Japanese shareholder activism's "best days are ahead," says Asset Value Investment CEO Joe Bauernfreund, as big names like Elliot Managment enter the market.
For years, the Japanese market has stood out as a cheap relative to other global markets in the world, lacking some kind of clear catalyst for undervaluations to correct themselves, he explained.
However, the Japanese market is unlike anywhere else in the world, Bauernfreund stressed. One cannot simply copy and paste the strategies found in the West into Japanese culture. But many of these companies deserve to operate at a discount because of their poor growth records. AVI looks for companies that have got "a good track record of growing their profits year by year… We expect companies to have some weakness in profits, but the general trend should be of rising profits. So that gives us a quality edge," he said.