The “Net Cash Ratio” approach was created by the legendary fund manager Tatsuro Kiyohara who has achieved an astonishing 93-fold performance over 25 years since launching the core fund at Tower Investment Management in 1998.

Mr. Kiyohara’s Net Cash Ratio approach focuses on identifying undervalued small-cap growth stocks by assessing their net cash ratio, which he defines as:

(Liquid assets + (investment securities*0.7) – Liabilities)/market capitalization

This formula helps identify companies with a net cash ratio of 1 or higher that are significantly undervalued relative to their financial strength, making them attractive to patient investors. Even in the absence of growth, these companies can still be worth holding onto due to the high likelihood of a MBO.

I prepared the list of the companies with net cash ratio of 1 or higher and market cap of larger than Y10Bn in an order of low PE.  Yes, these are ultra micro-cap but if you own these as an MBO candidate, liquidity is less critical?  This list is available for my clients.  This is a great opportunity to become my client!

In the list, you may notice that these companies provide not just a long term MOB potential but also can stand on their own.

For example,

1) Mamiya sells banknote transfer system and benefit from OEMing for Gamecard-Joyco (note: this is pachinko related)

2) Ohki: My brief note is attached.

3) Yoshicon: Development of commercial properties to sell them to investors.

4) OUG: Strong yen beneficiary

5) Somar: High per share net profits

6) Onamba: A cheaper SWCC?

I would greatly appreciate your feedback. If you’re interested in working on any of the names, please let me know.