Foreign Tuffett

Definitely this

Great, yet another example of Japanese management teams entrenching themselves in order to maintain the status quo.

This. It's an interesting exercise, but is largely meaningless insofar as figuring out who the best investors on this site are.

Even back in the $8.40s SMTA still looks cheapish to me. Not hard at all to come up with an expected distribution figure of over $9, even using conservative assumptions.

The sake anecdote is from an article I linked to back in April. Yeah, I would probably characterize the attitude of the average Japanese management team towards outside shareholders as benign neglect. They aren't actively hostile like Sardar Biglari, Chinese reverse mergers, or some of the Ukrainian companies listed in Poland. It's just that they have other priorities (no layoffs, fortress balance sheet, maintaining the firm's independence, saving face) that are more important to them than maximizing shareholder value.

I built a Murakami model in March, but passed on buying it as I didn't think it was quite cheap enough relative to some of the other J-net opportunities out there. Also, I prefer names with tiny tit market caps and Murakami, while definitely small, is much larger than some of the other J-nets out there. Burry is managing almost $350 million dollars, so his opportunity set is somewhat constrained, particularly since he's a traditional stock picker and not running some quant strategy where he owns tiny pieces of 100 different Japanese companies. Murakami (7292) ~$280 million USD equivalent market cap 1782 - $37M 2055 - $45M 4624 - $57.4M 6964 - $34.7M 9885 - $60M Any thoughts? *** Edited to make it clear I'm soliciting feedback and not just pontificating

Especially Nippon Pillar Packing looks like it could easily fit into a Japanese value basket. 0.6x book, dividend, decent ROE, boring business and a big pile of excess cash. Although cheap, Pillar Nipples looks like it is significantly exposed to the vagaries of the semiconductor cycle (Q1 FY 2020 earnings way down from Q1 FY 2019). I suppose it would be a good bet if one was bullish on semiconductors.

Quick update on Ming Fai, since they just reported 1H 2019 results and I still own it. It has not been a fun stock to own this year. Overall revenue up slightly, but gross margin weakened. Operating Supplies and Equipment (OS&E) segment continues to grow strongly with revenue up ~20% Y/Y, but is still too small to really move the needle. $0.015 per share interim dividend declared. That's down from $0.02 last year. Acquired, Wayoutokushin a small business in Japan founded by a Chinese immigrant. Vegans beware, Wayoutokushin makes products that contain substances from deer. Acquisition is too small to be material, but the logic of being able to offer a unique product line to hotel customers in Greater China makes sense. I have a attached a picture (which I found hilarious) of the proud founder. Company is continuing to shift production to its new-ish factory in Cambodia. Linked below is a video tour of the factory: Stock remains quite cheap and I like that management is being proactive and taking steps that (at least to me) make sense.

I suppose it's a matter of personal preference, but I can't imagine working for a company that dominated nearly every aspect of my life. Apparently in Japan such is the norm for big companies. https://www.kalzumeus.com/2014/11/07/doing-business-in-japan/

I'm not familiar with this company whatsoever, but is it actually down by ~90% today? What service is showing it as being down that much? I've checked several and only Seeking Alpha is showing down by ~90%. Thanks! I saw it on the SA biggest losers list, pulled up the 10-Q and checked the P/B and whether it was actually bankrupt and bought a few hundred shares. The $13MM in trust preferreds that haven't been paid for years is a pretty significant factor in the current valuation that I also missed. I though this was an illiquid fat finger type deal, and it wasn't, so I've sold. Thanks to you both for helping keep my loss on carelessness <$100. No worries.

I'm not familiar with this company whatsoever, but is it actually down by ~90% today? What service is showing it as being down that much? I've checked several and only Seeking Alpha is showing down by ~90%.

Could you share your thesis for this trade?

Company is overly indebted + terrestrial radio is a no growth industry. That said, the price action today does seem extreme. The amount of (very underwater) stock the Chairman of the Board has purchased in the open market since the CBS transaction is insane.

