No single ticker was named. Japan ETFs are one way for retail investors to get exposure. Not a recommendation.
Structural governance reforms unlock Japanese value
The guest argued that Japanese equities offer unusual value driven by internal, structural corporate governance reforms that are forcing better capital allocation.
The argument
While Japanese companies have historically suffered from poor capital allocation, the guest noted a structural shift driven by domestic institutions like METI, the Tokyo Stock Exchange, and local pension funds. This homegrown pressure has led to a significant increase in share buybacks, dividend payouts, and shareholder activism.
The thesis, stress-tested
✓ What validates it
- ✓Continued record levels of share buybacks and dividend hikes by Japanese firms
- ✓Increased domestic pension fund allocations to local equities
▸ Risks discussed
- ▸Slow execution of reforms by conservative Japanese corporate boards
- ▸Persistent weakness of the Japanese yen eroding dollar-denominated returns
Hear it yourself
"So Michael, as I was saying, is the portfolio manager of the Third Avenue Value Strategy portfolios, including the Third Avenue Value Fund and related separately managed accounts. He also leads the Third Avenue international value strategy. He's a principal of the firm and serves as a member of the Third Avenue's management committee. He joined Third Avenue in 2000 and began working with international team to identify investment opportunities in the wake of the Argentine crisis in 2001. I cannot think anything more fun than that. I'm already jealous thinking about that part of our conversation."