frank

The Nikkei is @ 15-year high and this does make a big difference to sentiment believe it or not :) I don't think the rally in small names is predominantly fundamental-driven at this time as some businesses are still couping with the drop in demand following the sales tax hike but I do have a gut feeling that fundamentals may follow prices this time as Japan Inc is finally in pretty good shape after all that they have been through in the last five years. We are running out cheap names to buy in Japan but generally speaking many micro-cap names are still relatively cheap in Japan versus in other markets. If you like the U.S. economy but dislike the valuation in the U.S. markets, then the smaller cap sector in Japan may be where you want to take a deeper look. Lower yen vs. the dollar, higher wages, lower oil price, and a business-friendly administration are all that's going to help get their economy back on track.

No way the general public is going to tolerate the air quality issues caused by coal-fired power plants but changes have been slow so far until this current administration came on. Nuclear energy is probably the only substantial alternative for China to replace coal.

The answer really depends on how you define "Advanced". In accountant's terms, "Advanced" level of accounting deals with topics such as business combinations, statement consolidations, intercompany transactions, FX translations & transactions, etc... So if that's what you are talking about, I would say just try to search Amazon and look for "Advanced Financial Accounting" textbooks and make sure that they have the above topical materials covered.

As any long-time practioner in the micro-cap space would probably have told you, these stocks are not uncorrelated to market, but they are just slow to react to broader market movements, both on the upside and on the downside. However, when they do react, they react hard and one will likely suffer tremendous mark-to-market losses (i.e. in a market panic). Therefore, I wouldn't necessarily treat these as workouts, unless there are clear catalysts to unlock value in a imaginable time frame.

No wonder why my jpy net-net holdings gained these days :P I do own or used to own several of the names you mentioned but Hakuseisha has been a real dissapointment with no catalyst in sight. However besides being a cash cow and controlled by its major customer this co. do have very attractive real estate holding in Tokyo and Osaka that alone should be valued at close to its current market cap: Owned Property Value: ~2,068 mil yen (estimate) 1) 東京都千代田区岩本町1-3-9 (ハクセイビル7F) 2,968 m2 Value estimated at ~1.86mil yen/m2 Mkt Value: 1484 mil yen Carrying Value: 746 mil yen 2) 大阪市中央区西心斎橋1-4-5 (御堂筋ビル7F） 656 m2 Value estimated 0.89 mil yen/m2 Mkt Value: 584 mil yen Carrying Value: 330 mil yen 3) 中央管财(子会社）新宿营业所 1741 M2 (valuation ignored for now) Btw, for you JPY net-net investors out there this dog 2665 Mitsui Knowledge Industries is going to be acquired by its parent for 255 yen/share. Good job for those with the patience to wait out on the deal.

Can't speak for others but I can share my results... I started to look into Japan in late-2011, mainly a net-net investor to begin with... '12 return was in the mid-single digits, '13 was close to 50 pct, and '14 so far this year is about -1%. All of these are USD returns and I run a fully-hedged portfolio since 2013 and will sometimes go short the Yen (again, my definition of shorting the yen is to have a net short currency exposure meaning my short yen futures notional > my long JPY stocks notional). My portfolio was heavily tilted towards net-nets and at one point I held close to three dozens net-nets and most of them profitable companies with quite predictable earning streams. Had drastically reduced my exposure to net-nets nowadays as the most have appreciated in value and I needed liquidity. Perhaps I have gone off topic a little bit but what I found from my experience on these micro-cap net-nets is that without a clear catalyst they tend to trade more like a convertible bond and have wide bid-ask spreads. Sometimes they may run up for no reason but often times they will only run after a nice earnings beat. Otherwise they will just fluctuate and slowly appreciate in value in line with the cash build. This is why I say they are like convertibles, they are stable but less exciting than the commons. Like many who had invested in the space have said before, patience is indeed key for investing in these and when you see a clear catalyst you are OK to bet big IMHO. One won't do too bad overall but don't expect great results unless you are nearing the end of a bull cycle. Looking back though, I would rather buy into the liquid and high quality names first after a market panic as they are more sought-after and often priced more appropriately. On returns from others, you may want to look into Symphony Financial Partners (http://www.symphony-fp.com). They are a notable activist value fund in Japan and sometimes they will own some of the net-net names that smaller guys like us own. I think their return is like 57% net of fees from Sept 2003 through end of May 2012 versus a decline of ~5% for the Nikkei according to this article (http://www.bloomberg.com/news/2012-05-30/ex-goldman-trader-run-symphony-seeks-1-billion-for-hedge-funds.html). Last year was a home run year for them and for almost everyone who invested in Japan I am sure. But in general, I think Japan was not the best market to be in for the last decade and their stock market so far still lags the other major developed markets in recovering from the 2008 financial crisis.

Hedging has been on my mind but I really don't know how. You can buy or sell Yen futures but then are in blocks of $100k USD. But let's say you have $100k invested in Japan, you can sell the futures. These futures are available a few months or a year out or maybe more. But if you do that I feel you aren't hedging you are actually magnifying the currency effect. Let me explain. For the last year, the yen has fallen, this has caused the market to go up, so the market and yen move in tandem. The yen has a dampening effect on the market return for us thinking in USD. I figure I gained 50% on stocks in yen but only 30% in USD. But if you sell yen futures, in that case, then your gains would be magnified by the futures gains. On the flip side though, if the yen rises, then the market drops, and your futures value drops, you are screwed. So I think I'll just leave my stocks as it is unhedged. BTW, does anyone know of how to hedge in smaller quantities than $100K usd? for any currency? thanks Try the e-mini futures... for yen, the IB symbol is J7. The per contract notional is only half of that is required for the regular yen.usd futures

Thanks for sharing. You might want to look into these: For Media: The Curse of the Mogul http://www.amazon.com/The-Curse-Mogul-Leading-Companies/dp/1591843901/ref=sr_1_1?ie=UTF8&qid=1399907822&sr=8-1&keywords=The+Curse+of+the+Mogul On Oil & Gas valuation: http://www.srr.com/assets/pdf/oil-and-gas-company-valuations-business-valuation-review.pdf https://samples-breakingintowallstreet-com.s3.amazonaws.com/72-BIWS-O&G-Valuation.pdf And I personally think Sam Walton's Made in America is a good book about consumer retail as the story tells you what's the most important in that business and how to do things right (in a broader sense). http://www.amazon.com/Sam-Walton-Made-In-America/dp/0553562835/ref=sr_1_1?ie=UTF8&qid=1399908615&sr=8-1&keywords=Made+in+America

Just joined. Currently live in China, used to live in the States (SoCal, Chicago, etc)