Author Topic: Japanese Basket  (Read 18491 times)

writser

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Re: Japanese Basket
« Reply #50 on: August 20, 2019, 01:14:20 AM »
Cool article, thanks for posting gaijin.
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Spekulatius

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Re: Japanese Basket
« Reply #51 on: August 27, 2019, 07:43:56 PM »
Finally was able to get my grimy hands on a tiny position in Isamu Paint last night. Only took 5 weeks for the order to fill.

I don't know if this has been mentioned in this thread yet, but (IMO) one of the reasons why many of these tiny "J-nets" are so cheap is that they are horribly illiquid, partially due to trading in only 100 share blocks.

Bought a few hundred shares of 4624.T too. Looks like you can only get a fill when the mood in the market is a bit shoddy. I also gave back all my gains in 9142.T (GARP railroad stock) after they published a 5 year roadmap plan with more Capex even taking up debt. There was also an activist investor in it to no avail. I guess just scraping the bottom of the barrel avoids much downside. Lately, the Japanese stock market has been a bust for me. Isamu Paint (4624.T) is the only position Iím am holding right now.
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mjohn707

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Re: Japanese Basket
« Reply #52 on: August 28, 2019, 05:56:41 AM »
Finally was able to get my grimy hands on a tiny position in Isamu Paint last night. Only took 5 weeks for the order to fill.

I don't know if this has been mentioned in this thread yet, but (IMO) one of the reasons why many of these tiny "J-nets" are so cheap is that they are horribly illiquid, partially due to trading in only 100 share blocks.

Bought a few hundred shares of 4624.T too. Looks like you can only get a fill when the mood in the market is a bit shoddy. I also gave back all my gains in 9142.T (GARP railroad stock) after they published a 5 year roadmap plan with more Capex even taking up debt. There was also an activist investor in it to no avail. I guess just scraping the bottom of the barrel avoids much downside. Lately, the Japanese stock market has been a bust for me. Isamu Paint (4624.T) is the only position Iím am holding right now.

Iím far from an expert here, but when you get a nice pop in one of these names, decent enough that it changes the calculus of your risk and reward, donít be afraid to sell part of your position or even all of it, especially if youíre in a dead money situation or even if the value accretion is low.  These things arenít compounders or whatever weíre calling them now, and unless thereís been some sort of sea change or youíre in a name thatís actually increasing in value, it doesnít usually pay to hold out for the last 20%.
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writser

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Re: Japanese Basket
« Reply #53 on: September 04, 2019, 11:41:21 AM »
We're in good company. Michael Burry:

Quote
ďIt is not hard in Japan to find simple extreme undervaluation -- low earnings multiple, or low free cash flow multiple. In many cases, the company might have significant cash or stock holdings that make up a lot of the stock price.Ē

ďThere is a lot of value in the small-cap space within technology and technology components. Iím a big believer in the continued growth of remote and virtual technologies. The global retracement in semiconductor, display, and related industries has hurt the shares of related smaller Japanese companies tremendously. I expect companies like Tazmo and Nippon Pillar Packing, another holding of mine, to rebound with a high beta to the sector as the inventory of tech components is finished off and growth resumes.Ē

Especially Nippon Pillar Packing looks like it could easily fit into a Japanese value basket. 0.6x book, dividend, decent ROE, boring business and a big pile of excess cash.
« Last Edit: September 04, 2019, 11:48:11 AM by writser »
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

Foreign Tuffett

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Re: Japanese Basket
« Reply #54 on: September 04, 2019, 01:33:05 PM »
We're in good company. Michael Burry:

Quote
ďIt is not hard in Japan to find simple extreme undervaluation -- low earnings multiple, or low free cash flow multiple. In many cases, the company might have significant cash or stock holdings that make up a lot of the stock price.Ē

ďThere is a lot of value in the small-cap space within technology and technology components. Iím a big believer in the continued growth of remote and virtual technologies. The global retracement in semiconductor, display, and related industries has hurt the shares of related smaller Japanese companies tremendously. I expect companies like Tazmo and Nippon Pillar Packing, another holding of mine, to rebound with a high beta to the sector as the inventory of tech components is finished off and growth resumes.Ē

Especially Nippon Pillar Packing looks like it could easily fit into a Japanese value basket. 0.6x book, dividend, decent ROE, boring business and a big pile of excess cash.

