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First Eagle U.S. Value Portfolio Manager Kimball Brooker on the great opportunities for investors in Japan.
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You go let's get to -- a whole different part of the psyche here how do you go from this.
Remember this that horrific.
Tsunami in Japan that just wiped out half of that entire coastline.
And partially the economy of this country of Japan how do you go from that.
To the land of the rising sun once again Japan's gross domestic product -- -- of that shrank a revised.
Half a percent in the second quarter and while many investors are.
And really shying away from the region because of the video we just showed you our next guest is running toward it.
Kimball broker -- portfolio managers of first eagle overseas funds where.
Nearly 30% of that fund is invested in Japan -- here in a Fox Business exclusive.
And of course we -- respect for Steagall -- He and the art who has been of course the man at the Helm of all of this.
If you add to your position after the tsunami in Japan.
We -- selectively I mean I think that our our approach of first eagle is.
One in which we really need to understand the businesses that were investing in and importantly we need to make sure that were.
Buying businesses and appropriate discount to to their intrinsic value.
Again it's not your entire fund but it is a huge chunk of it and people tend to have such short memories of course and and that's what I want to bring you in here to talk about that to really look at the opportunities in your toppled five holdings are Japan.
That's right that's right we've as you mentioned that after a twenty year period in the ways and that stock market drop from 1991 to today of 60%.
We see some of we have found some babies have been thrown out with the bath water.
I think that time.
Assess how you know it's not going to be a third decade that you know what people called the lost decade it really ended up being two decorous that were lost in Japan.
After their economic implosion -- how are -- social work well.
Japan remember it is there's Japanese stock market this is a market stocks.
And so many businesses that we found in Japan are really global businesses some some our.
Not doing much business in Japan.
That dominate a particular niche of the.
Quote global economic that's very -- -- to have a vote yes and in effect from from your first pick here is one that while in Japan.
Dominates globally and that's show mono and a -- something I tweeted this -- said who wants to guess -- bike parts company in everybody wanted to wait and hear what you have to say about it edition mono.
Two point six billion in sales there.
-- to they just omits market.
They have depending on on the component it's between a six or 7% market share and so.
I'd say that's a that's a pretty pretty solid market position.
She mono is a business.
We're also very strong balance sheet which is important to us we're we're very.
Focus on avoiding permanent impairments of capital and -- and that comes worth financial leverage and that's not the case where -- wanna.
And unlike many Japanese companies should -- has been very very good to its shareholders were capital.
Allocation perspective that bought back almost 40% of -- stock since we've rebounded so.
So we feel good about -- -- Happens to be traded in Tokyo.
But really a global global business multinational business.
Should motto is there and as we said -- you have almost 30% of the fund in Japan you've got nearly 28% in Europe.
All of the gyrations that are happening in Europe so much so that the focus is completely -- it's the beginning of August got to European banks.
And the concerns there you're still pretty bullish on Europe.
Well you know we we look at every company on its own merits in the portfolio is very much built.
Company parent company.
We don't on any of the European banks and I will say that president away from the worst thing -- amounts and it has been a really tailored to markets in Europe it's been the banks.
That have been driving the indices down many of the franchise businesses.
That we down.
You know haven't been haven't been to impact.
We you've got one called and forgive me but get the pronunciation wrong part case are partially -- -- -- RJ -- holdings which is cement industrial materials.
Ever heard of this company yes it's a little bit off the beaten track it's not -- covered by by Wall Street but it's very interest and tell us.
It's a holding company and I think many of its holdings you probably will have heard of because.
If they own bits and pieces of blue chip businesses -- what -- tall Pernod Ricard which makes us look vodka for example.
So to have a with that 67 -- different holdings that they have and and -- -- -- The piece is traded him at a substantial discount to the they're going to -- at a discount to sum of the parts.
We also feel that the many of the parts are trading at September substantial discounts to our excellence in terms of balance -- -- double -- I want people to know we are lucky to have -- here because He is a highly regarded fund manager doesn't get out there a lot so we're thrilled you're here the whole entire hour we.
