| |
| |
 |
|
Portfolio Construction
- Long term strategic holdings
A portfolio is comprised of a relatively few number of stocks (approx. 30-40),
the majority of which are strategic, long term core stock holdings (80%), which
are held for 2 to 3 years. The remaining stocks are tactical holdings (more focused
on short term factors) which are usually held for six months to a year.
All are high growth stocks trading on "reasonable" PE multiples generating
good cashflow and having well capitalized balance sheets.
- Realization of return over the long term
By sector, overweighting is given to those companies that are exploiting Japan's
service and retail/distribution transformation.
This portfolio construction style has resulted in superior investment returns,
lower turnover, lower transaction costs, and lower volatility except in times
of overall market collapse.
- Risk Control
Both the Buy discipline and Sell discipline (see below) are integral parts
of the risk control process. Close monitoring of business fundamentals helps
to limit stock specific risk. However due to the concentrated nature of portfolios
both in terms of number of stocks and concentration to 'New Japan' sectors, there
will be periods when performance will be very marked or divergent contributing
to high volatility of returns relative to the benchmark returns.
|
| |
| Features |
| Capture the immediate investment potential in well recognized
and well capitalized Japanese companies which have high profit growth and reasonable
PE multiples |
| Provide active value added portfolio management based on
ongoing fundamental company analysis with particular attention paid to projected
earnings growth at good relative value |
| Overweighting high growth sectors (i.e., service and retail/distribution)
that are a part of the New Japan's service, consumption, and distribution revolution |
| Underweighting higher risk or volatile sectors (e.g., electronics,
commodities) |
| Focus on long term, strategic stock picking at the expense
of tactical, short term stock picking, thus enabling low turnover and a concentrated
portfolio |
| No currency hedging |
|
Buying Discipline
| |
From an ongoing analysis of approximately 100
companies gained via Mr. Shiozumi's extensive information network, stocks are
screened: first for high profit growth past, present, and future (+20% recurring
profit growth); and secondly for theme exposure to marketing concepts that exploit
a New Japan.
After thorough screening, the team visit high potential companies and interview
competitors before a buy decision is made. |
Selling Discipline
| |
Mr. Shiozumi regularly reviews: stock price vs.
a preset target; PE multiple vs. profit growth; any significant deterioration
in fundamentals as well as company management changes; competitive information
that may result in a loss of “edge”; and general business environment
to assess any changes that impact upon company sales and profits. If one or more
factors of this review process is unsatisfactory, selling takes place. |
back to the top |
|
|
|
