´´ Mabuchi Motors (JP:6592) - A Fallen Angel That Turned Out to Be a Threebagger

Friday, September 26, 2014

Mabuchi Motors (JP:6592) - A Fallen Angel That Turned Out to Be a Threebagger

Sold Mabuchi Motors at 9560 Yen. The position was mentioned at 3150 Yen in July 2012 on this blog. The post is to be found here:

The Fallen Angel - Mabuchi Motors (JP:6592)

So the performance without dividends is a 203% in roughly 2 Years (100% p.a.).

In addition the stock paid out 270 Yen in dividends during the holding period. Thus, total performance comes in at 212% (106% p.a.).

The Nikkei gained about 80% in the same period. Therefore Mabuchi Motors outperformed the Nikkei by 120% (dividends excl.) and contributed significantly to the overall portfolio performance and was one contributing factor for its outperformance compared to the Nikkei.

Why I sold Mabuchi Motors

I regard selling as one of the "art" aspects of value investing.  I find it way harder than buying into a position. One has to be flexible strategic wise, while having the overall value investing framework and guidelines in sight.

Mabuchi surpassed all of my valuation models by a significant margin.

The exit price is 50% over its intrinsic value. The premium of 50% over fair value was delivered by momentum and growth investors.

Valuation has become very stretched. A lot of good news has been priced into the stock.

Corporate Action to remedy undervaluation

  • Significant dividend increase
  • Turned around operations successfully
  • Cancelled treasury stocks

Mabuchi Motors is a very good business with a very capable management. I wish the company all the best for the future.

And I should not feel remorse, should I find out that this stock was not only a threebagger, but rather a tenbagger.

Disclosure: No Position


  1. did it split after you sold?

  2. Can you explain what caused you to finally sell? Since it went far beyond your intrinsic valuation model, did you just "look up at your screen" one day and realize "Oh shit!" or did you have some kind of extreme overvaluation auto-sell order waiting that it hit or how do you decide that?

    Why not throw a trade on when you buy that is your pre-planned fair value exit trade, for example?

    1. 1) Reached fair value
      2) Found another hidden champion that was dirt cheap
      3) Tax Reasons