Investment opportunities in Japan

[shalab]

Looks like the markets are tanking in Japan by about 6% or so - anyone finding opportunities there?

 

[nodnub]

No specific company ideas.

 

But perhaps companies that specialize in rebuilding infrastructure would be worth looking at.

 

With ~25% of national power capacity knocked off line, and the prescribed rolling blackouts... a lot of traditional businesses could have trouble growing and maintaining previous productivity levels. This will be tough for any manufacturing businesses that run 24 hours a day.

 

The work to rebuild and repair the nuclear reactors alone will be pretty significant.  They may have to rebuild some of that capacity from scratch, if they can't repair the existing reactors. Are there any construction/engineering firms in Japan that specialize in nuclear reactor design/construction?

[nodnub]

via   http://www.businessweek.com/news/2011-03-14/japanese-stocks-fall-most-in-two-years-on-earthquake.html

 

Tokyo Electric Power will start service outages in parts of the greater Tokyo area today, according to a statement. The biggest supplier of electricity in the capital will divide its service area into five groups, each with three-hour outages from 6:20 a.m. to 10 p.m. The company’s shares were poised to plunge by the daily limit of 500 yen, or 24 percent, to 1,621 yen from the last close of 2,121 yen. The Tokyo Stock Exchange sets a limit on how much higher or lower a stock can be traded from the last closing price. For example, for stocks that are between 2,000 yen and 2,999 yen, the price movement limit is 500 yen.

 

Toshiba, Hitachi Drop

 

Nuclear power generator-related companies slumped. Toshiba, a maker of nuclear reactors, fell 16 percent. Hitachi Ltd., which provides nuclear power generation systems, dropped 15 percent. Toa Valve Engineering Inc., which makes valves for electric power generation, plummeted 21 percent.

 

 

Construction companies were the only group in the Topix that advanced today. Kajima Corp. soared 32 percent. Obayashi Corp. surged 16 percent. Shimizu Corp. jumped 18 percent. Taisei Corp. leapt 23 percent.

[indirect]

From Barrons Asia columns

 

"Japan's Inpex (1605.Japan) is the glaring exception, down 8.6%.

 

Why? A dilutive 2010 rights issue to fund development of Inpex's 2.7 billion barrels of oil equivalent (BOE) Ichthys offshore oil and gas-field lying between Australia, Indonesia and East Timor.

 

Adding to investor concerns: delays and increased spending that's underscored Inpex's inexperience in overseas liquefied natural gas (LNG) projects, and questions about who will buy the production and under what contract terms. Yet these aren't insurmountable problems.

 

Inpex's Ichthys partner, France's Total (TOT), which owns 24% of the project, has LNG experience. And even if Japanese demand for liquefied natural gas doesn't spike by 2016, when Ichthys becomes operational, local utilities will still be renewing supply contracts, and Inpex could try selling to, say, Korean and Taiwanese utilities.

 

By almost any metric, the $23.4 billion market-cap company looks cheap. For example, dividing its enterprise value by its proven reserves means that investors are paying US$11 per barrel of oil equivalent—about a third lower than for ExxonMobil's. Assuming a 10% cost of capital, oil at a modest $85 per barrel and the yen-dollar exchange rate at 80 yen, a back-of-envelope calculation spits out a net asset value per share of about 620,000 yen to 630,000 yen—about 13-15% above Inpex's current stock price.

 

Hard-core deep-value hunters should also check out Japan Petroleum Exploration (1662.Japan), which has a 7.3% stake in Inpex.

 

Possible catalysts this year for an Inpex rerating include an upgrading of Ichthys reserves from "probable" to "proven" and contract announcements with Icthys customers, which should prod the market to paste a higher value on the company's assets. "

 

[Myth465]

My focus will be babies thrown out with the bath water traded on US exchanges. Right now its insurance. I want no part of this Japan mess, but would love to pickup something of high quality being sold off for no good reason.

 

I am awaiting an update from LRE and FFH and hope both sell off.

[Valuebo]

My focus will be babies thrown out with the bath water traded on US exchanges. Right now its insurance. I want no part of this Japan mess, but would love to pickup something of high quality being sold off for no good reason.

 

I am awaiting an update from LRE and FFH and hope both sell off.

 

You think both have very little exposure?

 

Considering their speciality underwriting I wouldn't think their share in the claims will be that big, but who really knows?

 

And FFH? Their marketcap in premiums for Asia is still very small compared to their other markets and is especially located in Singapore/Hong Kong/India (?) ?

[king888]

Will this event cause the Japan's debt bubble burst sooner ?

 

Vitaliy Katsenelson - Japan: Land of the Rising Debt

http://contrarianedge.com/2010/07/30/japan-land-of-the-rising-debt/

 

Vitaliy had a prediction about rising interest rate in Japan with CNBC back in Sep 2009

http://contrarianedge.com/2009/09/28/on-cnbc-will-japan-drive-our-interest-rates-higher/

[omagh]

...or Japan to stop buying US debt.

http://www.gurufocus.com/news.php?id=70344

 

-O

Will this event cause the Japan's debt bubble burst sooner ?

