Brian here. This being our first post, I want to cover a few basic things:
- What is Kenkyo Investing?
- Why are we doing it?
- Who are we?
We’ve included a lot of this information in the “About” section on the site, but I’ll go into a bit more detail here.
What is Kenkyo Investing?
Kenkyo is the Japanese word for humility, which we think aligns with our investment philosophy of recognizing the limits of our knowledge and decision-making ability, and doing things like designing investment processes and maintaining a diversified portfolio so as not to rely totally on those limited and somewhat flawed resources.
Kenkyo Investing is an investment research service designed to capitalize on the opportunities presently available in the Japanese stock market. It will be a platform for us to broadcast our Japanese investment ideas to the English speaking world. We are beginning with a blog and hope to launch a quarterly subscription newsletter in January 2017.
The newsletters will be called K Reports and will serve as your source for undiscovered gems in the Japanese stock market.
We will have a blog post out weekly where we’ll provide regular musings on Japan, some interesting stocks, and answer subscriber and reader questions.
Why are we doing it?
Because it is our belief that there are incredible investment opportunities in Japan right now.
It amazes us how little information is available online on investing in Japanese stocks, how little media attention it gets, and how rare it is to see other investors aggressively investing in and discussing these securities. We will fill that void.
After over a quarter century of stagnation combined with concerns over a declining workforce and a large government debt burden, there is almost universal disdain today among foreign investors for Japan.
At the same time, conservatism has been ingrained in the culture of the Japanese, leading to very high savings rates, but most of that savings is directed to cash, insurance, and government bonds, not equities, and those adventurous few among Japanese investors willing to put money in equities are largely technical traders. 80 years since Ben Graham propounded concepts like intrinsic value and Mr. Market, value investing is still surprisingly uncommon in Japan.
Perhaps Mr. Market looks like this?
With no natural buyer inside or outside Japan, the stocks of financially healthy, profitable, and stable Japanese businesses have languished and currently trade at ridiculously low prices. For example, there are businesses that have posted consistent profits and cash flows over the last 10 years whose stocks are available today at less than half of the net cash on the companies’ books.
Kenkyo Investing was started to broadcast these incredible opportunities to the English-speaking world. With on-the-ground experience in Japan and a quantitative aptitude for finding and processing the cheapest stocks of the best companies, we hope to create value for our readers and subscribers and turn what can be a difficult, lonely endeavor into an easier community effort.
Who are we?
We are two young, adventurous investors interested in Japan. My name’s Brian Grosso and my partner in crime is Clayton Young. I was interested in doing this because I’ve already been investing in Japanese stocks and think the opportunities are incredible, but haven’t had a platform to communicate these ideas. Seeking Alpha, where I regularly publish my research, only covers US securities.
Clayton actually grew up in Japan and is currently residing in southeast Asia, plus he is also seeing the same opportunities in Japan. He has done a analysis of the investment landscape in Japan and concluded that value investing is surprisingly uncommon among Japanese investors, which goes a long way in explaining why these opportunities exist. He also understands the culture of Japan, which is one of the challenges for outside investors.
Our full bios are below:
Konnichiwa! I’m Brian. I run an investment management firm based in New York that I started in August 2015. My investment philosophy can be summarized in four one-syllable words: I buy cheap stocks. If you take a look at most of my postings or the stocks I own, you will agree. Most of the securities that interest me trade below tangible book value and at single digit multiples of profits and cash flows. With the US market setting record highs and its proxy, the S&P 500, trading at nearly 3x book value and 25x earnings, you may be wondering where I find such bargains. That’s where Japan comes in. It is my view that Japanese equities, specifically Japanese micro-cap stocks, are the best values on the planet right now. My mission in Kenkyo Investing is to share these incredible values with you.
Konbanwa! I’m Clayton. I don’t run an investment management firm, but I was introduced to investing in college and got hooked. My investment style typically revolves around dumpster diving (yes, I like cheap stocks too). I was born in the US, raised in Japan, and returned to the US for college and graduate school. Somewhere along the way, I’ve learned to speak, read, and write fluently in English and Japanese. Despite the long history between the US and Japan, Japan seems to be a mystery box to American investors and vice versa. My objective in Kenkyo Investing is to use my background to bridge the cultural gaps while uncovering value-focused investment opportunities in a mostly technical Japanese market – and share it with the English speaking world!
Writings and Resources
While I haven’t had a really solid platform for Japanese investment research pre-Kenkyo, I have written a few things which I’ve provided the links to below:
- Investing in Japan
- Investing in Japan, Part 2
- Nichiwa Sangyo At 41% Of NCAV – Any Takers?
- Taisei Oncho: Profitable Japanese Gem Under 50% NCAV And 2/3 Net Cash
Also, be sure to check out our resources page for other information sources and tools for investing in Japan.
Japanese stocks are cheap. Kenkyo Investing was started to tell the world about them.
Look for our next post which will present and explain additional evidence of the opportunities in Japan. It may be easier if you subscribe to email updates using the box on the right or use our RSS to add us to your blogroll.