Took a quantitative bet on Sanko Co. Sanko manufactures mechatronics and plastic components for automotbile and IT products.
Low margin business, strong balance sheet. Dividends. Only ~1200 shareholders according to IR info. Entered at NCAV ratio of 0.6 or 460¥.
So UKC hit a valuation of above net current assets a lot sooner than I expected. Not because the share price took of on a rocket, but because the company made large write-downs of receivables and prepayments.
The share has traded up since I took my position, but I feel a bit anxious about the write-downs so I sold. You know “Misfortunes never come singly” – there could be more problems with the books. The need to put together an independent audit committee indicates managerial problems.
Exited at ¥1922, so return of about +17 % in 5 weeks.
I took a small position in GIGM today. It’s a Taiwanese mobile game/IT company listed in the US. The share has been trading at below net-cash valuations for some time.
It’s a quantitative bet, the balance sheet is strong. The underlying business is poor, but cash burn-rate is slow. Some recent inside purchases. No share issues. Trading at net-cash ratio of 0.57.
Not much else to say. This share should obviously be part of a large basket net-net holdings.