 

Vitaliy Katsenelson - Japan: Land of the Rising Debt

http://contrarianedge.com/2010/07/30/japan-land-of-the-rising-debt/

 

Vitaliy had a prediction about rising interest rate in Japan with CNBC back in Sep 2009

http://contrarianedge.com/2009/09/28/on-cnbc-will-japan-drive-our-interest-rates-higher/

[Guest Bronco]

Too early to look at equities yet IMO.  How will you know the opportunities until this plays out?

[Guest Bronco]

Aspen getting crushed (AHL)

[Myth465]

My focus will be babies thrown out with the bath water traded on US exchanges. Right now its insurance. I want no part of this Japan mess, but would love to pickup something of high quality being sold off for no good reason.

 

I am awaiting an update from LRE and FFH and hope both sell off.

 

You think both have very little exposure?

 

Considering their speciality underwriting I wouldn't think their share in the claims will be that big, but who really knows?

 

And FFH? Their marketcap in premiums for Asia is still very small compared to their other markets and is especially located in Singapore/Hong Kong/India (?) ?

 

I have no ideal. They and Aspen and every other insurer should be issuing updates throughout the week. LRE know the exposure to DWH was $25 million and I am sure has a decent idea of what this will cost. AHL will probably get killed and deserves it. New Zealand 1 was a decent size lost and we have already had NZ 2, plus Japan.

[BargainValueHunter]

Let the aftermath of the Kobe earthquake guide your Japan strategy.

 

These articles may help you:

 

http://www.time.com/time/magazine/article/0,9171,982453,00.html

 

The aftershocks are not always physical, the damage not always measured in coffins and cracked pillars. Just as the port city of Kobe stirred painfully back to life last week from the quake that killed more than 5,000 people and left 300,000 homeless, a psychological temblor hit the Tokyo exchange. On the blackest trading day in nearly four years, the Tokyo exchange's Nikkei average shed 1,054 points, or 5.6% of value, as investors began to size up the blow Japan had suffered. Among the army of construction crews that moved in to occupy Kobe last week, a Tobishima Corp. supervisor surveyed the ruins and judged, ``This city is going to take 10 years to rebuild.''

 

http://www.nytimes.com/1995/01/18/world/quake-in-japan-the-cost-through-kobe-s-rubble-an-economic-rainbow.html

 

Despite the devastation, experts said today that the in some ways the earthquake could give a boost to an economy struggling to recover from a long recession. It is not the kind of a boost that any country would hope for, but economists and other experts said that the capital spending to rebuild the port city of Kobe may give a stimulus to Japan's economy, the world's largest after America's.

 

 

[Guest Bronco]

FCX

 

 

[Guest Bronco]

baby with bathwater - EXC.

 

maybe baby with a little water on it - NRG

[Valuebo]

My focus will be babies thrown out with the bath water traded on US exchanges. Right now its insurance. I want no part of this Japan mess, but would love to pickup something of high quality being sold off for no good reason.

 

I am awaiting an update from LRE and FFH and hope both sell off.

 

You think both have very little exposure?

 

Considering their speciality underwriting I wouldn't think their share in the claims will be that big, but who really knows?

 

And FFH? Their marketcap in premiums for Asia is still very small compared to their other markets and is especially located in Singapore/Hong Kong/India (?) ?

 

I have no ideal. They and Aspen and every other insurer should be issuing updates throughout the week. LRE know the exposure to DWH was $25 million and I am sure has a decent idea of what this will cost. AHL will probably get killed and deserves it. New Zealand 1 was a decent size lost and we have already had NZ 2, plus Japan.

 

I wouldn't put my money on AHL either in this stage.

LRE also had very little exposure in the New Zealand earthquake. At best it might give an indication of what we can expect. For both FFH and LRE I am not concerned when such events happen.

Since Friday LRE lost $50 million in market cap but is also still trading at 1,2x BV..

[BargainValueHunter]

Ultimately, how do you think the cataclysm will affect re-insurance pricing in 2012 and beyond?

[Myth465]

I would guess only those inside the company know what the real numbers are. I think we will find out in a few days.

[Smazz]

I would guess only those inside the company know what the real numbers are. I think we will find out in a few days.

 

As I mentioned in an earlier post - i believe the companies dont even know what the liabilities will be - not at this point.

 

Go back and look at most of the Katrina estimates - way off.

[Myth465]

I would guess only those inside the company know what the real numbers are. I think we will find out in a few days.

 

As I mentioned in an earlier post - i believe the companies dont even know what the liabilities will be - not at this point.

 

Go back and look at most of the Katrina estimates - way off.

 

Thats true but its the best you are going to get in terms of a starting point. We arent going to know much at all. Take the estimate and discount it as much as you like.

