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Jim Grant on Japanese Net-nets

May 27, 2012 | About:

I’ve mentioned my interest in Japanese stocks several times. With that in mind, I found this Jim Grant video (posted on lonestarvalue) really interesting. Grant discusses a company he bought in below NCAV, how mgmt ignored his request for a mgmt buyout, and how it was eventually taken private at 0.9x book value after almost a decade of waiting.

However, I do have one question. The blogger lists it as a cautionary tale, and Grant seems extremely frustrated by the whole process.

But Grant also mentions the following

  • The company pays a 3%+ dividend
  • The company compounds book at least 5% every year
Whenever I do the math w/ those two facts, plus buying in below NCAV, I get an absolutely outstanding return. As a matter of fact, it’d be hard to put in numbers that don’t result in a mid-teens+ CAGR on the investment.

So is it really a cautionary tale? Or a tale of how buying with a huge margin of safety + having patience leads to outstanding long term result.


Rating: 3.9/5 (14 votes)

Comments

AlbertaSunwapta
AlbertaSunwapta - 4 years ago    Report SPAM
Did you account for beginning and ending exchange rates?
newhigh
Newhigh premium member - 3 years ago    Report SPAM
Can someone post a long term chart of Sanko Rikagaku before the mangement buyout? Interesting to see how Jim Grant fared over the years?

Investing in Japan can be a minefield for those who don't know what they are doing.

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