Active Investing in Japan

For those interested in better understanding the yen carry trade, please take a look at a recent short essay we published on our main website (see item #4), entitled “The Yen Carry Trade Explained”, or see below.

Intro excerpt:

The yen carry trade is once again a hot topic in financial news, as the U.S. subprime induced liquidity crunch has rapidly spread fear of a collapse in bond and credit markets across the globe. Similar to the market turmoil this past late-February and early-March, Japanese equities have taken the worst beating [...]

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Thursday 8/30 Tokyo trading recap:
* Nikkei 225 Stock Average: +140.99 (+0.9%) to 16,153.82
* Nikkei 225 futures Osaka: +150 (+0.9%) to 16,200, Singapore (SGX) 16,190, Chicago (CME) 8/29 — 16,375
* TOPIX: +10.68 (+0.7%) to 1,568.23; Advancers 1,096 x decliners 491 (unch. 135), New highs 10 x new lows 65; 28/33 sectors posted gains
* Jasdaq: +4.33 (+0.2%) to 1,898.34

Wednesday 8/29 Tokyo trading recap:
* Nikkei 225 Stock Average: -274.66 (-1.7%) to 16,012.83, more than 400 point drop in morning session
* Nikkei 225 futures Osaka: -220 (-1.35%) to 16,050, Singapore (SGX) 16,050, Chicago (CME) 8/28 — 15,950
* TOPIX: -27.05 (-1.7%) to 1,557.55; Advancers 166 x decliners 1,490 (unch. 66), New highs 6 x new lows 188; all 33 sectors registered losses
* Jasdaq: -11.95 (-0.6%) to 1,894.01

Tuesday 8/28 Tokyo trading recap:
* Nikkei 225 Stock Average: -13.90 (-0.1%) to 16,287.49
* Nikkei 225 futures Osaka: -40 (-0.25%) to 16,270, Singapore (SGX) 16,305, Chicago (CME) 8/27 — 16,300
* TOPIX: -3.16 (-0.2%) to 1,584.60; Advancers 654 x decliners 941 (unch. 127), New highs 3 x new lows 63; 13/33 sectors posted gains
* Jasdaq: -0.64 (-0.0%) to 1,905.96
* Yen restrengthens back to the mid 115 level against the US dollar

Market recap for Monday 8/27
* Nikkei 225 Stock Average: +52.42 (+0.3%) to 16,301.39, climbed above 16,500 in A.M. session; lightest trading day since January 4
* Nikkei 225 futures Osaka: +70 (+0.4%) to 16,310, Singapore (SGX) 16,315, Chicago (CME) 8/24 — 16,495
* TOPIX: +1.91 (+0.1%) to 1,587.76; Advancers 924 x decliners 674 (unch. 128), New highs 7 x new lows 27; 19/33 sectors posted gains
* Jasdaq: +10.83 (+0.6%) to 1,906.60

Market recap for Friday 8/24
* Nikkei 225 Stock Average: -67.35 (-0.4%) to 16,248.97
* Nikkei 225 futures Osaka: -120 (-0.7%) to 16,240, Singapore (SGX) 16,200, Chicago (CME) 16,495
* TOPIX: -5.96 (-0.4%) to 1,585.85; Advancers 673 x decliners 919 (unch. 134), New highs 4 x new lows 28; 27/33 sectors declined
* Jasdaq: +9.04 (+0.5%) to 1,895.77

Thursday 8/23 recap:
* Nikkei 225 Stock Average: +415.68 (+2.6%) to 16,316.32
* Nikkei 225 futures Osaka: +450 (+2.8%) to 16,360, Singapore (SGX) 16,415, Chicago 8/22 — 16,155
* TOPIX: +46.92 (+3.0%) to 1,591.81; Advancers 1,514 x decliners 158 (unch. 54), New highs 4 x new lows 25; 32/33 sectors posted gains
* Jasdaq: +19.40 (+1.0%) to 1,886.73
* Yen weakens towards 116 per US$
* BoJ pauses again at 0.5%, rate hike chance of less than 50% in Sept. according to Credit Suisse measure
* Notice the bullish N225 futures trading in Singapore; also notice the demand for domestic issues via TOPIX gain and A/D
* Yen carry trade is still alive, for now, as rate spread is too wide to ignore

* Nikkei 225 Stock Average: -0.70 (-0.0%) to 15,900.64
* Nikkei 225 futures Osaka: +40 (+0.25%) to 15,910, Singapore (SGX) 15,895, Chicago (CME) 8/21 — 15,830
* TOPIX: -4.99 (-0.3%) to 1,544.89; Advancers 679 x decliners 940 (unch. 107), New highs 2 x new lows 77; 11/33 sectors posted gains
* Jasdaq: -11.05 (-0.6%) to 1,867.33
* Yen weakens slightly (0.3%) against US$, last at 114.82 and 0.5% vs. euro to 154.93

* Nikkei 225 Stock Average: +168.86 (+1.1%) to 15,901.34, intra-day high of 16,101.64
* Nikkei 225 futures Osaka: +140 (+0.9%) to 15,870, Singapore (SGX) 15,865, Chicago (CME) 8/20 — 15,805
* TOPIX: +26.31 (+1.7%) to 1,549.88; Advancers 1,369 x decliners 288 (unch. 66), New highs 2 x new lows 142; all 33 sectors posted gains
* Jasdaq: +0.16 (+0.2%) to 70.66
* Yen last trading near 114.4/$, up about 0.8%

The latest Forbes magazine (Sept. 3, 2007, or read online at: “So Long, Warren“) discusses something very interesting: several solid mutual funds, which have been longtime devotees of Warren Buffett, are selling shares, with one fund liquidating its entire position.

Sequoia Fund (SEQUX) sold $650m since the beg. of 2005, lowering its BRK.A weighting to 26%, from 35%. Forbes notes Sequoia lightened its position for (1) diversification purposes and (2) due to Buffett’s age (turning 77 on Aug. 30).

Weitz Value (WVALX) and Weitz Partners Value (WPVLX) decreased their positions in BRK.A by a few tenths of a percent from 7.6% each. Although, it appears the Partners Value fund could be down into the 5% range. Weitz reportedly sold some shares in order to buy other holdings.

Davis Financial Fund of Davis Advisors is the one that sold its entire position in BRK.A, for $49m with a $20m profit.

Berkshire Hathaway (BRK.A) had a nice afternoon recovery to gain 1.9% (+$2,200.00) to close at a record: $120,700.00. Safe to call this a “flight to quality” with a mountain of cash? BRK.A is up more than 10% in August and by a similar amount for the year, far better than the 5% gain for the Dow Jones Industrials and 2% gain for the S&P 500.