Thanks for the writeup! I have gotten a bit hesitant with net-nets and SOTP bets. Money is easy to lose, e.g. invest with bad returns, offset operating losses or "mistakes" like value destructive acquisitions. It only means something if we as shareholders can get it out of the business. And we can only get it out if the management is very shareholder friendly and wants to give it to us (selling assets and buying back stock, special dividends). That is rarely the case. So if they would consider e.g. a special dividend from the bandai plot sale, that would be a strong signal for me that they understand what their job as managers (not owners) really is: improve shareholder returns by running a great business and monetising assets. It's not very reassuring that they don't care about their P/B and cheap shares even though they have assets and are profitable. Either they don't know what to do with their assets (invest, buybacks, dividends), or they don't think reinvestment for growth makes sense. Both options make me worry that they are not great capital allocators. And this brings me back to the beginning: I don't trust bad capital allocators with a lot of money that I can't get to.
Oh another thing SVEN, take a look at NORTHM (I know we just spoke about not liking SOTP) but I do hold NORTHM because their investment securities = their market cap, and I think their business will manage to turn around.
You can find a short write up if you search for NORTHM on Twitter. It’s a big position for me
Appreciate how you update your thinking on the fly. Keep us posted as you learn more. Management remaining opposed to buybacks at such a low fraction of NCAV is grounds for naming, shaming, solitary confinement and a diet of American gas station sushi.
Thanks for the writeup! I have gotten a bit hesitant with net-nets and SOTP bets. Money is easy to lose, e.g. invest with bad returns, offset operating losses or "mistakes" like value destructive acquisitions. It only means something if we as shareholders can get it out of the business. And we can only get it out if the management is very shareholder friendly and wants to give it to us (selling assets and buying back stock, special dividends). That is rarely the case. So if they would consider e.g. a special dividend from the bandai plot sale, that would be a strong signal for me that they understand what their job as managers (not owners) really is: improve shareholder returns by running a great business and monetising assets. It's not very reassuring that they don't care about their P/B and cheap shares even though they have assets and are profitable. Either they don't know what to do with their assets (invest, buybacks, dividends), or they don't think reinvestment for growth makes sense. Both options make me worry that they are not great capital allocators. And this brings me back to the beginning: I don't trust bad capital allocators with a lot of money that I can't get to.
Oh another thing SVEN, take a look at NORTHM (I know we just spoke about not liking SOTP) but I do hold NORTHM because their investment securities = their market cap, and I think their business will manage to turn around.
You can find a short write up if you search for NORTHM on Twitter. It’s a big position for me
I feel you. I’ve come to feel the same way about cheap stocks in general.
I’ve made a lot of money on good companies run well with futures ahead of them. And I’ve paid more than fair prices for that.
Starting to spend more time on misunderstood companies instead of “cheap” companies.
Appreciate how you update your thinking on the fly. Keep us posted as you learn more. Management remaining opposed to buybacks at such a low fraction of NCAV is grounds for naming, shaming, solitary confinement and a diet of American gas station sushi.
100%!
Ha! I lived in Chuo-ku for 12 years. I'm extra interested now.
Wow maybe you can go meet management and suss them out!
I'm no longer there, unfortunately, otherwise that would be on the cards.
Thanks for writing this up in any case.
Pleasure!