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

To: Spekulatius who wrote (42471)	4/29/2011 3:48:45 AM
From: Paul Senior	1 Recommendation Read Replies (1) \| Respond to of 78601

"Their ROE is abysmal (~4%) but if you strip out the cash and the LT investment (shares in other Japanese companies), which are not necessary to run the business and contribute very little to net earnings..." That's part of my point. You can't strip these out. As the hedge fund who bought more than 50% of a Japanese company found out. The interweaving of suppliers/customers (keiretsu) meant in my day that there was a Japanese mindset against doing any such thing (to enhance shareholder value or attractiveness). You say it's different now or not significant; and you invest. Okay. For me, the low price-to-value in so many of these Japanese stocks is an affirmation that perhaps the Japanese mindset that I found, still exits. (Namely we Japanese want market share and ultimately profits; how our stock price trades, is of much much lesser concern.)

To: Spekulatius who wrote (42471)	4/29/2011 9:47:21 AM
From: Jurgis Bekepuris	Respond to of 78601

I am not saying that Japanese markets are efficient. I am just saying that so far I have not seen many (or any) incredibly cheap stocks that would not have warts. Sure you can adjust for cash and LT investments although you have to be careful, since I agree with Paul that these may be systemic rather than temporary. Even then 7% ROE is nothing to talk about. OTOH if it's a net-net then it might be buyable at these low ROEs as a Graham position to be sold on runup. Although I chided you about quick sell of your post-quake gains - with tongue in cheek ;) - IMHO you hit the nail by buying on temporary panic and selling on recovery. It may be that most of these Japanese companies are panic-to-some-runup trades rather than long term investments. Although I still hope to find some that would work long term. And I appreciate your research and suggestions from Japanese market. :)