Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

<ul>
<li>The decline in the working-age population is not merely a decrease in the number of workers; it causes a loss of dynamism in society as a whole.</li>
<li>The "5-year rotational use of foreign workers without the assumption of permanent residency," not immigration, is overshadowed by human rights issues.</li>
<li>Besides the high cost of education, an increasing number of people are choosing not to marry, and it is necessary to create a society that respects diverse lifestyles.</li>
</ul>


The decline in the working-age population is not merely a decrease in the number of workers; it causes a loss of dynamism in society as a whole.
The "5-year rotational use of foreign workers without the assumption of permanent residency," not immigration, is overshadowed by human rights issues.
Besides the high cost of education, an increasing number of people are choosing not to marry, and it is necessary to create a society that respects diverse lifestyles.


Behind the Issue of Population Decline Is Also the Issue of Human Rights

<ul>
<li>It's doubtful that if the outcomes of factor analysis of Berkshire Hathaway's portfolio stocks and screened to Japanese stocks would be the stocks that Buffett would want to invest in.</li>
<li>Berkshire Hathaway wouldn't invest in a Japanese company if there were companies in other countries with the same type of business that are more competitive and worthy of investment.</li>
<li>Investors continue to look for companies that few investors are aware of, as stock prices are often high for companies that have competitive advantages and promising future cash flow growth.</li>
</ul>


It's doubtful that if the outcomes of factor analysis of Berkshire Hathaway's portfolio stocks and screened to Japanese stocks would be the stocks that Buffett would want to invest in.
Berkshire Hathaway wouldn't invest in a Japanese company if there were companies in other countries with the same type of business that are more competitive and worthy of investment.
Investors continue to look for companies that few investors are aware of, as stock prices are often high for companies that have competitive advantages and promising future cash flow growth.


Isn't It Too Much to Expect Instantaneous Screening to Yield the Same Shares as Buffett's Approach?

<ul>
<li>It's hoped Buffett's visit to Japan will encourage managers to review their business strategies to develop products with competitive advantage and value, so that more companies can expect sustainable growth.</li>
<li>Companies with low OP Margin will need to rethink their fundamental strategy to raise OP Margin for mid-to-long term, as ROE may only temporarily rise even if cash is reduced.</li>
<li>There are many stocks in Japan with low valuations, but while there are many cash cow companies, there aren't many undervalued stocks that can generate cash flow for sustainable growth.</li>
</ul>


It's hoped Buffett's visit to Japan will encourage managers to review their business strategies to develop products with competitive advantage and value, so that more companies can expect sustainable growth.
Companies with low OP Margin will need to rethink their fundamental strategy to raise OP Margin for mid-to-long term, as ROE may only temporarily rise even if cash is reduced.
There are many stocks in Japan with low valuations, but while there are many cash cow companies, there aren't many undervalued stocks that can generate cash flow for sustainable growth.


If Japan Were Treasure Trove of Value Stocks, Global Investors Would Not Underweight Japanese Stocks

<ul>
<li>Examining ROE contribution requires first reducing cash and raising Asset Turnover and Financial Leverage. Also, regarding stock price appreciation, increasing ROE+DOE, which has higher correlation with TOPIX, will be effective.</li>
<li>Stock performance is correlated with higher foreign ownership and Tobin's q, indicating that overseas investors are also more interested in cash-rich, growth policy, dividend policy, policy-shareholdings, treasury-share retirements, AGM/IR disclosures.</li>
<li>TSE's adoption of P/B, made it easier to compare management capabilities with that of other companies. Managers who can't achieve sufficient stock performance will have to seek help from shareholder-returns.</li>
</ul>


Examining ROE contribution requires first reducing cash and raising Asset Turnover and Financial Leverage. Also, regarding stock price appreciation, increasing ROE+DOE, which has higher correlation with TOPIX, will be effective.
Stock performance is correlated with higher foreign ownership and Tobin's q, indicating that overseas investors are also more interested in cash-rich, growth policy, dividend policy, policy-shareholdings, treasury-share retirements, AGM/IR disclosures.
TSE's adoption of P/B, made it easier to compare management capabilities with that of other companies. Managers who can't achieve sufficient stock performance will have to seek help from shareholder-returns.


Managers Should Consider That "TSE's Request" Has Changed the Rules of the Game

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

TSE Tokyo Price Index TOPIX / Technical Analysis

<ul>
<li>We continue to recommend a tactical overweight to defensives (Staples, Health Care, and Utilities) as the MSCI ACWI (ACWI-US) tests the top-end of our anticipated 2023 trading range at $93.</li>
<li>We also remain overweight Europe, Japan, and India, where a lot more than just defensives continue to outperform.</li>
<li>Actionable Themes: Consumer Discretionary and Defensives, Mainly in Japan and Europe</li>
</ul>


We continue to recommend a tactical overweight to defensives (Staples, Health Care, and Utilities) as the MSCI ACWI (ACWI-US) tests the top-end of our anticipated 2023 trading range at $93.
We also remain overweight Europe, Japan, and India, where a lot more than just defensives continue to outperform.
Actionable Themes: Consumer Discretionary and Defensives, Mainly in Japan and Europe


Remain Overweight Japan, Europe, & India; Buys in Discretionary and Defensives W/ Japan/Europe Focus

Japan

The TOPIX, also known as the Tokyo Stock Price Index, is a capitalization-weighted index of all companies listed on the First Section of the Tokyo Stock Exchange. The index is supplemented by the subindices of the 33 industry sectors. The index calculation excludes temporary issues and preferred stocks, and has a base value of 100 as of January 4, 1968.

TSE Tokyo Price Index TOPIX (TPX INDEX)

Behind the Issue of Population Decline Is Also the Issue of Human Rights

I would like to discuss the issues on the April 16 Nikkei article, "Put a Brake" on Population Decline: Foreign Workers, Husband and Wife...

Metrical Inc

Isn't It Too Much to Expect Instantaneous Screening to Yield the Same Shares as Buffett's Approach?

I would like to discuss the issues on the April 14 Nikkei article, "Follow Buffett's Model and Find 'High-Quality, Undervalued' Japanese Stocks.”

Metrical Inc

If Japan Were Treasure Trove of Value Stocks, Global Investors Would Not Underweight Japanese Stocks

I would like to discuss the issues on the April 12 Nikkei article, "Buffett's divine power is still active in the stock market, and the search for...

Metrical Inc

Managers Should Consider That "TSE's Request" Has Changed the Rules of the Game

I would like to discuss the issues on the April 11 Nikkei article titled "The Reason Why the Stock Prices of "Companies Reluctant to Return...

Metrical Inc

Remain Overweight Japan, Europe, & India; Buys in Discretionary and Defensives W/ Japan/Europe Focus

We continue to recommend a tactical overweight to defensives as $ACWI tests the top-end of our anticipated 2023 trading range at $93. Remain...

Vermilion Research