Here's an interesting blog post from "Undervalued Japan" on a microcap Japanese company with a management team that hasn't hesitated to damage shareholder value in order to maintain control and independence. http://undervaluedjapan.blogspot.com/2019/08/j-net-kawasumi-laboratories.html

Finally was able to get my grimy hands on a tiny position in Isamu Paint last night. Only took 5 weeks for the order to fill. I don't know if this has been mentioned in this thread yet, but (IMO) one of the reasons why many of these tiny "J-nets" are so cheap is that they are horribly illiquid, partially due to trading in only 100 share blocks.

I probably should do that. Net-net stuff is pretty straightforward. Run the the screen, go through each one at a time. Invest. Mostly in Japan. Part of the reason I don't post is I'm already at capacity for net-nets and it happened pretty fast. I want from zero to fully invested in less than a year. There isn't a lot for me to do there. The rest of my money is in registered Canadian accounts which have restrictions on small foreign stocks and only really allow US or Canada. In those accounts recently I've been investing in a few low PE, mid to large caps. Its basically the strategy described by originally by Graham and can be found here: https://www.brokenleginvesting.com/grahams-simple-way/ The low PE stocks I like so far are mostly auto-part companies: Magna Lear Linimar LyondellBasell Part of the reason I don't post much about single names is that I don't really think the analysis provided here is valuable for what I do. I basically invest in cheap stocks...I don't really try to analyze them in detail. I just invest based on financial metrics and diversify. I'm not trying to be a "great" investor. Cheap stocks though are pretty easy to find. Run a metric screen and go through them one by one. Or just go through valuelines one by one. If a stock is cheap and doesn't have any disqualifiers: not a real business, chinese, not truly cheap, massive stock issuance than you can invest in it. For me its pretty much irrelevant what the future prospect of the business are. And I don't try to read between the lines when it comes to accounting. If its difficult for me to figure out I skip it. If you are looking for net-nets though they are here: http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/japanese-basket/ And there are some guys I follow: http://www.nonamestocks.com/ https://www.elementaryvalue.com/ I've thought about doing something like what nonamestocks does and searching for dark/illiquid companies. But I've realized I can't really do what he does where he concentrates heavily, use technical analysis. Just doesn't make sense to me. Elementary Value is more my style...he also invests in dark companies but is way more value oriented. I might try it sometime...but I'm not really motivated because there are other thing in my life which are more important right now. Thanks, all that makes alot of sense.

Hey rukawa, how come you don't post on individual names anymore? IIRC you used to be big on net-net stuff, right? I don't have any smart thoughts on housing.

I get that you think Einhorn is an idiot, a point that has been repeated ad infinitum on this board in recent years. Do you have any actual thoughts on the point he's trying to make here? I thought the Pets.com-Chewy parallel was an interesting one. Of course Einhorn leaves out alot, like that Pets.com was nearly pre-revenue when it IPO'd. Chewy is an actual business. Pets.com was never much more than an idea. More broadly, I think the profitability of selling dog food on the internet is still an open question. Zooplus in Europe looks like it operates around break even. Even more broadly, I agree with Einhorn that many US companies seem priced for something close to perfection. For what it's worth, when I was at UPS I remember whenever the Chewy's contract came up for bid UPS pursued it hard. Dog food deliveries were (for UPS) high margin. Dense heavy product packed in a box as small as possible that was pretty much a recurring monthly shipment. Pet food deliveries were always increasing yoy. Again, from Chewy's perspective can it be profitable? I don't know. All I can say is, the demand seems to be there for the product and delivery service. Customers had nothing but good things to say about it. Women loved not having to pick up 50lb bags at the grocery store. Cat litter is also another big one. That's really interesting, thanks. From Chewy's website FAQ: "Orders over $49 ship free! All other orders ship for a flat rate of $4.95." I wonder how much their average cost to ship a 50lb bag of dog food is?

