Benjamin Graham got rich investing in “net-net” stocks that were selling below their breakup value. Such companies are rare these days—except in Japan, where a surprising number of firms are selling for less than their liquidation value.
Greenbackd, the value-investing site, has had an interesting series of posts on some of the bargains that appear to be available. They include five big companies with market capitalizations of US$1 billion or more. This relatively high number of big cap net-net stocks is extremely unusual because most net-nets are small cap stocks.
So should you invest in apparent bargains such as TV Asahi Corp. or Tokyo Steel Manufacturing Co. Ltd.? You have to worry about Japan’s history of abusing minority shareholders. There is also the problem of large government debt and an aging population. All things considered, though, Greenbackd concludes that Japanese net-nets are worth buying for those investors who can stomach the risks.
Freelance business journalist Ian McGugan blogs for the Financial Post