J- Vid of interest; Week 11,2021

Great speach by Gerhard Fasol, a physicist and entrepreneure who has been living for a long time in Japan. He is one of very few foreigners in the boardroom of a listed Japanese corporations. 
While many Japanese corporations are still admired around the world, too many have suffered sluggish growth and low profitability for an extended period of time. Additionally, in 2017 a string of corporate scandals and failures have shocked the public with negative implications regarding confidence in the Japanese business practice.

The government of Prime Minister Shinzo Abe spearheaded corporate governance reforms, mainly a code to improve supervision of management and increase the number of independent outside directors. Mr. Fasol argues that, although change is happening faster than many expected, and the reforms are generally regarded as successful, more is needed to bring diversity into Japanese boardrooms.

Source:https://www.fasol.com/2018/04/03/japan-corporate-governance-reforms/

TOB Kawasumi Laboratories: The Beast That Never Really Turned into a Beauty

Introduction

With all likelihood, this is the final post on Kawasumi Laboratories, a longtime holding of mine that was mentioned on my blog two times in the past.

Friday the 31st of July Sumitomo Bakelite announced its intention to takeover Kawasumi Laboratories at a price of 1'700 Yen. An offer which would result in a performance of 318% (incl. dividends before tax) over a period of almost exactly 8 years. And my first Japanese stock where I made the serious money basically within three days.

I have not tendered my shares to Sumitome Bakelite or sold them on the market yet. Before doing so it is time to contemplate. Writing to myself a brief presentation of my initial investment case, a recap of my rather long and wearisome journey in this “deep value” sphere of stock market investment and finally, an in depth analysis of the takeover offer, reasoning if it is attractive or not and if there is any chance of a significantly bettered offer.

Kawasumi Laboratories (JP:7703) - The Beauty and The Beast

Introduction


This post will scrutinize the ever increasing cash holdings and corporate governance issues at Kawasumi Laboratories, a deep value J-Net stock and long term holding of mine.

The stock was first mentioned on the blog in 2012 as a deep value idea. Quantitative metrics in 2012 indicated that the company was trading in the Japanese stock market at a significant discount to its intrinsic value.


Although earnings growth and return metrics have been at best paltry since the initial investment, liquid assets in the form of cash holdings have been ever increasing during the holding period. Although the stock appreciated roughly 75% (excl. Dividends) during that time, the combination of significantly increased cash holdings and absence of interest-bearing debt, has pushed the company into obscene valuation territories, seldom seen in my career as a value investor in the spirit of Graham and Dodd.

Shareholder Activism in Japan: Ready To Rumble Corporate Japan?

Shareholder activism in Japan is seeing a little renaissance. The Japanese activist Investor Yoshiaki Murakami is a familiar player who was very present between 2000 and 2006. His approach to activism is rather hostile. 

Shareholder Activism in Japan: A Barbarian at The Gate

Shareholder activism is seeing a little renaissance in Japan. Activists have never abandoned Japan completely. But the ones who still sticking around are rather the nice guys. The ones not being very vocal about their intentions, but rather dialoguing with the management behind the scene.

Kabuki Theatre in a Japanese Board Room

Introduction

Prime minister Abe’s third arrow, which should be better described as a fusillade of thousand needles, is hitting some targets. So far the reforms are mainly shaking up the cosy atmosphere in corporate Japan’s boardrooms. Also it is giving the land of the silent shareholders a so much needed wake- up call, and activism in Japan is seeing a little renaissance once again.

Four and a Half Misconceptions about Investing in Japan

"Several myths about Japan persist. The reality is that Japan has taken its medicine. Companies have been paying a significant real interest rate on their debt - there has been no financial repression." (Peter Tasker)

The J-System (Part Three) - Lifetime Employment

"The nail that sticks up gets hammered down" (Japanese Proverb)

Introduction

Japan's seemingly relentless ascent between 1950 and 1989 from an economy decimated by a devastating World War and towards a global power house in only a few decades stunned many Japan observers in the west.

The J-System (Part Two) - Keiretsu

Introduction

Japan's economic performance after WW II till 1990 was exceptional. Japan managed to rise from a country decimated by a world war to one of the wealthiest nations on earth in only four decades.

The J-System (Part One) - Main Bank

Introduction

Japan's economic performance after WW II till 1990 was exceptional. As measured by per Capita GNP and net holdings of foreign assets, in only three short decades, Japan managed to rise from a country decimated by a world war to arguably the wealthiest nation on earth.

The Little Post about Shareholder Activism in Japan - (Part 3)

"Elements of the traditional Japanese culture are apparent within its corporate environment. It has proven over time to be both beneficial and detriment to creating shareholder value. It remains to be seen what style Japan will adopt form more aggressive western capitalism within its financial market, and what will remain uniquely Japanese." (Brandes)

The Little Post about Shareholder Activism in Japan - (Part two)

Between 2003 and 2008 many "hostile" activist funds, foreign as well as domestic, concentrated their activities on Japan. From an Anglo-Saxon perspective those activities were moderate in extent and quality.

The Little Post about Shareholder Activism in Japan - (Part One)

This post is the first part of a series on shareholder activism in Japan.

"Shareholder activism is a way in which shareholders can influence a corporation's behavior by exercising their rights as owners if they deem the board of directors and/ or the management of a company doing a bad or mediocre job. Although shareholders don't run a company, there are ways for them to influence the board of directors and management. These can range from dialogue with management to voice their concerns about a particular issue to formal proposals that are voted on by all shareholders at a company's annual meetings." (Investopedia)

Corporate Japan doing the right thing - Buying Back its Shares

In the first half of 2013 japanese corporations engaged in share repurchases totalling an amount of 1,78 Trillion Yen. The highest amount since 2005.

Activism in Japan - Sandwiched between Tokugawa 2.0 and Meji Era 2.0

Activism is seeing a little renaissance in Japan.

The most prominent case has been Danile Loebs interference with Sony, demanding a break-up.

"Corporate Governance" im Land der Stillen Aktionäre

Japans Unternehmen gelten kaum als besonders aktionärsfreundliche Gebilde (...) Corporate Governance ist hier nicht zuletzt als amerikanisches Fremdwort bekannt. (...) sukzessiven Auflösung traditioneller Kreuzbeteiligungen gewinnen Fragen der Unternehmenskontrolle mehr und mehr an Bedeutung (...)

Corporate Governance - Astellas Pharma

I've already mentioned that corporate governance is my main concern investing in Japan (click following link on my previews thoughts touching on that matter).

The main problem with japanese equities

The main problem with japanese equities

Although government debt in Japan is of a concern. Also the demographic situation is worryingsome, but to a much lesser extent (bring in your exellently educated women into the workforce Japan!). The main thing troubling me with japanese equities is the corporate governance situation.