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Author: TMFDoraemon Big red star, 1000 posts Old School Fool CAPS All Star Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 448  
Subject: Re: Japanese opportunities - GG Team Date: 3/18/2011 11:45 AM
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Mav,

Outside of TEPCO -- and you don't want to touch TEPCO, because most of the liability rests with the operator of a reactor and not the manufacturer in Japan -- most Japanese stocks have actually recovered a large part of their losses and are within 5% or 10% of their price pre--quake or even higher, because of liquidity injections by the BoJ and the rally brought on by the recent currency intervention.

I'll use Hitachi as an example since you brought it up and its pretty instructive because many stocks have traded in a similar way. Hitachi is currently about 20% off its 52-week high, but earlier in the week it was closer to 35% off of its high. Of course, that was Tuesday when we saw successive explosions at Fukushima Daiichi and the wind was blowing towards Tokyo. The current share price has us back where we were in December, but that that time the view was that the recovery was accelerating, which is why the shares rose.

Hitachi chart: http://stocks.finance.yahoo.co.jp/stocks/chart/?code=6501.T&...

The homebuilders in Japan, such as Sekisui House, actually rallied on the first trading day after the quake, but then fell on Tuesday and Wednesday with everything else and then rallied back to just about pre-quake levels to close the week. Based on what we know so far, that's about right, I think. I think people are way ahead of themselves on homebuilders. The infrastructure is so damaged in the areas that need most of the housing demand that its that piece, the infrastructure, that will need to go in first.

Sekisui House chart: http://stocks.finance.yahoo.co.jp/stocks/chart/?code=1928.T&...

Outside of Japan, the uranium producers such as CCJ and SXRZF.pk have been hit hard and are still down. They will most likely recover eventually, though there will be some bumps along the way depending on what comes from the nuclear reviews different countries are doing and, of course, how the situation in Fukushima evolves. If you're comfortable with volatility, my guess is that buying here probably works out well, but I'm not ready to make a rec just yet.

Ultimately, I think we'll have to be patient here and let the situation develop. When the Kobe quake hit the market fell hard at first, recovered, then fell gradually over about 3 months. So just because the market has recovered now doesn't mean we won't see other opportunities. And I'm ready to start scanning for those opportunities as they pop up -- I already have a few screens setup and ready to go for the Japan exchanges (Tokyo, Osaka, Jasdaq).

I'm going to close with this, and it's not directed at you personally. I've closed with similar comments on a few other boards where the same question has been asked. If we get any opportunities here I very much hope it's not because hundreds of thousands or millions are suffering additional pain. I'm ok with profiting on overdone or irrational panic where the situation is clearly going to improve. This sums up how I feel about the quake and the tsunami -- it's tragic, but Japan will bounce back. However, if things are really getting worse and out of hand (think Fukushima, again) my focus will be on the human side first, then I'll start looking for silliness in the market.

Best,

Nathan
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