tag:blogger.com,1999:blog-2149523431587168680.post6984264905420050331..comments2024-01-16T00:12:23.220-05:00Comments on Oddball Stocks: Japan, the ultimate contrarian tradeNate Tobikhttp://www.blogger.com/profile/05660387777171986124noreply@blogger.comBlogger37125tag:blogger.com,1999:blog-2149523431587168680.post-50821093206264617262015-11-11T15:58:33.646-05:002015-11-11T15:58:33.646-05:00Hi Nate,
This reply is a bit late.
There are 2 s...Hi Nate,<br /><br />This reply is a bit late.<br /><br />There are 2 strange things I experienced when investing JP equities.<br />(1) Deep value works better than other developed markets.<br />(2) Profitable companies (ROE, ROIC) in general turns out to be bad investments<br /> and under-performs low profitability names.<br />The second observations really confuse me. <br />Do you have idea about it? <br /><br />Thanks,<br />VIX <br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-22539233477755851322013-04-03T12:43:44.375-04:002013-04-03T12:43:44.375-04:00Hi Nate,
Thanks for your informative report.
I h...Hi Nate,<br /><br />Thanks for your informative report.<br /><br />I have been looking for an on-line stock screener for the Japan exchanges and found the following:<br /><br />Tokyo:<br /><br />select Japan from the drop down menu<br /><br />http://www.google.com/finance?ei=ItxZUbi9Ha610AGZwAE#stockscreener<br /><br />Osaka and JASDAQ:<br /><br />http://www.ose.or.jp/e/listed_company_info/description/search<br /><br /><br />The Osaka/JASDAQ screener does not include a field for dividend yield. Do you know of a Osaka/JASDAQ screener that can filter for div yield?<br /><br />I have also been looking for a website that has English translations of Japanese company news releases and found this:<br /><br />click the "Company Announcements Service" button half way down the webpage.<br /><br />http://www.tse.or.jp/english/listing/co_announce/index.html<br /><br />Problem is those reports only stay on-line for 30 days. Do you know of a website that makes announcements available for longer than 30 days?<br /><br />Thanks,<br /><br />John<br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-8973805878479392462013-01-19T19:02:33.429-05:002013-01-19T19:02:33.429-05:00Interesting idea but Templeton bought when he knew...Interesting idea but Templeton bought when he knew the United States was going to enter WWII. He had a catalyst.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-60905749272591128382012-12-26T17:20:05.367-05:002012-12-26T17:20:05.367-05:00Don't know whether it's a stupid idea, but...Don't know whether it's a stupid idea, but you could hedge your yen-exposure by buying your stocks on credit (currently 1.593% pa at IB) and have the corresponding USD amount in your account.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-10100478066645144212012-12-26T17:17:52.841-05:002012-12-26T17:17:52.841-05:00I don't know whether this is a really stupid i...I don't know whether this is a really stupid idea for hedging the yen-exposure, but you could buy your stock in yen on credit and have the corresponding USD amount as balance in your account. Yen interest rates at IB are currently at 1.593%, so the cost per year isn't too big and you don't have to worry about rolling over futures/options etc...Anonymoushttps://www.blogger.com/profile/15171471798662807409noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-18368358040414887152012-11-04T23:20:03.317-05:002012-11-04T23:20:03.317-05:00One way to "hedge" the downside of the y...One way to "hedge" the downside of the yen exposure is to filter for export-centric companies, whose products are sold and priced on worldwide markets. It's win-win: if the yen goes down not only does the revenue increase in yen terms, but the cost base shrinks if they have significant Japanese inputs.<br /><br />If you take this option would be nice to see what list you end up with!cighttp://commentisglee.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-32959425016102244782012-11-01T23:34:18.437-04:002012-11-01T23:34:18.437-04:00Nate have you look at Interactive Brokers? There ...Nate have you look at Interactive Brokers? There Japan stock commissions are .08%. They also don't ding you the 3% or so currency fee that I remember Fidelity had. It is easy to hedge the yen risk with CME futures through IB, the big contract JPY is for 12.5mm yen and they also have a half size contract, symbol J7. IB only has Tokyo stock exchange stocks which does somewhat limit the selection of micro caps. <br /><br />ggrhttps://www.blogger.com/profile/09454527210077252209noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-48710519461927199092012-11-01T14:23:03.827-04:002012-11-01T14:23:03.827-04:00Not a bad idea, but just as people have been sayin...Not a bad idea, but just as people have been saying Japan must face its debt demons (for over a decade), people have been saying Japanese stocks trading below NCAV must gravitate upwards (for over a decade). They're both true, but the question is when?