 percent as of March, before the company was summoned to testify in U.S. congressional hearings to explain its role in the crisis.

Separately, Japan Credit Rating Agency cut Takata’s long-term ratings by one level to A-, citing the increasing likelihood of higher air-bag recall costs due to additional automaker safety campaigns.


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Fidelity Investments led institutional investors that sold their stock holdings in Takata Corp., the Japanese air-bag maker at the center of a global auto safety crisis linked to at least five deaths.
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2014-04-05
Friday, 05 Dec 2014 01:04 PM
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