Elliott Investment Management has gone public with a rare activist campaign in Japan, urging Sumitomo Realty & Development to significantly improve shareholder returns and overhaul its governance practices – asserting the company is undervalued by at least 40%, according to a report by Bloomberg.
In an open letter published on Monday, the US-based hedge fund warned it would vote against Sumitomo’s senior management at its upcoming J27 une shareholder meeting unless the firm makes “meaningful progress” on unlocking value.
The move marks one of Elliott’s few public engagements in Japan, a market where the firm has typically operated behind the scenes. Its letter follows similar campaigns targeting Tokyo Gas, Mitsui Fudosan, and SoftBank Group over the past year.
Elliott now holds over 3% of Sumitomo Realty’s shares, up from 2.99% as of March. Under Japanese law, this threshold –once held for six months – enables shareholders to call a special meeting.
In the letter, Elliott argues Sumitomo’s shares should be trading at JPY8,000, up from the current level of around JPY5,540, citing undervalued real estate assets and inefficient capital allocation. It’s calling on the company to: unwind cross-shareholdings in firms such as Taisei Corp. and Obayashi Corp; increase shareholder payouts to at least 50% of net income; and establish a return-on-equity (ROE) target of 10% or higher.
A spokesperson for Sumitomo Realty said it has held constructive discussions with Elliott and plans to continue engaging. The company recently released a midterm plan with governance improvements, which Citigroup analyst Masashi Miki said addresses some of Elliott’s demands—though broader pressure is expected to intensify across the Japanese real estate sector.
Elliott’s push comes amid a broader surge in shareholder activism in Japan, where governance reforms and improving capital market dynamics are creating more fertile ground for activist strategies. Many global hedge funds are ramping up exposure to Japanese corporates, particularly in sectors like property, where asset values often far exceed market capitalisations.
