{"id":28072,"date":"2012-03-08T11:09:54","date_gmt":"2012-03-08T16:09:54","guid":{"rendered":"http:\/\/countingpips.com\/fx\/2012\/03\/08\/investing-in-greek-and-japanese-multinational-companies\/"},"modified":"2012-03-08T11:09:54","modified_gmt":"2012-03-08T16:09:54","slug":"investing-in-greek-and-japanese-multinational-companies","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2012\/03\/08\/investing-in-greek-and-japanese-multinational-companies\/","title":{"rendered":"Investing in Greek and Japanese Multinational Companies"},"content":{"rendered":"<div align=\"left\"><script type=\"text\/javascript\">\ntweetmeme_style = 'compact';\n<\/script><br \/>\n<script type=\"text\/javascript\" src=\"http:\/\/tweetmeme.com\/i\/scripts\/button.js\"><\/script>\n<\/div>\n<div><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-27957 \" title=\"Investing in Greek and Japanese Multinational Companies\" src=\"http:\/\/www.investmentu.com\/wp-content\/uploads\/2012\/03\/greek-japanese-multinational-companies.jpg\" alt=\"Investing in Greek and Japanese Multinational Companies\" width=\"220\" height=\"220\" \/><\/p>\n<p>Economic conditions in Greece and Japan have scared away many investors, leading to some promising contrarian value plays.<\/p>\n<\/div>\n<p>You\u2019d think that I would have a pretty complete understanding of Japan\u2019s stock market&#8230;<\/p>\n<p>After all, I studied in Tokyo for a year as an exchange student, went on to study the Japanese language for a year at Harvard, and then went back to Tokyo as a graduate research fellow at Keio University\u2019s School of Commerce. My first two jobs in banking and institutional sales were also centered on Japan.<\/p>\n<p>Still, it puzzles me why Japan\u2019s economy and leading high-quality global stocks have been in a funk for more than two decades.<\/p>\n<p>Treading water would be a polite way to put it\u2026<\/p>\n<h2><strong>Japan Lost Its Mojo<\/strong><\/h2>\n<p>Since Japan\u2019s banking crisis and real estate bubble burst in 1989-1990, its economy has barely grown and its market is trading at only 25% of its peak.<\/p>\n<p>Japan has clearly lost its mojo, and investors are tired of trying to guess when Japan will get it back. Many have simply given up on Japanese stocks altogether.<\/p>\n<p>This seems odd to me, since, as I\u2019ve written many times, where a company is based isn\u2019t very important. On the other hand, where a company gets its revenue and profits is most important.<\/p>\n<p>Take Japan\u2019s major companies, such as <strong>Sony<\/strong> (NYSE: <a href=\"http:\/\/www.google.com\/finance?q=SNE\">SNE<\/a>), <strong>Toyota<\/strong> (NYSE: <a href=\"http:\/\/www.google.com\/finance?q=TM\">TM<\/a>) and <strong>Canon <\/strong>(NYSE: <a href=\"http:\/\/www.google.com\/finance?q=CAJ\">CAJ<\/a>). These powerhouses get the vast majority of their revenue from outside of Japan. The same goes for <strong>Siemens<\/strong> (NYSE: <a href=\"http:\/\/www.google.com\/finance?q=SI\">SI<\/a>) or <strong>BMW<\/strong> (OTC: <a href=\"http:\/\/finance.yahoo.com\/q?s=BAMXY.PK\">BAMXY.PK<\/a>) of Germany. Investors need to look to where these companies get their sales and profits, not where their headquarters are located.<strong><\/strong><\/p>\n<h2><strong>Japanese Multinationals At Bargain Prices\u2026<\/strong><\/h2>\n<p>Once you realize this, the opportunities will be clear.<\/p>\n<p>When, say, the Japanese market is down and out\u2026 you can move in and scoop up the best Japanese multinationals at bargain prices.<\/p>\n<p>This is exactly what is happening so far in 2012.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-27959\" title=\"This chart shows the performance of the iShares MSCI Japan Index over the past year, beginning March 2011 and ending March 2012.\" src=\"http:\/\/www.investmentu.com\/wp-content\/uploads\/2012\/03\/ishares-msci-japan-index-nyse-ewj.jpg\" alt=\"iShares MSCI Japan Index (NYSE: EWJ)\" width=\"541\" height=\"352\" \/><\/p>\n<p>What\u2019s fueled this rebound in big Japanese stocks? Value.<\/p>\n<p>The Nikkei was trading close to book value and smaller Japanese stocks, such as the companies within the <strong>iShares MSCI Japan Small Cap ETF <\/strong>(NYSE: <a href=\"http:\/\/www.google.com\/finance?q=SCJ\">SCJ<\/a>), are still trading below book value.<\/p>\n<h2><strong>So What\u2019s Next?<\/strong><\/h2>\n<p>Now let\u2019s look at the more extreme situation in Greece. Russell Shorto of <em>The<\/em> <em>New York Times <\/em>summarizes the grim situation\u2026<\/p>\n<p>One quarter of all Greek businesses have gone out business since 2009. About <em><span>half<\/span><\/em>\u00a0of those under age 25 are unemployed. Greeks pulled one-third of their money out of bank accounts and are stashing it under the mattress. The suicide rate even increased by 40% in the first half of 2011.