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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (42443)	4/28/2011 10:46:34 AM
From: Jurgis Bekepuris	Respond to of 78594

I do think it is fairly naive for a Hedge fund to go into Japan, buy minority stakes in some Japanese companies and think that they can run things the US way. this would not work in Europe, probably most other countries in Asia much less Japan. It might be naive. However, it does show couple negative things. First, there is no possible exit through activist minority shareholders. Second, there is probably no exit through activist acquisition (buyout). Third, unless there is a mentality change in Japanese management, things may not change for the better. And the mentality change is quite unlikely (although you say that things are changing in some companies). These might not seem a big deal to you but in cumulative they definitely depress the prices. Or in other words, we should put some discount because of these issues. 20% maybe? And then Asahi is not so cheap anymore in your own numbers. If you assume just 10% discount due to these, then things are still cheap, but is 10% enough to compensate for loss of a number of catalysts/exit options? Now, US has its own set of issues, but then we didn't even touch the macro Japanese issues (huge debt, old/shrinking population, no immigration, etc.) So I'd say US-Japan is at par macro wise, maybe US is better. So I am still saying maybe 20% discount for Japanese issues? P.S. You cannot compare the situation to Europe. I was ignorant at the time, but I should have realized that opening of Eastern Europe would be huge boon for Euro cos/countries. IMHO most of the gains in Europe pre-2008/9-crash was made based on unification/cheap Eastern Europe labor/growth of Eastern Europe markets. Yes, Japan could/should have had similar effect with China, but apparently it did not and I don't think the situation will change greatly in the future. Part of the issue might be anti-Japanese sentiment in China.

To: Spekulatius who wrote (42443)	4/28/2011 10:52:30 AM
From: Paul Senior	1 Recommendation Read Replies (1) \| Respond to of 78594

Japan stocks as value traps? I maintain my opinion: the ones that are not multinational like Toyota, Sony, etc -- are value traps. That they are, or why they are, I guess depends on viewpoint. The linked author believes that at least for the company he studied, the Japanese management believed they were owners and that minority foreign holders were seen as short-term traders and an "annoyance". I've a background in the quality field and a decent stint as a student and practitioner of Dr. W.E Deming, whom the Japanese idolized, and who many believe is partly responsible for Japan's postwar rise as a leader in the manufacturing of high quality products. Thus my perspective, which is this: Deming speaking to Japanese leaders and government, whose country was in ruins (1950): What is the purpose of quality? High quality means lower costs (NOT HIGHER), and thus, eventually (with lower production costs), more sales! What is the result of more sales? More profits. AND MORE JOBS. Which is what you (Japanese people circa 1950) need and want, that is -- jobs! What is the purpose of profits? To recycle into more and better products and quality. And thus MORE jobs. -------- In my opinion this is still the mindset of many Japanese. In my view I see it from the linked article about the Japanese government overruling or overriding the hedge fund that owned more than 50% of the company. Namely, profits aren't the goal of business - it's an intermediate step on the way to job creation or continued employment. Profits may belong to the stockholders, but the profits are there for economic welfare of the employees and the country. Profits are not for the stockholders (controlling managers) to do what they wish (enrich stockolders). Management is a caretaker of those profits. The Japanese government is an overseer of the business, with the idea of nurturing and protecting businesses (keeping jobs for Japanese). And individual Japanese know this: one reason why very few Japanese invest for retirement in Japanese stocks (except for some surges when markets rise and there's like a national interest in options/speculating trading). (note to myself: and if I'm still right about individual Japanese who won't invest in Japanese stocks, then why should I?) --- Anyway, my view is there's little reason in general for any discrepancy between asset value and stock price for these Japanese companies to be reduced. Thus, in my view, they are value traps. -- Just my opinion, I could be wrong. Or outdated. My outlook colored by a past life experiences (1980's in the quality business)