I get that you think Einhorn is an idiot, a point that has been repeated ad infinitum on this board in recent years. Do you have any actual thoughts on the point he's trying to make here? I thought the Pets.com-Chewy parallel was an interesting one. Of course Einhorn leaves out alot, like that Pets.com was nearly pre-revenue when it IPO'd. Chewy is an actual business. Pets.com was never much more than an idea. More broadly, I think the profitability of selling dog food on the internet is still an open question. Zooplus in Europe looks like it operates around break even. Even more broadly, I agree with Einhorn that many US companies seem priced for something close to perfection.

I stand behind my two previous posts in this thread. Unless someone actually posts something of substance I'm probably done here.

Open your mouth please, I am going to spoon feed this to you: Housel's point: The Germans never could have predicted those pesky mice! It's a Black Swan! My point: The real problem is that there was a lack of fuel, an issue German planners had predicted would occur (Google Georg Thomas). If there had been sufficient fuel, the tanks wouldn't have been immobilized and covered in hay for an extended period of time in below zero weather. Hopefully now you get my point. When historians look back at Stalingrad they don't talk about mice, they talk about how the German army had stretched past the limits of its logistical and operational capacities.

My impression is that wide moat companies like MSFT, as well as Big Tobacco have actually done very well after being subject to intense regulatory scrutiny. Ditto for the Ma Bell breakup. I was wondering if anyone could think of any counterexamples.... Also, it has come to my attention that I neglected to finish giving this thread a title. Oops.

I find much of the discussion of "moats" in investing to be overly simplistic. Here are three examples of companies with wide moats (aka significant competitive advantages) that have performed poorly over the past few years. 1) National Oilwell Varco Leading supplier of equipment and components for offshore hydrocarbon exploration and production. Moaty enough that people in the industry sometimes joked that the acronym "NOV" stood for "no other vendor." The rise of shale drilling + lower oil prices devastated demand for new offshore rigs, crushing what was by far NOV's most lucrative segment. Many people probably recall The Motley Fool being super bullish on these guys right near the top of the cycle. 2) Gamestop By far the leading player in the buy-trade-buy used console video game ecosystem. Crushed by the market shifting from discs to digital. 3) Stericycle Unsurpassed scale in disposing of hazardous waste ruined by poor capital allocation (I'm not as familiar with this one, so someone correct me if this is incorrect). I would argue that all three of these companies retain their moats. Three conclusions -- and I recognize that these probably aren't ground-breaking: 1) Cycles matter 2) Secular growth / decline matters 3) Capital allocation matters One question: Can anyone think of a wide moat company that was severely damaged by regulation?

This Malcolm Gladwell style horse**** drives me insane. The story about the 22nd Panzer Division, while not untrue, is very misleading. The real "point" of the full story is basically the opposite of what he is trying to say. 1) It was really, really cold 2) 22nd Panzer Division was suffering from a severe shortage of fuel. This is why its tanks were sitting for an extended period of time without even so much as being started, despite the weather. 3) The crewman used straw in an attempt to insulate their immobilized vehicles 4) Mice like straw 5) When Soviets attacked and things fell apart at the front, the unit was able to procure enough fuel to launch a desperate counter attack. This is when it was realized the mice had chewed through various wires. It wasn't just the 22nd Panzer Division that was short of fuel that Winter. The entire German army in Russia was short of fuel, something that Wehrmacht planners had consistently predicted would occur prior to the invasion. The real point of the story is that the planners were right: Germany had inadequate resources to invade the Soviet Union. Other gross inaccuracies: 1) "The Germans had the most sophisticated equipment in the world." Actually the 22nd Panzer Division was equipped with obsolete tanks. The Soviet T-34s it faced were far superior machines. 2) The tanks weren't "destroyed" by mice, not were the Germans "defeated" by them. The entire incident had only a minor, if not completely negligible, effect on the outcome of the battle.

WOW. I remember this guy being huge into spin offs and other special situations. His letters would show up on the internet every now and again in