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-9348775189698575702012-10-31T17:01:45.513-04:002012-10-31T17:01:45.513-04:00I'm long some Japanese equities and am wonderi...I'm long some Japanese equities and am wondering how you plan to hedge. Are there options one can buy on the Yen? Not sure I want to mess around with forex.mehttps://www.blogger.com/profile/08055223057078438581noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-53337013685608642322012-10-31T13:57:44.473-04:002012-10-31T13:57:44.473-04:00Why would one wants to hedge a currency with a pos...Why would one wants to hedge a currency with a positive real interest rate against one with a negative real interest rate?O-tonehttps://www.blogger.com/profile/14922301157900495819noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-72354210680354656012012-10-31T13:01:35.656-04:002012-10-31T13:01:35.656-04:00I am not trying to beat a dead horse here or be pe...I am not trying to beat a dead horse here or be pedantic but, if we WERE trying to make this idea logical, wouldn't it be logically consistent to start by assembling a basket of penny stocks in the US and then making decisions about other factors such as quality or perceived cheapness from there?<br /><br />I am honestly asking to make sure I am getting the point here... it seems like that is the logical extreme of this idea but I have a hard time accepting the idea of anyone, let alone Ben "Business-like" Graham, suggesting you buy something simply because it's the lowest price thing. I understand he's making a psychological commentary but then that would seem to be a different thing than recommending or predicating an investment operation off of "lowest price X" as the first screening criterion.Taylor Conanthttps://www.blogger.com/profile/18270678440957992085noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-17097356653923759892012-10-31T12:57:37.257-04:002012-10-31T12:57:37.257-04:00Yeah, the theory is it's easier for a stock to...Yeah, the theory is it's easier for a stock to go from $1 to $1.50 than from $100 to $150. Sure it's the smae percentage, but there is a psychological thing about small numbers. On that same stock someone would probably pay $1.01 to buy because it's only a penny more. Yet $101 is a dollar more. Yes the same, but a dollar is greater than a penny.<br /><br />I'm not arguing it's logical, but it's how people see things. I do have a preference for lower priced stocks in general. I don't want penny stocks, but I'd prefer something in the $5-15 range verses the $50-100 range. Total value the same, but I like the lower price, not sure why.Nate Tobikhttps://www.blogger.com/profile/05660387777171986124noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-49972816274922628082012-10-31T12:51:11.184-04:002012-10-31T12:51:11.184-04:00But "more potential" from the standpoint...But "more potential" from the standpoint of a small increase in price in absolute terms (say, Y1 to Y2) is a doubling of your money?<br /><br />I forget this part from Graham. I'll be rereading it soon so I'll keep an eye out but it's somewhat curious to me. Again, I am not sure why, if this is a good heuristic, you wouldn't routinely buy penny stock baskets in the US...Taylor Conanthttps://www.blogger.com/profile/18270678440957992085noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-57569146352704463902012-10-31T12:49:07.716-04:002012-10-31T12:49:07.716-04:00Nate,