Although cheap, Pillar Nipples looks like it is significantly exposed to the vagaries of the semiconductor cycle (Q1 FY 2020 earnings way down from Q1 FY 2019). I suppose it would be a good bet if one was bullish on semiconductors.

writser

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Re: Japanese Basket
« Reply #55 on: September 04, 2019, 02:01:11 PM »
Yeah, Q1 looks bad. On the other hand, their track record the past 10 years looks reasonably stable. Semiconductor / LCD makes up ~55% of their total sales. They even have some decent (English) investor presentations on their website: link.
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

Spekulatius

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Re: Japanese Basket
« Reply #56 on: September 04, 2019, 04:35:53 PM »
Yeah, Q1 looks bad. On the other hand, their track record the past 10 years looks reasonably stable. Semiconductor / LCD makes up ~55% of their total sales. They even have some decent (English) investor presentations on their website: link.

The semi downturn may last a while. on the business, I agree, it looks like quite high margin. And. decent ROE. I put this on my watchlist.
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NeverLoseMoney

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Re: Japanese Basket
« Reply #57 on: September 05, 2019, 06:21:17 AM »
Bloomberg published a follow-up article in which Burry discloses all his Japanese holdings: https://www.bloomberg.com/news/articles/2019-09-05/burry-s-picks-of-undervalued-japanese-companies-rise-in-tokyo

His holdings are:
  • Tazmo Co. (6266)
  • Yotai Refractories (5357)
  • Sansei Technologies (6357)
  • Tosei Corp. (8923)
  • Kanamoto (9678)
  • Altech Corp. (4641)
  • Nippon Pillar Packing (6490)
  • Murakami Corp. (7292)

All these stocks are up nicely after he disclosed his stakes, which might be a reason why he decided to talk to the press about his Japanese holdings. A known Burry holding might hold up better in a big downturn as well.

Foreign Tuffett

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Re: Japanese Basket
« Reply #58 on: September 05, 2019, 07:14:52 AM »
Bloomberg published a follow-up article in which Burry discloses all his Japanese holdings: https://www.bloomberg.com/news/articles/2019-09-05/burry-s-picks-of-undervalued-japanese-companies-rise-in-tokyo

His holdings are:
  • Tazmo Co. (6266)
  • Yotai Refractories (5357)
  • Sansei Technologies (6357)
  • Tosei Corp. (8923)
  • Kanamoto (9678)
  • Altech Corp. (4641)
  • Nippon Pillar Packing (6490)
  • Murakami Corp. (7292)

All these stocks are up nicely after he disclosed his stakes, which might be a reason why he decided to talk to the press about his Japanese holdings. A known Burry holding might hold up better in a big downturn as well.

I built a Murakami model in March, but passed on buying it as I didn't think it was quite cheap enough relative to some of the other J-net opportunities out there.

Also, I prefer names with tiny tit market caps and Murakami, while definitely small, is much larger than some of the other J-nets out there. Burry is managing almost $350 million dollars, so his opportunity set is somewhat constrained, particularly since he's a traditional stock picker and not running some quant strategy where he owns tiny pieces of 100 different Japanese companies.

Murakami (7292) ~$280 million USD equivalent market cap

1782 - $37M

2055 - $45M

4624 - $57.4M

6964 - $34.7M

9885 - $60M


Any thoughts?



*** Edited to make it clear I'm soliciting feedback and not just pontificating
« Last Edit: September 05, 2019, 07:21:56 AM by Foreign Tuffett »

matjone

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Re: Japanese Basket
« Reply #59 on: September 05, 2019, 09:40:17 AM »
I own some of those.  Since I started investing in Japan I've hardly ever lost money but many times I haven't made much either.  The currency moved against me a little but the main problem is that these companies simply aren't run for the shareholders.  A lot of times even if the business is decent they'll sit on cash for years on end earning like 4% on equity.  Their business culture is very different.  I forgot where I read it but someone was describing how they bought out a sake brewer.  The guy's family had been doing it for like 500 years or something crazy and then he sold out.  Apparently that was a very unorthodox decision and he was going to be seen as a failure for abandoning the family business.  Price paid, returns on other prospective investments, etc. didn't figure into it.  It kind of reminds me of how people view farm land where i grew up.

One thing I think might be smart, if you think there's a decent chance there's some sort of mass awakening of all these zombie companies, is to look for the ones that hold a lot of securities.  That way you'd get a double re-rate.  But to me it's a big if if this even happens.  It would be interesting to hear from people who are over there what the feeling is.
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