Please note that this is for your information only.

This is probably one of my craziest experiments. I’ve built an unapologetically value‑heavy portfolio in the middle of an AI/large‑cap/Kioxia‑driven market.

You might have heard of the legendary investor Tatsuro Kiyohara. He is one of Japan’s most successful and influential hedge fund managers, having compounded extraordinary returns over 25 years and amassing an estimated ¥80 billion in personal wealth. His career and philosophy are well documented in his 2024 book My Investment Method — Who Does the Market Smile Upon?, which became a bestseller after his retirement in 2023 and has sold more than 200,000 copies across Japan and Korea.

Toyo Keizai recently interviewed him and highlighted three stocks he used to hold: Tanabe Engineering (1828), Shinnihon Corp. (1879), and Nisshin Group (8881). I say “used to” because he has either been reducing these positions or has already exited. When asked, he commented that it’s not that he wants to sell them, but rather that his “game‑playing days are over.”

Using these former holdings as a reference set, Toyo Keizai extracted the common characteristics and built a set of screening criteria:

Screening criteria:

· P/B (most recent quarter): < 0.7x

· P/E (current fiscal year): < 8x

· Dividend yield (current fiscal year): ≥ 3%

· ROE (current fiscal year): ≥ 10%

To this, I added:

· Market cap: ¥30B – ¥100B

This screen produces an exceptionally narrow universe: only four qualifying stocks as of June 1, 2026 (JST). Maybe I should have lowered the market cap hurdle.

 

Interestingly, three of the four names fall within the automotive value chain. Each is a market leader in its respective niche, yet all face the structural challenge of surviving the industry’s transition from internal‑combustion vehicles to EVs. Investors are skeptical about their ability to reposition themselves for an EV‑centric world, which explains the low valuations.

I actually highlighted the first name on the list, Kyokuyo, in my 5/17/25 note (available to my paid subscribers/clients). The stock has gone essentially nowhere since then. I’m hoping they do better from here.

I plan to update the performance of these four names from time to time, though my sense is that they may take a while before they start to move.

If you’d prefer to start by sampling my work, I’d be happy to send it straight to your inbox at no cost. I’m confident that once you experience the depth, clarity, and practical value of my research, you’ll see why even clients with established Japan research teams find my perspective uniquely useful.

#Kiyohara #valuestocks #deepvaluestocks #Japanese #whatsnext