You'll probably get in the habit of &qu...Nate,<br /><br />You'll probably get in the habit of "recycling" capital, especially because many of your picks will pay dividends as well. But it probably is worth adding a column to your spreadsheet of what NCAV or BV is in a per/share price, so you can monitor it periodically.<br /><br />I think MSN money will let you add all your picks to a portfolio on their site. It's annoying to have to create an MSN login (who even uses MSFT web products anymore?!) but that could be one free, relatively easy way to at least keep tabs on what the companies are doing price-wise.<br /><br />Much harder is noticing when the quality picture deteriorates substantially. Then again, that's to be expected with net-nets, so I guess you just buy and wait for them to appreciate, you don't do anything if the business deteriorates.<br /><br />Psychologically, how would you feel and what kind of personal reaction would you anticipate from yourself if you woke up one day and the Yen had fallen 20-25% against the dollar and you weren't hedged? 50%? 75%?Taylor Conanthttps://www.blogger.com/profile/18270678440957992085noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-56267771209162935102012-10-31T12:45:11.569-04:002012-10-31T12:45:11.569-04:00One question here is what is your timeline? In the...One question here is what is your timeline? In the short run, currencies can be volatile. In the long run, currencies tend to be more stable against one another.<br /><br />What if you just permanently commit part of your portfolio/capital to Japan/the Yen? This essentially eliminates the currency risk because you're now investing just like a Japanese person-- whatever happens to the Yen, that's the currency you're making investment decisions in. The Yen could have some trouble over time but in the long-run, Japan will still be where it is and its assets will be in place. As the portfolio matures you could roll the new cash into other JNets or other cheap, high quality assets that are Yen-denominated.<br /><br />The real risk here is not the currency risk, it is the inflation risk. If you were buying a bunch of real assets for cheap, you wouldn't really care what happens to the Yen so much because you'd assume in real terms your earnings power and asset values would be approximately the same over time, whatever unit you used to account them in. But because you're buying piles of cash and short-term, liquid current assets, the risk of a large loss in purchasing power in the short-term is real because cash is not an earning asset (especially not w/ Japanese rates where they are)... and these businesses don't appear to have profitable places to put excess capital.Taylor Conanthttps://www.blogger.com/profile/18270678440957992085noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-21966890480803382062012-10-31T12:41:56.632-04:002012-10-31T12:41:56.632-04:00Yes, Templeton and Graham, in SA there is a chapte...Yes, Templeton and Graham, in SA there is a chapter discussing low priced stocks, they have more potential. I think the better approach is to look for ones that are cheapest first then lowest price in that.<br /><br />In some ways just going lowest share price first might be a nice selection mechanism to get a good cross section of companies.Nate Tobikhttps://www.blogger.com/profile/05660387777171986124noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-71399452512428382482012-10-31T12:40:01.006-04:002012-10-31T12:40:01.006-04:00Nate,
I used MSN Money, it's helpful because ...Nate,<br /><br />I used MSN Money, it's helpful because they have good balance sheet detail and they have helpful 10yr summaries of earnings and basic balance sheet items.<br /><br />I liked the scoring system you used originally, which is why I partly adopted it myself. However, the dividend point is a little... flim-flam... because companies can cut dividends any time they want. In general, it's better to buy companies that are cheap which tend to pay dividends, not to buy a company because of its dividend.<br /><br />That being said, I wonder if you've since considered any new criteria to add to your "scoring screen"? For example, I wonder if a company should get a point for maintaining/increasing its earnings over 10 yrs, whereas one with a declining earnings picture gets a 0?<br /><br />Can you think of others you might add as a "quality test" to your scoring system?Taylor Conanthttps://www.blogger.com/profile/18270678440957992085noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-64056726203780790112012-10-31T12:36:53.063-04:002012-10-31T12:36:53.063-04:00But you've decided to focus on the lowest pric...But you've decided to focus on the lowest price as opposed to "cheapest" (which, in and of itself is a cloudy term, I admit), simply because this is what Templeton once did? Or is there some causal relationship in your mind between low share prices and investment outcomes?<br /><br />If this strategy would work, are you also building a basket of penny stocks in the US?Taylor Conanthttps://www.blogger.com/profile/18270678440957992085noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-79733301153280816472012-10-31T12:35:36.356-04:002012-10-31T12:35:36.356-04:00This doesn't make any sense to me-- the more c...This doesn't make any sense to me-- the more closely what you're buying resembles cash, the more you would be concerned about changes in relative currency values.Taylor Conanthttps://www.blogger.com/profile/18270678440957992085noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-53425663124342116582012-10-31T12:34:20.786-04:002012-10-31T12:34:20.786-04:00Anon,
