What to like about investing in Japan

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In a recent article by IBD about the attractiveness of foreign stocks, Dennis Stattman (a manager of the $60 billion BlackRock Global Allocation — ticker: MDLOX), commented that there is a lot to like in Japan. Dennis cited upward earnings revisions; corporate managers starting shareholder-friendly policies; and attractive valuations. He believes Japan is in the very early stages of a multi-year bull market. Continue reading

No Stock Market as Undervalued and as Misunderstood as Japan

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Japanese stocks have done very well in 2012 and of course the weakening yen has increasingly more to do with the rally; deservedly so for the people of Japan. Otherwise, and unless Japanese stocks continue to do well, they could become neglected once again. Not necessarily a bad thing for value investors, and regardless of the rally to-date, valuations in Japan remain extremely compelling. Allow me to introduce my book, Investing in Japan: No stock market is as undervalued and as misunderstood as Japan, just released this month. Continue reading

Japanese stocks ‘fairly’ undervalued

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The author’s intent is not to be misleading, but rather to be as frank as possible, regarding the longstanding debate of whether or not Japanese stocks are truly undervalued. In short, the answer is  no. I no longer believe Japanese stocks are undervalued, not to the extent that I once did, and not to the lengths that some pundits and money managers try to make a case for. In fact, I would argue that Japanese stocks may best be described as being closer to fair value instead of being deeply undervalued. I mean Japanese stocks, for the foreseeable future, may be destined to be “undervalued” by traditional metrics, but fairly valued by the market and in relation to the economy. Continue reading

Thoughts on the N225, EAFE and EWJ

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Thoughts on the Nikkei 225 Stock Average:

Japanese stocks have been rallying over the past several weeks and the benchmark Nikkei 225 Stock Average is now at a 2-month-plus high; the N225 recouped 14,000 last Friday in spite of thin trading of late, due to the extended holiday that continues through this Tuesday. Short-term, sentiment has improved drastically as buyers have emerged to pick up stocks with severely depressed prices and the kind of valuations that excite Warren Buffett; Continue reading

Ranking of Japanese Mutual Funds by Assets in the U.S. – Oct. 2007

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Since posting the monthly ranking of Japanese Mutual Funds in the U.S. (by net assets) for September, the latest data as of month-end October, show the top-2 funds, both from Fidelity, registered growth in net assets, especially the Fidelity Japan fund (FJPNX; +$30M, to $1.78B). However, the T. Rowe Price Japan fund (PRJPX) saw another decline in net assets, by about $11.5M, to $405.6M, after losing around $26M in Sept. Also, Matthews Japan (MJFOX) lost about $22M in net assets to $213.4M, after holding steady at $235.1M in Sept. The biggest change was a $52M decline in DWS Japan Equity (FJESX) net assets to $34.36M. Click through for the ranking table. Continue reading

Similarity Across Top-10 Holdings of Largest Japanese Mutual Funds in U.S.

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This post probably about does it for now in terms of looking at the Japanese mutual fund universe in the U.S. For reference, also see:Cash Inflows/Outflows in Sept. for Largest Japanese Mutual Funds in U.S. and Ranking of Japanese Mutual Funds in the U.S..

Among the 8-largest funds reviewed in each of the two prior posts, there were a number of similar holdings among the top-10 components of each fund. This is not exactly surprising since (1) these companies are the largest in Japan based on market-cap and (2) most/all of them had posted big gains through early 2006, making them must-haves for portfolio managers. If these large cap blue chips rally in Q4 and into 2008, then these funds will likely do quite well. If not, it could be a continuation of the frustration felt in much of 2007.

Toyota is the top holding for four of the eight-largest funds and also held in two other funds. Nintendo is the second-largest holding in three funds. Mizuho Financial Group is the third-largest holding in three funds and also held in another fund. Sumitomo Mitsui Financial Group is the second-largest holding for two funds and is held in three other funds. Mitsubishi UFJ Financial Group and Sony are each the largest holding of one fund and held in another. Canon is held in three funds. Nomura Holdings and Komatsu are held in two funds. Sumitomo Metal Industries is held in four funds.

Cash Inflows/Outflows in Sept. for Largest Japanese Mutual Funds in U.S.

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Yahoo! Finance has updated the net assets for mutual funds, reflecting amounts as of the end of September. Yesterday, the list and ranking of Japanese mutual funds in the U.S. had data as of the end of August. Changes for the 8-largest funds are listed below with the new net asset value and % change in {}. Notice $30M, or about a 2% inflow for #1 (by size) Fidelity Japan (FJPNX). On the opposite end, T. Rowe Price Japan (PRJPX) had almost $30M of outflow, or a 6.5% decline.

[Ticker] [Fund Name] [Net Assets ($m)]
1. FJPNX – Fidelity Japan – 1,720.000 {$1,750.000, +1.7%}
2. FJSCX – Fidelity Japan Smaller Comp. – 807.070 {$806.070, -0.1%}
3. PRJPX – T. Rowe Price Japan – 446.090 {$417.140, -6.5%}
4. SJPNX – Japan S – 364.060 {$370.230, +1.7%}
5. MJFOX – Matthews Japan – 235.080 {$235.080, unchanged}
6. SPARX – SPARX Japan Institutional – 85.470 {$85.890, +0.5%}
7. FJESX – DWS Japan Equity S – 85.360 {$83.360, +1.2%}
8. HFJAX – Henderson Japan-Asia Focus A – 57.450 {$56.270, -2.1%}

Ranking of Japanese Mutual Funds in the U.S.

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It shouldn’t come as a surprise that Japanese mutual funds listed in the U.S. are struggling, given the mostly weak performance of Japanese equities year-to-date and a weak yen. There are 44 Japanese mutual funds according to Yahoo! Finance. Among them, only a few are trading positive for the year and by a very little amount at that. Below is a list of the funds, ranked by net assets, as of Aug. 31, 2007. Two Fidelity funds have the most net assets ($1.72B and $807M), which has been the case for a while. The Fidelity Japan Smaller Companies (FJSCX) fund had been closed, but is apparently open again to new investors. Click to continue reading and view the ranking table. Continue reading