Tokyo Deep Value

Japanese stocks are the last great deep value trade on earth. Rock solid balance sheets. Monster cash flows. Dirt cheap prices. I find them and buy them

[Tokyo Deep Value @TokyoDeepValue]

Japanese stocks are the last great deep value trade on earth. Rock solid balance sheets. Monster cash flows. Dirt cheap prices. I find them, trade them, and do it all over again. Follow for the best deep value plays in Japan nobody else is talking about.

[Tokyo Deep Value @TokyoDeepValue]

A Japanese company's boss just bid for its shares at 57.53% below the market price.

Daikokuya Holdings, ticker 6993.

The offer: ¥31 a share.
The close before it: ¥73.

The seller lined up is the parent, S Bank, backed by a Keystone Partners fund. It owns 64.38% and wants out.

The buyer: a company funded by the CEO, Katsuhiro Shimano, and an equipment maker called Tokyo Wells.

About ¥15 billion. The tender runs November 10 to December 8. The stock stays listed.

The board supports the deal.

Somebody wanted out badly enough to take 42% of the market price.

[Tokyo Deep Value @TokyoDeepValue]

This is why I cheat on my wife with women at Soap Land and not Chinese women

[Kalshi @Kalshi]

BREAKING: Nvidia stock plunges nearly -5% as images of Jensen Huang and his Chinese spy lover surface

35% chance Jensen leaves as CEO before 2028

[Tokyo Deep Value @TokyoDeepValue]

A Japanese company just offered to buy another company at more than double its share price, and the target says nobody asked first.

Ikuyo, an auto parts maker, wants more of Muraki.

The offer: ¥3,000 a share.
Muraki's last close before the news: ¥1,458.
That's a 105.76% premium.

Ikuyo already owns 17.01%. It wants to get to 50.1%.

Muraki says it wasn't told in advance.

The stock hit its daily limit the same afternoon, at ¥1,758.

The bid still needs Muraki's board. It's targeted to start in late April 2027.

In Japan, the hostile bid used to be a scandal. Now it's a press release.

[Tokyo Deep Value @TokyoDeepValue]

Japanese companies leaving the stock market this week:

Shobunsha, maker of the Mapple travel guidebooks. The president's family is buying it out at ¥752 a share.

Hobu, a strawberry company in Hokkaido. The founder's company is buying it at ¥1,140 a share, 15.04% above its last close of ¥991. About ¥520 million in total.

Both tender offers run November 9 to December 21.

Hobu delists January 1, 2027 no matter what.

The guidebook company and the strawberry farm decided they don't need the stock market anymore.

[Tokyo Deep Value @TokyoDeepValue]

Toyota is buying back its own shares from four insurance companies.

At a discount.

The price: ¥2,725 a share. That's 10% below Wednesday's close of ¥3,028.

Toyota also raised its total buyback limit to ¥1.3 trillion. The stock closed Thursday at ¥3,533.

The sellers: Mitsui Sumitomo Insurance, Tokio Marine, Sompo Japan and Aioi Nissay Dowa. About 108.8 million shares, around ¥300 billion.

They're selling at a price about 23% below Thursday's close.

For decades, Japanese companies held each other's shares as a sign of friendship.

Now the friends are leaving, and they're leaving cheap.

[Tokyo Deep Value @TokyoDeepValue]

June 29, 1994. Almost 2,000 Japanese companies held their annual meetings on the same day.

More than 10,000 police were sent out to watch.

The reason was the sokaiya, racketeers who threatened to disrupt meetings unless companies paid them.

Before a 1982 law, there were an estimated 6,500 of them. After it, about 1,000. By 2023, about 150.

Japanese companies scheduled all their meetings together so the gangsters couldn't attend them all.

The shareholders couldn't either. That was the other effect.

[Tokyo Deep Value @TokyoDeepValue]

As of August 10, there were 109 companies listed in Japan whose net cash was worth more than their entire market value.

Net cash here means current assets minus all liabilities. Ben Graham's net-net test.

36 of them had a market cap under ¥5 billion.

18 had net cash worth more than 1.5 times their price.

That last group is where I'm spending my week.

Names next week. Follow so you don't miss them.

[Tokyo Deep Value @TokyoDeepValue]

I'll admit something.

I took a four-hour train to Takamatsu to attend the shareholder meeting of a company that makes rope.

I was the only person under 60.

I asked one question, about the cash pile.

The chairman thanked me for my "valuable opinion" and moved on to the next agenda item.

On the way out, an employee handed me a bag with a towel, a pen and a pamphlet about rope.

Best ¥14,000 I ever spent.

[Tokyo Deep Value @TokyoDeepValue]

One small Tokyo stock, in three prices:

¥1,699: where Broadmedia closed on December 9, 2025.

¥2,200: what Asset Value Investors offered in a partial tender offer a year ago, about 29% more.

¥2,500: what an investment vehicle of Nippon Sangyo Suishin Kiko offered on October 29 to take the whole company private. The board supports it.

AVI's funds hold 40% and have agreed to sell.

That's about 47% above where it started last December.

