Entered Sasakura Engineering (TYO:6303)

I am aware that I may be overenthusiastic about the Japanese net-nets, but I’ve still picked another one. This time Sasakura Engineering. The company is engaged in the development of desalination plants, heat exchangers etc.

It’s a quantitative pick. There are many things to like from a net-net perspective, strong balance sheet, reducing share count, cyclic business. From my limited knowledge it would seem that the company could benefit from some macro trends – growing population and urbanization.

The company provides some limited IR info in English. Trading at NCAV of 0.5.

The share has a rather large lot size of 1 000 shares, so it’s limited liquidity. Unlocking value in this company could be as simple as reducing the lot size to 100 shares (common for many Japanese stocks).


Entered Kawasumi Laboratories (TYO:7703)

Opened a small position in Kawasumi Laboratories. KL manufactures and sells medical devices relating to hemodialysis, blood banking, infusion therapy etc. The devices are mainly of a more simple and disposable nature.

It’s not wide moat medtech business, but more of a commodity market. However, the company has a very low valuation, is trading below NCAV and have a strong balance sheet. The company has been profitable during the last years, although poor margins as with most Japanese net-nets. Dividends looks ok and the company performed a 5% share repurchase last year.

Entered at ~0.63 of NCAV or 660¥.

Market cap 14 400 M¥ (126 MUSD)
Total cash 15 501 M¥
Total liabilities 5 637 M¥
P/S 0.54
P/B 0.40



Entered Sino Agro Food Inc (SIAF-ME)

Sino Agro Food is conglomerate of different food and agriculture related companies. The company is listed in the US (OTCMKTS:SIAF) and in Norway (SIAF-ME). The US share is trading at a slight discount to the Norwegian listing.

Chinese companies listed in Europe is a sorry bunch, ripe with frauds and dodgy accounting. Knowing this I still opened a small position in Sino Agro Food, mainly on a quantitative basis.

The share is trading at a large discount to net current assets, which is not uncommon for Chinese companies listed abroad (notable exceptions are HK and Singapore). Singo Agro Food has received some press coverage and management acknowledges the low share price and are planning various corporate actions to increase share holder value. This is a more risky pick, as the balance sheet is not as strong etc.

The company provides lots of IR material so there is information to dig into if someone is interested.

Entered at ~NCAV 0.4 (33 NOK).

Portfolio performance 2016

2016 was the first full-year of the bargain hunting strategy.  The total return for the portfolio was 20.7 % (vs -3.95 % in 2015). This return includes fees and FX. The average share return was 14.6 %, which may interest anyone considering NCAV or similar valuation metrics.


Open Positions        
Company BOY/Entered Dividends EOY Return
Kingboard Copper Foil Holdings Ltd 0.2 0.28 40.00%
Oriental Watch Holdings Limited 1.14 0.0045 1.5 31.97%
Sanshin Electronics 870 10 1128 30.80%
Renesas Easton Co Ltd 458 12 524 17.03%
Boom Logistics Limited 0.092 0.105 14.13%
CosmoSteel Holdings Limited 0.116 0.124 6.90%
Charle Co Ltd 481 25 475 3.95%
Magnificent Hotel Investments 0.174 0.007 0.173 3.45%
Emerson Radio Corp 0.99 1.01 2.02%
Nireco Corp 600 605 0.83%
NIPPON ANTENNA CO., LTD 576 21 555 0.00%
Swing Media 0.61 0.01 0.59 -1.64%
KK Chuokeizai-Sha Holdings 432 10 413 -2.08%
Tiemco Limited 517 12 487 -3.48%
EIDAI KAKO CO., LTD 301 8 255 -12.62%
NICHIWA SANGYO CO., LTD. 252 5 214 -13.10%
Coventry Group Ltd. 1.15 0.89 -22.61%
QC Holdings, Inc. 1.46 0.74 -49.32%
Closed Positions        
Company BOY/Entered Dividends Exited Return
PC Partner Group Ltd 0.69 0.035 1.68 148.55%
I-O DATA DEVICE, INC. 549 15 1175 116.76%
MultiClient Geophysical 0.74 0.71 -4.05%

Exited MultiClient Geophysical (MCG)

On the one year follow up of MCG I decided to exit the position. At the time of purchase MCG had a large cash position and was trading at around net-cash. During the last quarter the company invested much of the cash in data libraries, which I don’t have any strong opinions on. What is clear though is that the stock no longer has any good margin of safety and is no longer  a net-net.

I exited at about the same price I entered. A slight profit (+6%) after FX and commission.


Exited PC Partner Group Ltd (HKG:1263)

I sold the position in PC Partner Group this week, as the share is now trading at around NCAV. It may still have ways to go, but rules are rules…

I entered at 0.75$ and got one dividend of 0.035$. The sale price was 1.68$ so the total gain landed at circa 120 % in HK$. I bought the share amidst the China stock-market chaos in mid 2015.

After a lot of volatility it’s nice to be able to close a position with gains.