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Sergio8

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Everything posted by Sergio8

  1. Anyway, the minimum investment is at least twice less in most companies in practice. Of course, this does not mean that it will boost demand for the stocks that do the reverse split (and, to be honest, it doesn't really matter for me).
  2. To be honest, I don't know for sure. The few japanese people I talked to believe that investing in stocks is dangerous, based on the past losses they experienced. I also read and heard that investors in Japan focus only on EPS and don't care a lot about net asset values. However, we probably all know that assets, when productive enough, are the generators of the companies' earning power. That's why I don't really worry about the focus on earnings. We just have to pick the companies we like. At least, the well capitalized balance sheets give the managements great margin for errors, and the only thing these managements need to do is to prove that the cash really belongs to shareholders. And in that sense, what I am seing is mostly encouraging (at least going in the right direction). Perhaps, disproportionate focus on earnings can partly be explained that around twenty / thirty years ago, a significant number of japanese managements used to buy derivative contrats and get their asset values wiped out. However, I am not sure this fear is still warranted today (as managements mostly became very cautious after learning from those mistakes).
  3. I do not know if there is a correlation there, but we can observe that since 2015, a significant number of companies trading below net cash started to buy-back shares. And when it is significant, it smells quite good, regardless of any laws. It indeed feels like there are much less reasons today why such companies should trade well below their tangible and liquid assets. And indeed, the gaps have begun to close, or at least be reduced. Nevertheless, I think that Japan remains one of the best markets (if not the very best) for Graham & Dood minded investors looking for cash generative businesses with rock solid balance sheets at great prices. Sometimes, you can even have businesses with 25-30 % return on unlevered assets trading below net cash and buying back shares in this country! This is unique in today's world in my opinion.
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