Sometimes an activist makes money by making the company impossible to ignore.

[Tokyo Deep Value @TokyoDeepValue]

Overheard on the last train out of Shinbashi:

Salaryman 1: "Our company has more cash than it's worth on the stock market."

Salaryman 2: "Is that good?"

Salaryman 1: "Nobody upstairs has asked."

Salaryman 2: "What happens if somebody asks?"

Salaryman 1: "Then we form a committee to study the question until I retire."

[Tokyo Deep Value @TokyoDeepValue]

What some of Japan's famous companies did first:

Sumitomo: a copper refinery in Kyoto, opened in 1590 by a 19-year-old.

Yamaha: a reed organ, 1887. Torakusu Yamaha repaired a broken one, built his own, and carried it about 250 km to Tokyo to be judged.

Nintendo: hanafuda playing cards, founded in Kyoto on September 23, 1889.

The Tokyo Stock Exchange: first trading day, June 1, 1878.

Japan's best companies are mostly second acts.

[Tokyo Deep Value @TokyoDeepValue]

The math nobody does on a Japanese takeover:

Wednesday, October 21: circlace, a small company on Tokyo's Growth market, closes at ¥885.

The next day, Hillhouse, an investment firm based in Singapore, offers ¥2,020 a share in cash to take it private.

¥2,020 divided by ¥885 is about 2.28.

That's a premium of about 128%, overnight.

The offer runs from October 23 to December 7.

This is why you own the boring little stock nobody talks about. Eventually somebody else does the math for you.

[Tokyo Deep Value @TokyoDeepValue]

Myth: futures trading was invented in Chicago.

Fact: merchants in Osaka were trading rice futures at the Dojima Rice Exchange by about 1710. It was licensed in 1697.

In 1735 the shogunate set a floor price for rice in Osaka: 42 momme of silver per koku.

The shogun was nicknamed the Rice Shogun.

Japan had a futures market, a price floor and a market-obsessed ruler more than a century before the Chicago Board of Trade existed.

[Tokyo Deep Value @TokyoDeepValue]

Yoshiaki Murakami made his first investment at age 10. ¥1 million, into a brewery.

He spent 16 years as a bureaucrat at Japan's trade ministry, MITI.

In 1999 he started his own fund. By 2006 it managed about $5 billion.

In 2007 he was convicted of insider trading. The prison sentence was suspended on appeal.

October 2026: a fund in his group, together with his daughter Aya Nomura, discloses 5.06% of TV Asahi Holdings. They want bigger dividends, buybacks, asset sales, even a management buyout.

Twenty-seven years later. Same playbook. Next generation.

[Tokyo Deep Value @TokyoDeepValue]

In 2007 an American fund called Steel Partners tried to buy Bull-Dog Sauce, a Tokyo condiment maker.

Steel owned 10.25%. It bid ¥1,584 a share, then ¥1,700.

Bull-Dog responded with a poison pill. 83.4% of shareholders voted for it.

Japan's Supreme Court upheld it that August.

Steel got paid cash for its warrants and went away.

That was the old Japan. Today foreign funds are the largest shareholders in famous Japanese companies, and boards answer the phone.

[Tokyo Deep Value @TokyoDeepValue]

My daughter asked why I wake up at 2am.

I said the Tokyo stock market is open.

She asked what I'm waiting for.

I said a 78-year-old man in Nagoya to decide to pay a dividend.

She asked how long I've been waiting.

I said three years.

She asked if he knows I'm waiting.

He does not.

[Tokyo Deep Value @TokyoDeepValue]

Kongo Gumi was founded in the year 578 to build a Buddhist temple in Osaka.

It survived 40 generations of the same family, the samurai era, World War II and the 1989 crash.

What finally took it down was ¥4 billion of debt from the real estate bubble. In 2006 a bigger builder absorbed it.

1,428 years. Taken out by a balance sheet.

Net cash matters.

[Tokyo Deep Value @TokyoDeepValue]

Americans this week:

Debating whether Alphabet's $51.4 billion quarter of capex will pay off.

Me this week:

Reading the yuho of a 40-employee Japanese parts maker that spent ¥80 million on a new press machine and paid for it in cash.

We are not the same.

[Tokyo Deep Value @TokyoDeepValue]

For every ¥100 you pay for this Japanese manufacturer, ¥41 is net cash sitting in the bank.

Market cap: ¥3.83 billion.
Cash: ¥2.04 billion.
Short-term debt: ¥0.46 billion.
Net cash: about ¥1.58 billion.

It trades at 0.51x book.

So you pay about ¥2.25 billion for the factory, the machines, the customers and decades of know-how.

Meanwhile Alphabet just spent $51.4 billion on capex in one quarter and the stock fell 10%.

[Tokyo Deep Value @TokyoDeepValue]

3 cheap Japanese stocks I'm looking at this week:

- Small manufacturer. 0.51x book. Net cash = 41% of market cap.

- Electronic components maker. 0.90x book. ¥1.69 billion net cash.

- Auto accessories wholesaler. Just got an unsolicited bid at a 106% premium.

Tickers tomorrow.