Everything on Japanese Culture & Investing 🌱 Local market insights 🗺️ Quality 📈 Hidden Gems 🔍 Unique mental models 🧠 Views my own. Not investment advice.
Kamakura-shi, Kanagawa
Joined March 2023
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The First episode of the Made in Japan podcast is finally out. (Link in reply)
We felt our interview with Philip was going to be the perfect first episode as an introduction to Japanese markets.
Over the last 2 decades, he’s seen the country as a lawyer, investment banker and now an investor. He’s worked with truly the pioneers of Japanese activist investing like Yoshiaki Murakami of M&A Consulting and Seth Fischer of Oasis.
Through his adventures not just in Japan but in East Asia, he has so many interesting stories to tell!
We learnt
⚪︎Why Activism Struggled in the past and why that’s changing
⚪︎Why Activism, and Japan, is still a huge opportunity today
⚪︎Some of the misconceptions of Activism
⚪︎Japan’s unique business culture and how Japanese companies think about M&A
⚪︎And some of his favourite things to do in Japan!
We still have alot to improve on so we’d love to hear your feedback, thoughts or suggestions if you have any!! Or even any guests that you’d want us to interview!
We hope you enjoy this conversation. If you liked it and want to hear more, we would really appreciate it if you like this post, retweet, and subscribe!
Thank you for your interest and support ♥️🎌
Finally a special thank you to the people around us who’s been so encouraging and supportive for this project. Ben and I still have no idea where this’ll go but we hope to bring some unique perspectives!
Insanity, the real reason why they had to raise prices was because growth in customer numbers was way more than they were expecting....!!
They couldn't procure raw ingredients fast enough and had to pay a higher price.
客が来すぎて利益が出ない､サイゼリヤを｢本格値上げ｣に追い込んだ強みの自前工場の限界
toyokeizai.net/articles/-/96…
What a comeback if they succeed, Nike’s founder Phil Knight started his business originally selling Asics shoes
アシックスが米国で復活、ナイキと再逆転なるか ミシガンに研究拠点
nikkei.com/article/DGXZQOGN2…
Some of my fav findings from Part 2:
As of 2023, Saizeriya sold 100 plates of their Milanese Doria per store per day.
With their 1000+ stores that means they serve at least 100,000 plates a day. Annualised thats more than 36 MILLION.
They’ve been reinvesting into their customer flywheel for the last 50 YEARS long before $COST or $AMZN even existed
They have a factory in australia entirely dedicated to make the meat sauce and bechamel for the doria.
In one family 3 generations works at a Saizeriya.
They developed a mobile game app to train their staff.
No boardroom politics because the founder makes it so that you become busier as you move up the ranks. Literally everyones too busy.
In a year The founder received more than 10,000 emails from employees across the organisation with feedback on how to improve the stores. He reads through all of it.
When there was traces of melamine in the pizza dough, they refunded everyone who ordered a pizza, including people who lost their receipt!
They sell imported mozzarella for ¥299 which is cheaper than if you’d get it in Italy.
When they had just 3 stores, the founder started a central kitchen. With a dozen stores he approached major food producers to make private brand products for them.
When they cut the time to open/close a store by an hour it saved the millions.
When they tried to lower the production cost of rice, they realised that farmers were using harvesters that were used just one week of the year and was replaced every 5 years!
40% of their raw ingredients are produced in-house, and 50% directly sourced. Only 10% uses distributors
Saizeriya has been using AI as early as
2018 in order to forecast customer footfall which in turn makes staff placement more efficient.
Finally, once I release Part 3 it’ll most probably reach 100 pages worth of writing and this Saizeriya Deep Dive would basically be a book! 😅😭
Saizeriya might be the only company in the world to be praised and even thanked by customers for raising prices when they finally announced it yesterday. It truly reflects how special Saizeriya is.
I just published Part 2 of my Saizeriya deep dive, breaking down their own version of ‘scale economies shared’, a flywheel built over 50 years, predating Amazon or Costco!
I apologise for the length but I hope you can see it as a result of the multitude upon which their moat is built upon. One that betrays economic theory we’re often taught. They are the Anti-Private Equity. And all the small decisions they’ve made over time have created a cost structure that will be almost impossible to replicate, let alone deliver the quality they do.
