The team uses a combination of quantitative and qualitative techniques in the search for stocks that are priced below their assessment of intrinsic value.  The first stage is to reduce the Japanese stock universe to around 800 stocks based upon value and market-cap metrics.  This number is reduced further to 500 stocks by drawing upon the work of in-house analysts.  The team’s qualitative effort is then concentrated on this smaller number of names in the value universe.

There is an emphasis upon original research derived from meetings held directly with companies.  The focus of analysis is upon three components of a company’s undervaluation and potential: its asset value, its earnings power value and its franchise value. The portfolio managers conduct their own research, as well as liaising with internal and external analysts.  They hold regular meetings with the in-house research analysts, testing their conclusions to assess whether a company is a good fit for the strategy.  Key areas of discussion include competitiveness within the industry, the change of management attitude towards shareholders, new business, restructuring potential and the sustainability of earnings / quality of assets.  The approach is open-minded in terms of using all information sources at their disposal, with Mr Miyazaki making the final decisions for the portfolio.  There is also a monthly Investment Environment and Assessment meeting where the global house view is formulated and this assists in forming the strategy for the fund.