Bull, Value And Bear

My first smallcap buys were McRae Industries and Globus Maritime half a year back. 10% and -30%). However, six months is brief a period to tell anything too. The next stock that I found is Riken Keiki (7734: TSE). Riken Keiki makes devices that identify hazardous gases. Its products are mostly for commercial purposes. The business has an extended history heading back more than 80 years.

130M USD. The company is regularly profitable. Its current PE is less than 10 and it pays a 3% dividend. Riken Keiki is also a net-net company, signifying its current resources exceed its total liabilities. Therefore, the reader might wonder what’s the capture? I certainly wish to know, if there is one. But I cannot far to find any so.

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In fact, I found the entire Japanese market is full of such profitable net-net small caps that trade at suprisingly low PE multiples. Of today to see what they are doing I have been pursuing many outstanding traders. For this I would recommend Wealthtrack really. Wealthrack is a gem of a financial news show that you can get on YouTube. A common theme of several Wealthtrack guests — the actual web host Conseulo Mack telephone calls Thought Leaders — is that Japan can be an undervalued market.

But I acknowledge, I don’t know too much in what this company makes. I cannot even access their reports in English. And I don’t read Japanese. My strategy on Japan is to make my own basket of Japanese small caps, starting with Riken Keiki. I am not necessarily looking to stock pick but to take the benefit of a inefficiency of the world markets.

I believe this opportunity comes because too many people have been burnt from twenty years of recession. I understand that individuals have said Japan is a good investment for much of the last two decades and have shown wrong. But from my judgment, I feel this is the time to invest in Japan. Personally I think judgment is a huge factor in trading. Judgment is not quantifiable, but someone like Buffett has it in spades. My feeling partly originates from Benjamin Graham.

Back in the 1930s, in the heart of the great depression, he wrote articles that showed many companies that are available for less than their net-net value. And I thought, wow, only if I can enter on such opportunities now. But surely today, in our better markets, such opportunities are impossible, or are they?

The investing world today is more liquid than ever before, which is very volatile. Two recessions in ten years proves the second option point. I thought about it and reasoned that in such a huge investing world, some market someplace is undervalued at any moment surely. So that it just may be possible that the problem Benjamin Graham describes happens very often, maybe now, Japan maybe!

As I pointed out in a previous post once I first considered being aggressive with small caps. Buffett’s thoughts greatly influenced me to the path. He often discusses the great deals he found in the 1973 recession. He compared the depressed Korean market from about ten years compared to that time ago, like 1973 is the precious metal standard for an undervalued market. I could just imagine him saying Japan is similar to that today. The recent decline in the yen helps also. I believe that opportunities, like bubbles, appear more than we think often. It really is just hard to recognize an opportunity at the time.

That’s all. Many thanks, Tom. Thank you. It looks like we only need time for just one more question. Hi. I had developed a question about the technology that you will cross-license from EONTEC. If that’s regarding making the larger parts and if that’s the case, are you going to use new tools that are not created by ENGLE? For clarification, the machines that people use today from ENGLE have been precisely tuned and match to the alloy that people get from Materion.