Proud to be a value investor

Technical analysis

When I started my career at Daiwa Securities America’s US equity department in 1996, my first client was a portfolio manager of a mid-sized Japanese insurance company. He was a believer in technical analysis.  My sales calls with him were quite odd along the following line:

Me: Good morning, Mr. Sato (not true name, of course), I think regional banks like Bank of Boston (Ticker: BKB) are attractive investments because deregulation will drive consolidation. BKB may be acquired at a large premium. 

Mr. Sato: That sounds interesting.  Let me see the chart of BKB.  Hmm…. I think the A wave is over and the B wave just started. Don’t you think, Yasu-san?

Me: (I have no idea what these waves mean) Yes, yes, I think so, too. Definitely B. So, that means we should….

Mr. Sato:  BUY.  Definitely buy.  Buy me 5,000 shares of BKB at market, Yasu-san.  

Me:  Yes, sir.  Buy 5,000 shares of BKB at market.  Let me call you right back.  

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Where do ideas come from?

As an analyst, most of my time is spent deepening my understanding of our portfolio of companies and researching potential new investment candidates.  But every once in a while, I meet with investors in our fund. They always ask “how do you come up with new ideas?”  After my deer-in-headlights stun wears off, I usually give a rambling, incoherent monologue and it is a miracle if they don’t pull out their funds immediately.

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Our view on engagement

Engagement is the new buzz word in Japanese fund management. Firms such as Neuberger Berman[1] and UBP[2] have launched new engagement funds, and many institutional investors have created dedicated departments to focus on engaging with companies.  We are often asked if we are an engagement fund because we have a concentrated portfolio. But for us, engaging with a company is just one of our tools, and not the end goal of the fund.

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If You Absolutely Must Sell, Please Give Me a Call


An Early Lesson

The day after my college graduation, my roommates and I were packing up to leave. One roommate was preparing to drive halfway across the country to home and deciding what would fit in his car. He asked if I would make an offer for his loose change jar.

I had seen him depositing pocket change into the jar for the last 4 years each time he came home for the day. I had no idea how much money was in there, but offered $20, thinking that was a safe bet. He accepted. Two days later I took it to a Coinstar machine at my local supermarket, which converts your coins into bills for a 10% fee, and walked out with $180 in my pocket.

This was a powerful lesson in the value of taking the other side from a forced seller, even under conditions of uncertainty.

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Remembering Mr. Arnhold

Working with Mr. Arnhold

Mr. Henry H. Arnhold died on Friday August 23rd, 2018.  He was 96 years old.  I met Mr. Arnhold in 1998 when I joined Arnhold and S. Bleichroeder, Inc., a predecessor firm of First Eagle Investment Management.  Around that time, he was not actively involved in day-to-day management of the company, and instead focused on managing some family accounts and DEF Associates.  DEF was comprised of a fund of George Soros’ Quantum funds, in-house funds, some outside funds, and some direct investments.  At that time, Quantum funds were not taking new capital, but traded on secondary markets.  Some funds traded at huge premiums to their NAV such as Nick Roditi’s Quota Fund, which carried a premium as high as 80%.

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A Trip to Big Tree Country

I recently visited Sequoia and Kings Canyon National Parks in California. I have been fascinated with forests since reading The Hidden Life of Trees , which illuminates the intricate complexity of these ecosystems.

Sequoia is one of the oldest parks in the country and home to the giant trees that have made it famous. Sequoias are the largest organisms in the world and only grow on the western slopes of the Sierra Nevada Mountains at elevations above 4000 ft.

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A Snail’s View on Investing

安 弘一郎

In 1986, my grandfather, Koichiro Yasu (安 弘一郎) wrote a book about the origins of my family and Jyujiya Securities Co. Ltd., (十字屋証券) our family brokerage firm, which was originally started by my great grandfather, Tsunesaburo Yasu (安 常三郎), in 1924. Late in life, Koichiro was diagnosed with liver cancer and knew his remaining life was not long. Instead of going after his bucket list, he wrote a book to share his experiences with other family members and people in the brokerage industry. We privately published the book and distributed it at his funeral (so you won’t find it on Amazon). Read More >