We seek to outperform the MSCI Japan Index over a three- to five-year market cycle by investing in a very focused list of Japanese equity securities that we believe offer attractive growth potential relative to price.
We believe that stocks are not fairly valued at all times and that certain stocks whose price-to-cash earnings ratios are low relative to their long-term growth rates will produce superior investment returns.
Our investment process begins by screening a universe of more than 3,000 stocks which includes all stocks on the Tokyo Stock Exchange plus OTC stocks. We conduct qualitative and quantitative analysis on both companies and their relevant industries. Starting with a Price/Cash Earnings to Growth screening, our initial analysis also assesses the impact of currency and other macroeconomic variables on the company’s fundamentals. Detailed company and industry analysis, involving both quantitative and qualitative research, visits with company management, and evaluation of political, regulatory, economic and currency risks narrows the list of attractive stocks. Finally, we look for catalysts that help us determine the appropriate level of confidence in the companies’ growth and justify long-term investment. Such catalysts may include: the introduction of a new product, a corporate rationalization/restructuring, participation in new markets, or a change in regulatory environment. The top 20 –35 stocks in which we have the most long-term confidence are purchased for the portfolio.
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| Other International Equity Strategies | |
