Update autumn 2016: The newsletter ended following its sixth quarterly issue during summer 2016. From inception, 5 best-ideas were published, along with 3 watch-list ideas that were included in the sixth and final publishing. During the life of the newsletter, value and smaller-cap equities were generally out of favor as was the broader Japanese equity market. While there were interim gains of 20%+ with some ideas, presently some of them are available at 20% or greater discounts to their price at publishing, which reflects tremendous, depressed, valuations. See below for the characteristics and targets for investment ideas. For investors looking to generate smaller-cap or micro-cap Japanese equity ideas and/or have case study-like write-ups of Japanese equities, you may be interested in purchasing the six back issues. By completing payment (US$150.00) via the PayPal link (you can choose to use your PayPal account or pay by credit card; no PayPal account needed), you will receive an email within 24 hours that contains original PDF copies of each back issue (6 total). Be sure to include your email address when purchasing or email email@example.com so I have your email. Please, no sample requests and no refunds will be processed.
The Uguisu Value newsletter launched in January 2015, following 30%-plus returns (40%+ yen-denominated) in the two preceding years in a portfolio concentrated on smaller-cap Japanese stocks. The editor, Steven Towns, publishes his best equity idea each quarter. Thoroughly researched in Japanese, Steven’s equity write-ups have characteristics that include being severely mispriced (profitable companies that are neglected, obscure and/or at an inflection point), having upside of at least 2x and very limited downside supported by strong balance sheets (in some instances with valuable hidden assets) and historically and currently profitable operations, often without English-language filings and little or no Japanese analyst coverage. The maiden issue featured a Japanese micro-cap stock with 200%+ upside (market cap: >$50M, <$300M).
With deep conviction and heavy concentration, Uguisu Value aims to continue compounding at double-digit rates. 2015 proved to be a challenging year for realizing share price increases despite some double-digit interim gains for the Uguisu portfolio companies– nevertheless, three of the four best ideas increased their book value and subsequently traded at even more attractive valuations.
The Uguisu Value newsletter has been reviewed and is endorsed by:
John Mihaljevic, CFA, and Oliver Mihaljevic of The Manual of Ideas
Guy Spier, Aquamarine Capital —“Excellent thinking and ideas for investing in Japan.”
Nate Tobik, Oddball Stocks —“Steven Towns is an expert on Japanese small caps. If you want exposure to cheap and safe Japanese stocks with a value-bent then Steven’s letter is the ultimate resource.”
Japan-focused portfolio performance net of commissions and fees versus select benchmarks:
2013: 34.1% (40.1% in yen-denomination) | TSE-2: 44.2% | Jasdaq: 87.1% | Nikkei 225: 56.7% |
iShares MSIC Japan ETF (EWJ): 24.2% | WisdomTree Japan Hedged (DXJ): 38.1%
2014: 32.6% (49.1% in yen-denomination) | TSE-2: 23.0% | Jasdaq: 1.9% | Nikkei 225: 7.1% |
iShares MSCI Japan ETF (EWJ): -6.4% | WisdomTree Japan Hedged (DXJ): -1.9%
2015: 12.9% (13.3% in yen-denomination) | TSE-2: 8.6% | Jasdaq: 10.1% | Nikkei 225: 9.1% |
iShares MSCI Japan ETF (EWJ): 8.99% | WisdomTree Japan Hedged (DXJ): 6.9%
*Uguisu Value 2015 portfolio excluding legacy (pre-January 2015) holdings: -11.4%
Note: Uguisu Value is most appropriate for micro and smaller-cap stock focused fund managers/advisors, family offices, and individual investors that have an equity allocation of at least US$100,000 due to some companies having minimum trading units of up to $10K. Target investments will often be $100M+ in market capitalization, but could be as low as $50M and may be as high as a few billion dollars. In addition, having a brokerage that offers trading in Japan is crucial since it’s the editor’s intent to exclusively focus on Japanese stocks. The editor uses Interactive Brokers for its low-cost trading fees but note that there are additional monthly fees charged for stock quotes. Other options for U.S. based investors include E*Trade, Fidelity and Schwab.