Net-Nets Value Investing Work In Japan?VW Staff
If you took a look at the companies I purchased off my Japanese net-nets (“JNet”) worksheet about six months ago, you’d probably conclude net-nets investing doesn’t “work” in Japan, at least not over a six month period. The cheap, crappy companies I bought then are cheaper, still crappy companies today.
But other Net-Nets….
However, if you took a look at all the companies I didn’t buy from my list, you might get a different impression altogether. While there are a few companies of this group whose fundamentals worsened and/or whose stock price fell, most are up anywhere from 10-15% with several up substantially more, 30-50%. About 10% of the total list seems to have gone private as you can’t find financial info nor trade the symbol any longer, which in my experience in JNet-land typically means they received an MBO.
And if you look at an entirely different list of JNets I generated about two months ago (because all my original picks were no longer JNets), which I finished researching one month ago and which I failed to do anything about until yesterday, the story is even better (or worse, if you’re me). How would you like to see the top pick on your list closed up 25% the day prior and about 40% total since you composed your list? How would you like to see the average company on your list priced 15% or more higher from where you first researched it, meaning you could’ve locked in your 15% annual return for the year in a few months time?!
Once again, this list also had several symbols which no longer trade, presumably because they received buyouts or other going private transactions.