<\/p>\n<p>It\u2019s not a pretty picture, which is why the Greek market has been pummeled, trading 90% below its 2000 highs.<\/p>\n<p>You might be thinking, \u201cI wouldn\u2019t touch this market with a 10-foot pole.\u201d<\/p>\n<p>But the money masters think the opposite\u2026<\/p>\n<p>What they\u2019re asking is: \u201cWhat about the big Greek shipping companies not tied to the economy of Greece, but rather to global trade?\u201d<\/p>\n<p>Ah ha!<\/p>\n<p>Take <strong>Diana Shipping<\/strong> (NYSE: <a href=\"http:\/\/www.google.com\/finance?q=DSX\">DSX<\/a>), the strongest of the Greek shippers. And a leader in dry bulk shipping of bulk cargoes such as iron ore, coal and grain. Diana is trading at about eight times earnings and is a major beneficiary of the rising global trade \u2013 90% of which is transported by sea.<\/p>\n<p>Diana is the best of the breed, with operating margins of 45% and a $395-million cash stockpile. The stock is trading at only 63% of book value and about eight times earnings. I also like that almost 18% of outstanding stock is held by insiders and 43% is owned by institutional investors. As usual, don\u2019t forget to have a trailing sell stop in place.<\/p>\n<p>Were not counting on it, but any Greek debt deal will send the Greek market soaring. Let\u2019s call it an undeserved bonus.<\/p>\n<p>When markets are out of favor for political or economic reasons, consider it an opportunity for a killing, rather than a red flag.<\/p>\n<p>[<strong>Editor\u2019s Note:<\/strong> As regular readers of Carl can tell, he\u2019s chock full of great investment ideas in emerging and frontier markets. That\u2019s one of the reasons he\u2019s been sought after as a consultant for high-profile entities such as the U.S. Treasury and the Asian Development Bank.<\/p>\n<p>But there\u2019s only so much valuable information he can give away in a free newsletter. In less than two weeks, Carl will be sharing his most current and profitable investment ideas in a private, closed-door meeting with some of the world\u2019s greatest financial minds. Leading experts such as Alexander Green and Rick Rule.<\/p>\n<p>Luckily, we\u2019ve found a way for you to get in on this privy investment intelligence from any location in the world that has an internet connection. To find out how you can get a sneak peek into this private meeting, <a href=\"http:\/\/oxfordclub.com\/video\/iu\/IUlive.php?code=WIUPMA05&amp;n=IUP\">click here<\/a>.]<\/p>\n<div>\n<a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=5m2n3yx2GEE:zHVkFn2Lc-8:yIl2AUoC8zA\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=yIl2AUoC8zA\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=5m2n3yx2GEE:zHVkFn2Lc-8:V_sGLiPBpWU\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=5m2n3yx2GEE:zHVkFn2Lc-8:V_sGLiPBpWU\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=5m2n3yx2GEE:zHVkFn2Lc-8:qj6IDK7rITs\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=qj6IDK7rITs\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=5m2n3yx2GEE:zHVkFn2Lc-8:gIN9vFwOqvQ\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=5m2n3yx2GEE:zHVkFn2Lc-8:gIN9vFwOqvQ\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=5m2n3yx2GEE:zHVkFn2Lc-8:F7zBnMyn0Lo\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=5m2n3yx2GEE:zHVkFn2Lc-8:F7zBnMyn0Lo\" border=\"0\"><\/img><\/a>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/InvestmentU\/~4\/5m2n3yx2GEE\" height=\"1\" width=\"1\" \/><\/p>\n<p>Article by <a href=\"http:\/\/www.investmentu.com\/\" target=\"_blank\">Investment U<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"<p>Economic conditions in Greece and Japan have scared away many investors, leading to some promising contrarian value plays. You\u2019d think that I would have a pretty complete understanding of Japan\u2019s stock market&#8230; After all, I studied in Tokyo for a year as an exchange student, went on to study the Japanese language for a year &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/www.investmacro.com\/fx\/2012\/03\/08\/investing-in-greek-and-japanese-multinational-companies\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Investing in Greek and Japanese Multinational Companies&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-28072","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/28072","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=28072"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/28072\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=28072"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=28072"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=28072"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}