Sunday, November 11, 2012

Japan the ultimate trade, part 2

Recently I wrote a piece on my desire to investing in a large number of Japanese net-net stocks.  I've received a lot of inquires from that post asking if I needed any help digging through the net-nets, and if I'd post what I purchase.  This post addresses the first question, to answer the second, yes I will post what I've purchased, and follow them.

It's been almost two weeks since that post and I hate to admit I still don't have my Schwab Brokerage account open yet.  I hope the account opening process with is no indication of what their accounts and features are actually like.  A global account requires a paper form, and money can only be transferred online once an account is established.  There's a chicken and egg problem with the funding, I'm still waiting to get the account opened.

In the meantime I am looking to solicit help from readers who are interested in this trade.  I have two lists of net-nets, one is 251 stocks long, the second 448 stocks long.  From what I can tell the first list contains net-nets traded on the Tokyo exchange, the second contains Osaka, and JASDAQ listed stocks.  In the first pass I'm going to focus on Tokyo Exchange listed stocks.

The plan is as follows, anyone who is interested in helping me score will get a Google Docs link to the spreadsheet.  There are seven categories I'm scoring, which I'll discuss below.  I will assign a chunk of stocks for scoring to whomever is interested and we'll divide up the work.  The reward for helping is access to the entire spreadsheet.

If there is an overwhelming interest in doing this we can go ahead and score both lists.

The scoring

There are almost 450 net-nets in Japan, and at most I want to purchase 30 of them, I already own five.  Because I'm looking at such a small subset I can be picky and demand the absolute best of them.  My goal is to find 20-30 that meet the scoring criteria set below.  Here are the items that will be scored:


  • 10 years of positive EBIT
  • 10 years of positive net income
  • Pays a dividend
  • No debt
  • Stable or shrinking share count
  • Revenue growth
  • Earnings growth
If it seems like I'm looking for a needle in a haystack I am, but there are many needles to be found.  I scored 100 Japanese net-nets about eight months ago and found 20 or so that met all of the criteria mentioned above.

Here is a screenshot of the spreadsheet:

If you're not interested in helping, but are interested in Japanese net-nets there are nine to get you started.

If this is at all interesting drop me an email at the link below.  My response might be delayed a bit as I'll be out of town this week for a training session.  I'll be able to respond in the afternoon or at night, but not right away.  The more volunteers we have the quicker we can get a list finalized.  I want to get a rough number of volunteers first before I split up the list.

If you're wondering where the data for this exercise will come from the answer is MSN Money.  MSN Money has 10 year financials for all listed Japanese stocks.  If anyone has access to a better database that is fine as well, but MSN Money is good enough.  It should go without saying that this is only a starting point for an investment, investors should do their own due diligence. 

3 comments:

  1. Japans national debt is 200% of their GDP. I often wonder how the country has managed to say in business.

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    Replies
    1. How many companies have a debt 1000% of their net income?

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  2. Make sure you fully hedge the currency exposure ...

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