Find it in the usual place. 🍝🍝🍝🍕🍅
The sad part about missing this trade is that I could’ve just been visiting ramen shops and eating ramen while my money 20x-ed but no, here I am being swung around by this stupid market 💀
With all the corporate cyber attacks happening there’s a non-zero chance that Japanese companies will revert to using more fax again.. 😅
Maybe Japan was right after all 😂
Made in Japan 🇯🇵 retweeted
Recruit (indeed/glassdoor) is trading at a higher market cap than Kioxia now.
let that sink in
Just saw a tourist telling off a silly tourist to get in line boarding a train.
I think we’re gonna be okay 🥹🇯🇵
Photosynth breakout.
$4379.JP
My new long is PhotoSynth $4379.JP ; you can find full thoughts on the newsletter.
In short, my bet is on recognising a very specific pattern and I feel the company is at an inflection.
At 1x EV/Rev, I believe it could do 2-3x depending on how well they deliver.
Some thoughts 1/x
It's very cheap, they got rid of their overseas business and succesfully raising price for their key Backlog business. Also profitable. I've been a buyer here.
The reason why I decided to take a 14+ hour flight just to attend this event is because I really think what @GavinSBaker and co are organising could be one of those magical moments where looking back, we'd be saying "Yeah, we were there" and becomes the epicenter of one of the most important events to discuss the future!
HOLY Smokes!🔥
Taking the stage at @TomorrowXSummit: Stan Druckenmiller (@standuquesne), Chief Executive Officer of Duquesne Family Office, and Iliana Bouzali (@ilianabouzali), Global Head of Derivatives at Morgan Stanley (@MorganStanley) $MS.
November 17-18 at the Moody Center in Austin. Hosted with @GavinSBaker and @atreidesmgmt, @antoniogracias and Valor Equity Partners, @rbiscardi and @iconnections_io.
Registration link below.
Sohn Tokyo was a blast! Learnt so many new things, made new friends and found some great ideas many of which I thought were immediately actionable. I took notes on all of them.
Sharing a recap with a look into some of my favourite ideas with my thoughts, covering anything from SaaS to Semicaps to Deep Value with improving fundamentals. (incl one insane nesting doll situation)
Find it in the usual place!
Just a reminder how Saizeriya is hilariously uncorrelated once again on a tough down day…. Or the market is pricing in that more finance bros will be headed there shortly 😅
Part 2 of my deep dive is out now ✨
One of my favourite stories Praveen heard from his old boss was just the fervor during the 80’s bubble period in Japan.
People would literally wave a wad of cash in the air to stop a taxi!
You just can’t imagine that based on what you see now…
NEW EPISODE OUT NOW ❗️❕
We covered a lot of ground on how to invest in growth companies as a 'foreigner' and how to find multibaggers in Japan.
Our guest today is Praveen Kumar
Praveen has close to 2 decades of experience investing in growth equities as the former Portfolio Manager of the Baillie Gifford Shin Nippon Trust, the Japanese Smaller companies fund and as the co-deputy of the Baillie Gifford Japan Trust.
Growth equities have admittedly had a tough stretch these past few years. But it’s exactly why we felt this was a great conversation to have, and understanding why there are some interesting opportunities today.
We loved hearing his experience as someone who looks at a different corner of the Japanese market to many foreign investors who tend towards deep value. What’s also remarkable, and something that should give courage to many investors, is that he’s learnt to invest in Japan without speaking Japanese!
When he first started, translation wasn’t easily available and he’s had to learn the hard way. Through his 2 decades of experience talking to Japanese companies and investing in them, he shares practical insights on investing in Japanese growth companies. Whether its about how to talk to Japanese management teams, how to assess them, or how to understand the cultural context of Japanese business. He also mentions several interesting investment ideas that are solving uniquely Japanese problems today.
In this episode we discuss:
・Why language barriers are an overrated deterrent to investing in Japan
・The unique red flags and green flags when looking at Japanese companies
・What kind of companies have been multi-baggers
・How to build rapport with Japanese companies
・Some of the unique consumer behaviours in Japan
・Investing in SoftBank
・The invisible market cap ceiling for Japanese companies
・Some of the best resources to learn about Japanese culture
…and more
We hope this gives our listeners a deeper insight into why, in addition to statistically cheap companies, there are interesting opportunities in growth equities - and the tools and insights to improve your research process for fundamental analysis in Japan.
Looking through this lens also makes you realise just how absurd Saizeriya prices are.
Even at ¥100/USD a plate of pasta still only costs LESS THAN $5.
