Thread by @marketplunger1, COVID has caused global indices to post poor YTD returns:

COVID has caused global indices to post poor YTD returns:

- FTSE 100: -26%
- Nikkei 225: -1.37%
- DAX: -12.14%

Yet one index is just crushing it:

- Japan's Mothers Index: +37%

It's one of the most under-fished corners of the market.

Let's learn

https://macro-ops.com/japans-mothers-index-an-under-fished-reservoir-of-growth-value/

Japan's Mother’s Index: An Under-fished Reservoir of Growth & Value | Macro Ops

Our job as investors is simple. We fish where the fish are. More importantly, we want to fish where other fishermen aren’t casting their lines. What good is inefficiency if every investor finds the...

https://macro-ops.com/japans-mothers-index-an-under-fished-reservoir-of-growth-value/

1/ What is The Mothers Index (MOS)?

- The name stands for "Market of the high-growth and emerging stocks.

- It's venture capital-type companies in public markets.

- These are SMALL biz ( @iancassel enters chat) w/ average market cap of $10M USD

- Dominated by ST traders

2/ What You Can Buy There

What gets me excited about the MOS is the type of companies available.

Most companies on the MOS involve one of the following:

- Telemedicine
- Robotics
- Ecommerce
- Artificial Intelligence
- Teleworking
- Cloud Servicing

No wonder its up 40%!

3/ Management Teams Have Skin In The Game

Another thing that surprised me was the amount of insider ownership in these smaller Japanese companies.

It's normal to see 30-40% of shares owned by the founder/CEO.

In fact, most of the companies listed are run by founder-led CEOs

4/ *Very* Little Analyst Coverage / Institution Ownshp

Thanks to $10M average market cap, many companies fly under the radar of analysts / institutions.

Here's some stats:

- 61.7% analyst coverage on TSE
- 33% coverage on MOS

What's left is short term trading (Robinhood-y)

5/ That's Great, But Why Now?

Japan's population is aging ... fast.

To compete on the global stage Japan needs to innovate. They have to find a way to get more done with less people.

As such, technology will be a HUGE part of that initiative.

This = major sec. tailwinds

6/ Recap of Mothers Index

Before we dive into four industries RIPE for innovation, let's review why we love the Mothers Index over the next 5-10 years:

a) Exciting industries w/ tailwinds
b) Low share count
c) Small cap
d) Founder-led w/ skin in game
e) Little analyst coverage

7/ Four Industries Ripe For Disruption

Investing in companies on the MOS = going long Japanese disruption.

There's main areas we want to bet on:

- Retail
- Financial Services
- Healthcare

We'll highlight the problems, potential solutions and companies trying to do it now!

8/ Disrupting Retail

Problems:

- Highly fragmented
- Low margins b/c zero scale
- Expanding floor space but no IT invest
- Small average transactions w/ high overhead

Solutions:

- Reduce store size
- New IT, not legacy
- Understanding cust. wants

Biz Idea: Smaregi (4431)

9/ Disrupting Fin. Services

Problems:

- Low customer loyalty
- Risk-averse client base
- Little online footprint
- 2012, >50% assets in cash

Solutions:

- Back-end automated software
- Develop better online banking solutions
- Better cust. analytics

Biz idea: Freee (4478)

10/ Disrupting Healthcare

Problems:

- Long patient stays = economic losses
- Lack of secondary care facilities
- Avg. stay is 3x > than other countries

Solutions:

- Electronic medical records
- Connecting hospital tech
- Hospice
- PT clinics

Biz idea: Japan Hospice (7061)

11/ Must-Follows in Japan

If any of the above sounds interesting, you *must* follow these peeps:

- @willschoebs
- @WillThrower3
- @janeo1934
- @japan_value

I was told @TheStalwart would enjoy reading this. Joe, if you're reading, thank you!

/Fin

https://collective.securechkout.com/

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