Net-Net Stocks in Japan- Being Secretive About Them isn't Very Wise

Every now and then I get private mails from individuals who want to tell me about their latest incredible findings of a stock in Japan selling below their NCAV.

Usually those stocks are not bad from a quantative perspective, but not great from a qualitative point of view. I always do the same. I ask the people why they do not want to publish those companies on the comment section of this blog. And usually they resist, because they think they would give away incredibly valuable information for free. Well, I would say they do not! It is rather the other way round. They make sure that their opportunity cost of holding those stocks runs high, but not their stock flying high. Why is that? Because every cheesy screener has been spitting out those stocks for quite some time now.

I could understand the hesitance of sharing the ideas if a lot of hidden assets are involved (so a stupid computer screen doesn't catch those). And/ or some serious asset recomposition by management trying to remedy those obvious undervaluation, i.e. corporate Japan is getting active without any activist being involved.  The market has not sniffed what was going on yet, because management doing that is not too keen on too much publicity while getting their hands on some of the shares outstanding left.

I do not do that neither on this blog. Apart from one post all the financials of individual stocks I have been presenting so far are not adjusted (I have left you something to do). They are just the plain numbers on the P&L account and the balance sheet. Nor am I very keen on presenting the latest corporate action on increasing the capital efficiency of my holdings.

But usually the stocks mentioned to me privately have none of those specific characteristics. They are just net-nets and have been for quite some time. And if those obvious undervaluation is not corrected in a reasonable timeframe, opportunity costs can run very high for holding on to them ( Ryoyo anyone!; but at least I spelled it out). 

It is not in your guy’s interest to be secretive about those issues. It is rather the other way around. Get the internet community to know where you have to pay only 30-60 sens on the yen in Japan. You need a catalyst for this situation to be remedied. And letting as many interested people (and potential buyers) as possible know about such situations might work as such a catalyst.