 

I would also guess some insurers are better then others, depending on if they have cap limits and reinsurance. I think some can accurately give you a maximum exposure number depending on how the policies are setup.

[Smazz]

I would guess only those inside the company know what the real numbers are. I think we will find out in a few days.

 

As I mentioned in an earlier post - i believe the companies dont even know what the liabilities will be - not at this point.

 

Go back and look at most of the Katrina estimates - way off.

 

Thats true but its the best you are going to get in terms of a starting point. We arent going to know much at all. Take the estimate and discount it as much as you like.

 

I would also guess some insurers are better then others, depending on if they have cap limits and reinsurance. I think some can accurately give you a maximum exposure number depending on how the policies are setup.

My experience has been the stocks will get pummeled.. the estimates will come out - the stocks get pummelled - the real numbers come out - the stocks get pummelled. All the info is now there and they dont move for a while because for whatever reason Insurance Cos dont accelerate quickly after a closer number has come out.

 

I have profited with this method but doesnt mean it works for everyone - especiallly if you dont have the patience.

[Guest Bronco]

If true, what will get pummeled and doesn't deserve it?

 

 

[Smazz]

If true, what will get pummeled and doesn't deserve it?

 

patience  ;)

[Myth465]

I would guess only those inside the company know what the real numbers are. I think we will find out in a few days.

 

As I mentioned in an earlier post - i believe the companies dont even know what the liabilities will be - not at this point.

 

Go back and look at most of the Katrina estimates - way off.

 

Thats true but its the best you are going to get in terms of a starting point. We arent going to know much at all. Take the estimate and discount it as much as you like.

 

I would also guess some insurers are better then others, depending on if they have cap limits and reinsurance. I think some can accurately give you a maximum exposure number depending on how the policies are setup.

My experience has been the stocks will get pummeled.. the estimates will come out - the stocks get pummelled - the real numbers come out - the stocks get pummelled. All the info is now there and they dont move for a while because for whatever reason Insurance Cos dont accelerate quickly after a closer number has come out.

 

I have profited with this method but doesnt mean it works for everyone - especiallly if you dont have the patience.

 

LOL I am afraid you are correct and will follow your lead.  

Just let us know when you start buying  ;D.

 

I have my names picked out - LRE, FFH, and perhaps AHL if they go significantly below an conservative current book value number. Just have to wait to see what happens.

 

 

hpmst3 - I believe you are on the right path, but feel like no one really knows the answer to your question. Thanks for the info though, its helpful because I own LRE. Those numbers could have been put togteher under any variety of scenarios. I would guess those numbers are for Toyko being hit. They probably dont include Nuclear or who knows.

 

As a LRE and FFH shareholder, I am of the opinion this too shall pass. Would have been nice not to hold at all and to be able to buy now, but I dont plan on selling to rebuy later (though I would have sold AHL if I hadnt 2 weeks ago). I will pickup shares if either sell off significantly and will look at any insurer which seems to be getting punished a bit more than warranted.

 

From what I have seen Smazz is right though. Things get killed for a few weeks and you can usually buy when its clear from 5% - 10% off the bottom. All types of things are rallying (LNG related stocks or construction, and are getting killed Hitachi) best to just wait and watch.

 

LRE will make up for this loss if they survive and I am sure they will survive. DWH was highly profitable for me and them, and hopefully this will be as well.

 

With that said, it sucks to talk finance when people are truly suffering.

Also thanks to whoever posted that blog post from that Engineer. It was very helpful to see what it looks like on the ground without the sensationalism.

[Smazz]

FFH I know best and am most confortable if i am going to go in shortly.

 

Flagstone FSR I will admit, I am not up to speed enough to make a declaration however they are getting bitchslapped like nobodys business. Warranted/unwarranted? There is a song "Billy dont be a hero".

I dont like to die so i wont try to be one yet.

 

FSR

I believe there was a thread on them in the ideas section (may have been you Myth) so whomever can add to that to bring some of us up to speed.

[Myth465]

Flagstone FSR I will admit, I am not up to speed enough to make a declaration however they are getting bitchslapped like nobodys business. Warranted/unwarranted? There is a song "Billy dont be a hero".

I dont like to die so i wont try to be one yet.

 

FSR

I believe there was a thread on them in the ideas section (may have been you Myth) so whomever can add to that to bring some of us up to speed.

 

Your post made me laugh out loud - I think it was Bargain Value Hunter who posted FSR. I dont know them, and they are getting killed, but I think similar to AHL they may deserve it. Its probably a bit overboard, but I would be speculating by saying it definitely is.

 

I definitely agree with you. Why go down with the ship when you arent on it. I will wait to see if she floats, then jump on board when the news crews come to film the rescue. Less ballsy but I save my 9 lives, and sleep better.

 

If anyone goes in my advice is go in tiny using leaps or long dated options.

Every body seems to agree insurance is a black box and a bet on Management.