Are you making the argument that this is a ...Anon,<br /><br />Are you making the argument that this is a "risk-free trade"? That you win no matter what happens?<br /><br />If the Yen strengthens, then earnings weaken while asset values strengthen-- but they have to strengthen more than earnings weaken to come out an intrinsic value winner, and the market has to be more concerned with asset values than earnings values to reward you price-wise.<br /><br />If the Yen weakens, then earnings strengthen while asset values weaken-- but they have to strengthen more than asset values weaken, etc. etc.<br /><br />I don't think there's a free lunch here.<br /><br />Besides, asset values are tied to earnings power and vice versa, it's confusing to think they could move inversely of one another. "Yeah, the assets of my business are worthless but boy do they ever generate valuable earnings!!"Taylor Conanthttps://www.blogger.com/profile/18270678440957992085noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-1029704139185642842012-10-31T03:45:02.460-04:002012-10-31T03:45:02.460-04:00Don't forget the 2000 JPY/trade commission whe...Don't forget the 2000 JPY/trade commission when you eventually sell... IB now has a 80 JPY/trade (i.e. $1) minimum commission, but only TSE stocks.<br /><br />If USDJPY weakens substantially, then Japanese exporters will have earnings coming out the ear (and see this reflected in valuations, e.g. this March). Incidentally, several of the NCAV or P/B based basement-bargains are exporters (or plug into an export-chain). Thus, if the JPY strengthens, you are holding more valuable assets; if the JPY weakens, you are holding more valuable earnings; no hedging needed. And this is when I back the truck & load up to the hilt...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-836799025884236112012-10-30T23:25:49.454-04:002012-10-30T23:25:49.454-04:00I plan on following up for sure.
Yes, the minimum...I plan on following up for sure.<br /><br />Yes, the minimum lots are what really complicates this. The problem is buying small or smallish lots isn't possible for some stocks. Some stocks have a minimum due to lots ranging from $5k to $10-15k or more. That's why an equal sizing strategy buying all the net-nets is a problem. The position size would have to be determined by the largest lot minimum, which could be substantial.Nate Tobikhttps://www.blogger.com/profile/05660387777171986124noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-7523388389030266552012-10-30T23:16:39.175-04:002012-10-30T23:16:39.175-04:00Hi Nate,
really interesting idea, and I hope you ...Hi Nate,<br /><br />really interesting idea, and I hope you could chronicle (perhaps once a year?) how this pans out. <br /><br />Not clear to me though if Japan stocks have minimum lots to buy a stock -- or if there's an easy way to do these trades via odd lots?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-14471183611946331422012-10-30T22:54:12.737-04:002012-10-30T22:54:12.737-04:00Really interesting and thought provoking comment.
...Really interesting and thought provoking comment.<br /><br />If possible could you expand on your second comment about being short the yen, and a different trade that could accommodate that?Nate Tobikhttps://www.blogger.com/profile/05660387777171986124noreply@blogger.comtag:blogger.com,1999:blog-2149523431587168680.post-382094600883737392012-10-30T22:49:27.630-04:002012-10-30T22:49:27.630-04:00Sure, so the first pass is lowest share priced sto...Sure, so the first pass is lowest share priced stocks. Then the second sort is cheapness, then after that I'll look at earnings or dividends or something. So a stock selling at ¥30 will get priority over one at ¥4000.<br /><br />Maybe a better way is to determine ultimate cheapness then take the lowest priced stocks from that bunch, that might be a better approach.Nate Tobikhttps://www.blogger.com/profile/05660387777171986124noreply@blogger.com