Is the investment in V-Tech a savvy act for Renaissance?

Renaissance Technologies made an investment in V- Technology (V-Tech). V-Tech added Renaissance as a shareholder in last June. Following the investment event, V-Tech share surged three times in 2016. Is the investment in V-Tech a savvy act for Renaissance Technologies?

RENAISSANCE PICKS V-TECH

New York’s Renaissance Technologies is an investment management company. People identify the company as a secretive hedge fund institute too. However, the investment company surprisingly invested in a Japanese company works in display manufacturing industry. As Bloomberg reported, “it built a $27.8 million position in the stock”. Right after the investment V Tech’s value started increasing. Eventually, it surged to $662 million. And last year it has been one of the hottest tech stocks in Japan. The display manufacturer has become the second-best stock performer in the list of Tokyo-companies.

Shigeto Sugimoto is a former engineer who founded V-Technologies Co. Ltd. in 1997. In early days the company made equipment for producing plasma displays. Sugimoto was always vigilant in his field as a businessman. Realizing the then display manufacturing industry he decided to focus on producing LCDs. Later, since the beginning of 2000s LCDs remain dominant in terms of mobile phones.

WHY DID RENAISSANCE CHOOSE V-TECH?

Renaissance Technologies eschewed providing the reason behind choosing V-Tech. Nonetheless, Shigeto Sugimoto, President, and Representative Director at V Technology Co Ltd. opened up regarding the matter. He expressed his elation saying it made him substantially confident about his company’s outlook. Additionally, he is hoping a deal is to happen with a Chinese screen maker which will increase V-Tech’s revenue to two-fold.

As Bloomberg reported president of V-Tech asserted that “such an agreement could bring in sales of as much as $440 million, Sugimoto says. V Tech’s revenue more than doubled to 39 billion yen in the fiscal year ended March. ‘Our company would double in size in one go,’ he added.”

V-Tech’s strength and opportunity

Spending five years Sugimoto’s V-Tech developed one of the main components for OLED screen machines. The component can even be a substitute to Samsung’s components. Once the Japanese company establishes successfully in the industry it can make an elephantine amount of revenue from the OLED screen sector alone. Currently, Samsung solely has 98% market share in terms of OLED manufacturing. Yet, this unsaturated industry is expanding fast.

OLED Screen (From Internet)

Source: The Internet

Though only Samsung introduced OLED screen in its phones initially, but now many companies want to manufacture their phones with OLEDs. Already, China’s Huawei and Xiaomi adopted this technology. According to people expert on iPhone matter said Apple will bring iPhone with OLED screen this year. However, adopting OLED screen for phones will definitely expand the sphere of V-Tech’s business. In fact, it opens a new door for this Japanese company. All in all, the news-making investment by Renaissance is a shrewd and knowledgeable maneuver, perhaps.