When a common stocks sells persistently below its liquidating value, then either the price is too low, or the company should be liquidated. Two corollaries may be deduced from this principle: Corollary I. Such a price should impel the stockholders to raise the question whether it ......
As value investors, we have constantly been searching for that fifty cents for a dollar. Scrutinizing balance sheets, searching for companies trading at a minimum of 33% discount to NCAV coupled with minimal debt. With the case of Japan, there are an abundance of such stocks, where companies can be trading even at 50% discount to NCAV with zero debt.
For many people, Japan is a enigma. After a 20-year bear market, coupled with a decade of deflation, there is huge consensus that Japan is a value trap. Despite the fact of so many cheap stocks, it is extremely difficult to profit from them.
