Japanese Basket

[Foreign Tuffett]

Isamu Paint (4624)

Manufactures and sells paints and related products. I believe they specialize in automotive repair paints. Margins in core biz seem solid. 

Market cap is the equivalent of $51 or $52 million USD. Typical trading volume is very low, maybe a few hundred shares a day. I don't know the extent of insider ownership, but it is probably very high.

~1.75% dividend yield.

Grossly overcapitalized, even more so than even the other three companies I have posted.

Calculating the discount to NCAV is a little tricky since the company owns a great deal of long term investment securities. If you exclude them altogether then the stock is at maybe a 24% discount to NCAV. If you 'cheat' and treat them as current assets, then the discount to this adjusted NCAV figure approaches 57%.



This is the last of the four J-nets I own. If anyone has any thoughts, thinks my #s are wrong, etc, feel free top chime in.

[MattR]

I bought shares in 8050 Seiko Holdings just below current prices, maybe 1750 yen per share.  Trades maybe around 70% of book, not including any current losses in the equity holdings, and something around 9-10X earnings.  This is sort of on the more expensive side for a Japanese name, but the company has recognizable brand names in the popular line of Seiko watches, a significant export business, a number of new premium offerings, and pays a good dividend.  The company's ROIC has been decent, and free cash has gone over the last number of years towards paying down debt.  It's reasonable I think and at the floor of the 5-year average valuations.

They seem to have a lot of debt and not really high cashflow. Why did you decide to invest in them? I really like their watches so I would really love to know.

[mjohn707]

I bought shares in 8050 Seiko Holdings just below current prices, maybe 1750 yen per share.  Trades maybe around 70% of book, not including any current losses in the equity holdings, and something around 9-10X earnings.  This is sort of on the more expensive side for a Japanese name, but the company has recognizable brand names in the popular line of Seiko watches, a significant export business, a number of new premium offerings, and pays a good dividend.  The company's ROIC has been decent, and free cash has gone over the last number of years towards paying down debt.  It's reasonable I think and at the floor of the 5-year average valuations.

They seem to have a lot of debt and not really high cashflow. Why did you decide to invest in them? I really like their watches so I would really love to know.

My stated reason was to buy at the lower end of the historical P/B and P/average earnings and all of that, but clearly I was just looking for a 25% loss in a market where everything else has just flown up

[CorpRaider]

I started looking at a couple of the Japanese trading cos with ADRs after the BRK investment.  As a retail schmuck, I set it aside, deciding it was probably more attractive for me if I gained potential options on future JVs  (i.e., by going through BRK).

[MattR]

I bought shares in 8050 Seiko Holdings just below current prices, maybe 1750 yen per share.  Trades maybe around 70% of book, not including any current losses in the equity holdings, and something around 9-10X earnings.  This is sort of on the more expensive side for a Japanese name, but the company has recognizable brand names in the popular line of Seiko watches, a significant export business, a number of new premium offerings, and pays a good dividend.  The company's ROIC has been decent, and free cash has gone over the last number of years towards paying down debt.  It's reasonable I think and at the floor of the 5-year average valuations.

They seem to have a lot of debt and not really high cashflow. Why did you decide to invest in them? I really like their watches so I would really love to know.

My stated reason was to buy at the lower end of the historical P/B and P/average earnings and all of that, but clearly I was just looking for a 25% loss in a market where everything else has just flown up

With the rise of smartwatches I can't see  them having a great future. What would be the catalyst for the company to go back to it's higher valuations over the last 5 years ? I just wanted to have some more context to your investment since I am not able to find out how it would go back up again.

[mjohn707]

I bought shares in 8050 Seiko Holdings just below current prices, maybe 1750 yen per share.  Trades maybe around 70% of book, not including any current losses in the equity holdings, and something around 9-10X earnings.  This is sort of on the more expensive side for a Japanese name, but the company has recognizable brand names in the popular line of Seiko watches, a significant export business, a number of new premium offerings, and pays a good dividend.  The company's ROIC has been decent, and free cash has gone over the last number of years towards paying down debt.  It's reasonable I think and at the floor of the 5-year average valuations.

They seem to have a lot of debt and not really high cashflow. Why did you decide to invest in them? I really like their watches so I would really love to know.

My stated reason was to buy at the lower end of the historical P/B and P/average earnings and all of that, but clearly I was just looking for a 25% loss in a market where everything else has just flown up

With the rise of smartwatches I can't see  them having a great future. What would be the catalyst for the company to go back to it's higher valuations over the last 5 years ? I just wanted to have some more context to your investment since I am not able to find out how it would go back up again.

I would suspect you'd likely need a rebound in earnings to get closer to historical valuations, which may or may not be in the cards.  This issue of the smartwatch is certainly a complication, and probably a bigger risk at the lower end of the market, but I'm just not convinced that it means that they can't do well in the future