A contrarian view of Japan,
From Barron's for personal use only:
June 15, 1998
Samurai Warrior
Marty Whitman makes a bold foray into Japanese stocks
By Sandra Ward
Mutual Choice | Fund Scope | Cash Track
Tracking The Giants | Scoreboard
Let the rest of the world abandon Japan and U.S. semiconductor stocks,
Marty Whitman loves them. Right now he is taking the 30% cash position he's
built up the past few years in his $2 billion flagship fund, Third Avenue Value,
and plowing it into shares of beaten-up Japanese financial companies and
semiconductor equipment makers.
"The investment opportunities are so fantastic, it's sort of like 1974," he
gushes, referring to the bargains that proliferated during the last great U.S.
bear market.
Whitman, whose specialty is investing in deeply depressed but otherwise
sound securities, plans to close his Third Avenue Value Fund to new investors
as of July 15. Then he hopes to "take a ride for a few years" and allow his
fund to "expand by appreciation, if I know what I'm doing." It's a bold
gamble, especially because Japan, the world's second-largest economy,
officially entered a recession last week: The nation's gross domestic product
contracted for two consecutive quarters, making for the first full year of
negative growth in 20 years. But Whitman is betting that a majority of
investors are misjudging the severity of the problems Japan faces. In fact, he
asserts that financial reforms are "progressing at the speed of light," pointing
out that they're not top-down governmental reforms, but rather those
instigated by foreign firms that are snapping up stakes or entering into joint
ventures with Japanese companies. He points to Merrill Lynch taking over the
operations of Yamaichi Securities and Swiss Bank's joint venture with
Long-Term Credit Bank of Japan. "The free market is working the reforms,"
he notes. "And I'm getting better pricing than if I were a first-stage venture
capitalist. You better believe I'll take my shot." Some names he likes include
Mitsui Marine & Fire, Chiyoda Fire & Marine Insurance, Nissan Fire &
Marine Insurance and Yasuda Fire & Marine. He's also a fan of Long-Term
Credit Bank. Among U.S. chip-equipment makers, a sector he's been in since
late 1996 hoping to be rewarded through consolidation, he favors Electroglas,
FSI International, Silicon Valley Group, Speedfam, AVX, CP Clare and
Planar. (See related story.)
Return to top of page | Format for printing
Copyright c 1998 Dow Jones & Company, Inc. All Rights Reserved.
|
