Barron's Online is running a short interview with Abhay Deshpande, manager of the First Eagle Global Fund. First Eagle is a value outfit most known for their association with Jean-Marie Eveillard.
Deshpande reports liking Japan, long an area of interest to value players:
If you go to Japan, for instance, not only are these companies not
aggressively financed, but they tend to be almost the opposite, and
they have way too much cash. These industrial companies that you
mentioned, mostly we have them in Japan -- SMC and Fanuc are two of our
largest holdings in that space. SMC and Fanuc both have about 50% or
60% of their market cap represented by net cash. So, yes the operating
conditions will be tough, earnings will be under pressure. But we
assumed that to be the case when we bought the stocks in the first
place, and even under the assumption of 40% declines in operating
profit, because of so much cash on the balance sheets the stocks were
still very cheap.
More about the appeal of Japanese stocks:
Well, until about six months ago all we really did was spend time in
Japan because that was the cheapest market. Even now, three-quarters of
the Japanese market trades for below book value. Almost 20% of the
Japanese market trades for less than net working capital. To me it is a
value hunter's paradise. Over the last couple of months everything has
come down around the world, almost uniformly 40% or 50%. So, literally
what used to be a kind of dull uninteresting world for value investors
became -- almost overnight -- interesting.
Away from Japan, he likes American Express and Sanofi-Aventis (both trading on the NYSE).
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