I like Sato Foods 2814, but recently sold. I still think its very hard to lose with a name like this. Only reason I sold is because they announced a Shareholder benefits program that was pretty generous and as a foreigner, I'm not eligible to receive these. If you own 100 shares, you get 2,000 yen gift card to tully's coffee ever year. Equal to a 1% dividend! I prefer they just pay the 1% dividend instead!
Many thanks ! appreciate the write-up—very insightful. I had a quick question regarding the $3.5B in investment securities—could you clarify what the key components of that are? Also, I was curious about the $1.4B in bankruptcy and rehabilitation—could you provide some context on what that includes?
Securities consist of cross-shareholdings, i.e., shares of their customers. Bulldog Sauce, Yokohama Reito, RaiseNext Co., Ltd., Nissin Foods Holdings Co., Ltd., and Aichi Financial Group Co., Ltd. are the largest positions. If you're new to Japan, this kind of practice is typical, and one of the goals of the TSE reforms is to dismantle it.
The bankruptcy costs all stem from the 2009 scandal. Sato Foods sued the directors who got them into the mess and won, but the directors declared bankruptcy and avoided paying the company back. That seems to be the gist of it. Anyway these 'assets' are already written off, so I don’t see this as material to the thesis—albeit an interesting curiosity.
"This is why I hold this stock as part of a basket of net-nets. Yet, investing in net-nets can result in good returns over time even without catalysts. "
I am to late to vote, but I can stress if you could continue writing about net-nets, that would certainly make for the most interesting reading!
Interesting thesis. How do you calculate market cap of ¥8.6B? Seems like they have 9,167,460 shares outstanding as of last fin report they issued and also per Tokyo Stock Exchange site? At 2,310 yen, market cap is closer to 21B which is still intriguing but definitely not a screaming bargain.
What your looking at is the total outstanding shares. But 5 million are held by the company itself after previous buybacks and this gift. So around 4 million are left. Not cancelling shares is typical in Japan. It’s more clear if you look at the fillings directly.
I like Sato Foods 2814, but recently sold. I still think its very hard to lose with a name like this. Only reason I sold is because they announced a Shareholder benefits program that was pretty generous and as a foreigner, I'm not eligible to receive these. If you own 100 shares, you get 2,000 yen gift card to tully's coffee ever year. Equal to a 1% dividend! I prefer they just pay the 1% dividend instead!
I still think this name does fine going forward
Yep, hard to disagree with this one. I’d much prefer a dividend, but I still see it as a net positive.
1) It’s already attracting attention from retail investors.
2) It shows that management is at least thinking about the stock price on some level.
On a separate note, I wonder what you think of the shareholder register?
Hikaru Tsushin increasing position is a positive! This is a solid name though, I don't think you lose here
Many thanks ! appreciate the write-up—very insightful. I had a quick question regarding the $3.5B in investment securities—could you clarify what the key components of that are? Also, I was curious about the $1.4B in bankruptcy and rehabilitation—could you provide some context on what that includes?
Securities consist of cross-shareholdings, i.e., shares of their customers. Bulldog Sauce, Yokohama Reito, RaiseNext Co., Ltd., Nissin Foods Holdings Co., Ltd., and Aichi Financial Group Co., Ltd. are the largest positions. If you're new to Japan, this kind of practice is typical, and one of the goals of the TSE reforms is to dismantle it.
The bankruptcy costs all stem from the 2009 scandal. Sato Foods sued the directors who got them into the mess and won, but the directors declared bankruptcy and avoided paying the company back. That seems to be the gist of it. Anyway these 'assets' are already written off, so I don’t see this as material to the thesis—albeit an interesting curiosity.
"This is why I hold this stock as part of a basket of net-nets. Yet, investing in net-nets can result in good returns over time even without catalysts. "
I am to late to vote, but I can stress if you could continue writing about net-nets, that would certainly make for the most interesting reading!
Interesting thesis. How do you calculate market cap of ¥8.6B? Seems like they have 9,167,460 shares outstanding as of last fin report they issued and also per Tokyo Stock Exchange site? At 2,310 yen, market cap is closer to 21B which is still intriguing but definitely not a screaming bargain.
What your looking at is the total outstanding shares. But 5 million are held by the company itself after previous buybacks and this gift. So around 4 million are left. Not cancelling shares is typical in Japan. It’s more clear if you look at the fillings directly.