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Japan Value Equity

Through fundamental, bottom-up stock selection, the investment team looks for changes that act as catalysts which will lead to a revaluation of the stock price.
Investment Philosophy

We seek to generate high returns through a long-term, contrarian approach that identifies undervalued companies likely to undergo transformation.

The mature nature of the Japanese economy makes its stock market highly cyclical, allowing seasoned investors to take advantage of repeated patterns. In this type of market, a consistent application of contrarian value-oriented investment is the most effective way to generate excess returns. We aim to benefit from opportunities in which stocks are revalued by the market.

Examples of undervalued companies that are expected to undergo transformation include:

  • Those in “crisis mode” where poor standing in the market compels management / employees to make fundamental changes
  • Those whose mindset is changing toward enhancing corporate value
  • Those with attractive potential that may be priced into the stock price in the future

Companies that offer goods and services needed by society will generally have business continuity, offer downside protection, and are likely to possess a turnaround catalyst, even if they are temporarily undervalued.

Our research seeks to identify such companies that demonstrate these three attributes.

 

Experienced Team with Long Track Record

Shigeru Aoyagi is the Team Leader of the Value Strategy Fund Management Team. He started his career with Nikko Securities in 1986, then joined Nikko International Capital Management (now Nikko Asset Management) in 1995. He has been the lead portfolio manager of the Japan Value Equity Strategy and its primary decision maker since its inception in 1996.

The Value Strategy Fund Management Team has extensive experience in Japanese equities and includes four portfolio managers and three value analysts (one of whom concurrently works as a portfolio manager). The Value Team is also supported by Nikko AM’s robust equity research platform, consisting of a team of experienced sector analysts.

Key Characteristics
Decades-long Track Record
Turn-around Catalyst Driven Investment
Dedicated Value Analyst Team
3-5 Year Investment Horizon
Focus on Turn-Around Catalysts

We seek to understand whether poor stock performance is due to a structural or cyclical issue, and invest in companies that we believe are underperforming due to structural issues, but possess a turn-around catalyst—what we call "Phase 1" stocks, which are the main focus of the strategy and comprise around 60–70% of the portfolio*.

“Phase 2” stocks are companies that resolve their structural issues in Phase 1 and start to generate positive cash flow in Phase 2. They comprise approximately 30–40% of the portfolio*.

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Phase 1 Stocks:

Stocks underperforming due to structural issues, but have a turn-around catalyst

Focus on the catalyst to turn stock price around:
  1. Structural change due to the company’s own efforts (supply side catalyst)
  2. Structural / environmental change in the market (demand side catalyst)

Does the company have products / services / human resources that are needed by the market to capture new demand?

Phase 2 Stocks:

Stocks underperforming due to cyclical issues

Assessment of type of cycle and position within cycle:
  1. Cyclical factor due to economic cycle
  2. Cyclical factor due to product life cycle
  3. Cyclical factor due to time lag between upfront investment and recovery
  4. Cyclical factor due to business cycles unique to the company
*Weightings of Phase 1 and Phase 2 stocks are subject to change, depending on market conditions.
Investment Process
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Lead Portfolio Manager
shigeru-aoyagi-profile
Shigeru Aoyagi
Portfolio Manager

Team Leader and a portfolio manager on the Value Strategy Fund Management Team. Shigeru Aoyagi started his career with Nikko Securities in April 1986, then joined Nikko International Capital Management (now Nikko Asset Management) in March 1995.

He has specialized in managing the Japan Value Equity strategy for institutional investors since February 1997 and was appointed the Team Leader in April 2010.

Important Information

The funds mentioned are Singapore registered funds approved for sale or purchase in Singapore. By proceeding, you are representing and warranting that you are either resident in Singapore or the applicable laws and regulations of your jurisdiction allow you to access the information.

The information on this website is not intended to be an offer, or a solicitation of an offer, to buy or sell any product or service to any person in any jurisdiction where such offer, solicitation, purchase or sale would be unlawful under the laws of such jurisdiction.

This website may contain links to the website of certain overseas affiliates of Nikko Asset Management Asia Limited (“Nikko AM Asia”). However, providing such links should not be considered as offering or solicitation by Nikko AM Asia of any product or service of its affiliates to any person.

This website is purely for informational purposes only with no consideration given to the specific investment objective, financial situation and particular needs of any specific person. It should not be relied upon as financial advice. The mention of individual securities, sectors, regions or countries within this website are for illustration purposes only and does not imply a recommendation to buy or sell. You should seek advice from a financial adviser before making any investment. In the event that you choose not to do so, you should consider whether the investment selected is suitable for you. Investments in funds are not deposits in, obligations of, or guaranteed or insured by Nikko AM Asia.

Past performance or any prediction, projection or forecast is not indicative of future performance. The Funds or any underlying funds may use or invest in financial derivative instruments. The value of units and income from them may fall or rise. Investments in the Funds are subject to investment risks, including the possible loss of principal amount invested. You should read the relevant prospectus (including the risk warnings) and product highlights sheet of the Funds, which are available and may be obtained from appointed distributors of Nikko AM Asia or our website (www.nikkoam.com.sg) before deciding whether to invest in the Funds.

The information contained herein may not be copied, reproduced or redistributed without the express consent of Nikko AM Asia. While reasonable care has been taken to ensure the accuracy of the information as at the date of publication, Nikko AM Asia does not give any warranty or representation, either express or implied, and expressly disclaims liability for any errors or omissions. Information may be subject to change without notice. Nikko AM Asia accepts no liability for any loss, indirect or consequential damages, arising from any use of or reliance on this website.

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