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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& #39;s Mothers Index: +37%
It& #39;s one of the most under-fished corners of the market.
Let& #39;s learn
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- FTSE 100: -26%
- Nikkei 225: -1.37%
- DAX: -12.14%
Yet one index is just crushing it:
- Japan& #39;s Mothers Index: +37%
It& #39;s one of the most under-fished corners of the market.
Let& #39;s learn
1/ What is The Mothers Index (MOS)?
- The name stands for "Market of the high-growth and emerging stocks.
- It& #39;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
- The name stands for "Market of the high-growth and emerging stocks.
- It& #39;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%!
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& #39;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
Another thing that surprised me was the amount of insider ownership in these smaller Japanese companies.
It& #39;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& #39;s some stats:
- 61.7% analyst coverage on TSE
- 33% coverage on MOS
What& #39;s left is short term trading (Robinhood-y)
Thanks to $10M average market cap, many companies fly under the radar of analysts / institutions.
Here& #39;s some stats:
- 61.7% analyst coverage on TSE
- 33% coverage on MOS
What& #39;s left is short term trading (Robinhood-y)
5/ That& #39;s Great, But Why Now?
Japan& #39;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
Japan& #39;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& #39;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
Before we dive into four industries RIPE for innovation, let& #39;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& #39;s main areas we want to bet on:
- Retail
- Financial Services
- Healthcare
We& #39;ll highlight the problems, potential solutions and companies trying to do it now!
Investing in companies on the MOS = going long Japanese disruption.
There& #39;s main areas we want to bet on:
- Retail
- Financial Services
- Healthcare
We& #39;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)
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)
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)
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& #39;re reading, thank you!
/Fin
https://collective.securechkout.com/ ">https://collective.securechkout.com/">...
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& #39;re reading, thank you!
/Fin
https://collective.securechkout.com/ ">https://collective.securechkout.com/">...
