| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 12.8% | - | 31.7% |
Motiwala Capital's Japan Capital Appreciation strategy returned +31.7% net in 2025, driven by domestic technology and engineering sectors. The portfolio focuses on profitable Japanese companies trading at attractive valuations with net cash positions and growing dividends. Key contributors included Ryoyu Systems (+36.6%), Business Brain Showa-Ota (+74%), and JFE Systems (+60%), benefiting from earnings growth, multiple expansion, and governance improvements. Japan presents compelling value with 33-44% of Tokyo Stock Exchange companies trading below book value, compared to only 3-5% in the US. Structural catalysts include Tokyo Stock Exchange governance reforms, record dividend payouts of ¥18 trillion, consecutive record share buybacks, and unwinding of cross-shareholdings exemplified by Toyota's $33 billion deal. Warren Buffett's increased stakes in Japanese trading houses and record M&A activity of ¥59.5 trillion further validate the opportunity. New Prime Minister Takaichi's pro-growth agenda provides additional tailwinds. Despite recent gains, Japanese equities remain attractively valued on absolute and relative bases, with the investment opportunity appearing to be in early innings of a multi-year cycle.
Japan offers compelling value opportunities with one-third of companies trading below book value, supported by corporate governance reforms, record shareholder returns, and structural changes that are unlocking value in what appears to be the early innings of a multi-year opportunity.
We continue to be excited by the Japan investment opportunity. Despite the run up since 2023, Japanese equities overall remain very attractively valued on an absolute basis and certainly relative to most global equities. We think the Japan investment opportunity is in its early innings and could last several years.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 30 2026 | 2025 Q4 | 4832.T, 6201.T, 6489.T, 7203.T, 8001.T, 8002.T, 8031.T, 8053.T, 8306.T, 8593.T, 9658.T, 9687.T | Buybacks, Corporate Governance, dividends, Japan, technology, Trading Houses, value |
4746 JP 9658 JP 4832 JP |
Japan offers tremendous value opportunities with one-third of companies trading below book value. Corporate governance reforms, record shareholder returns, and structural changes like unwinding cross-holdings… |
| Dec 31 2023 | 2023 Q4 | 4746 JP, 4832 JP, 6955 JP | Corporate Governance Reform, earnings growth, Japanese Equities, shareholder alignment, Valuation Opportunity | 4832 JP | The letter describes strong absolute and relative performance in Japanese equities driven by valuation normalization, earnings growth, and improving corporate governance. Structural reforms by the… |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
BuybacksShare repurchases in 2024 and 2025 hit consecutive records as companies raced to meet Tokyo Stock Exchange capital efficiency mandates. Buybacks were a primary driver of the market's 20% climb in the first half of FY2025. |
Share Repurchases Capital Efficiency TSE Mandates Shareholder Returns Records |
DividendsJapanese companies paid record dividends of ¥18 trillion for fiscal year ending March 2025, a 13.8% year-over-year increase. Many major firms have adopted progressive dividend policies guaranteeing dividends will never be cut, only maintained or increased. |
Progressive Dividend Record Payouts Shareholder Returns Yield Growth | |
JapanJapan offers tremendous value opportunities with one-third of companies trading below book value. Corporate governance reforms, record shareholder returns, and structural changes like unwinding cross-holdings are unlocking value. The investment opportunity is in early innings and could last several years. |
Corporate Governance Value Reforms Shareholder Returns Cross Holdings | |
ValueManager emphasizes investing in controlled companies trading at significant discounts to NAV, with European holding companies showing discounts of 30-68%. The strategy focuses on securities mispricing where real value exists, contrasting with overvalued technology stocks. |
Discounts NAV Mispricing Undervalued Controlled | |
| 2023 Q4 |
Governance |
|
JapanJapan offers tremendous value opportunities with one-third of companies trading below book value. Corporate governance reforms, record shareholder returns, and structural changes like unwinding cross-holdings are unlocking value. The investment opportunity is in early innings and could last several years. |
Corporate Governance Value Reforms Shareholder Returns Cross Holdings | |
ValueThe manager continues to find attractive value opportunities despite expensive markets, purchasing undervalued companies like Centene, GlaxoSmithKline, Carrefour and PayPal trading at low multiples with strong fundamentals. |
Undervalued Low Multiples Contrarian Opportunistic |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 30, 2026 | Fund Letters | Adib Motiwala | 4746 JP | Ryoyu Systems Co., Ltd. | Information Technology | IT Services | Bull | New York Stock Exchange | cashflow, dividends, Governance, Itservices, rerating | Login |
| Jan 30, 2026 | Fund Letters | Adib Motiwala | 9658 JP | Business Brain Showa-Ota Inc. | Information Technology | IT Consulting & BPO | Bull | New York Stock Exchange | buybacks, Consulting, Governance, Margins, recurring revenue | Login |
| Jan 30, 2026 | Fund Letters | Adib Motiwala | 4832 JP | JFE Systems, Inc. | Information Technology | IT Services | Bull | New York Stock Exchange | cash generation, Governance, Itservices, rerating, subsidiaries | Login |
| Dec 31, 2023 | Fund Letters | Adib Motiwala | 4832 JP | JFE Systems, Inc. | Information Technology | IT Services | Bull | New York Stock Exchange | cashflow, dividends, Governance, Itservices, rerating | Login |
| TICKER | COMMENTARY |
|---|---|
| 4832.T | Listed subsidiaries of large Japanese conglomerates are often overlooked. As the IT arm of JFE Steel, this company was trading like a cyclical steel firm despite being a high-margin, cash-generative IT consultant. We benefitted from the Governance Wave. Following the Tokyo Stock Exchange's push for listed subsidiaries to justify their listing, JFE Systems transitioned to a company with an Audit & Supervisory Committee in June 2025, signaling a move toward more independent, transparent governance. This shift, combined with steady revenue of ¥63.97 billion, led to a sharp re-rating of the stock. |
| 7203.T | In June 2025, the Toyota Group announced a massive deal to dissolve its historic cross-shareholding structure. This included a $26 billion tender offer for shares of Toyota Industries. As Japan's bellwether corporation, Toyota's move to prioritize capital efficiency over stable cross-holdings is being viewed by analysts as the final nail in the coffin for the old, opaque way of doing business in Japan. |
| 8001.T | Japanese trading/investment companies Marubeni Corp. and Itochu Corp. both posted gains in excess of 10% for the quarter, executing on both organic and acquisitive growth initiatives, while focusing on better shareholder returns. |
| 8002.T | Japanese trading/investment companies Marubeni Corp. and Itochu Corp. both posted gains in excess of 10% for the quarter, executing on both organic and acquisitive growth initiatives, while focusing on better shareholder returns. |
| 8306.T | MUFG is the largest and most diversified Japanese financial group |
| 8593.T | A high-quality IT services provider within the Mitsubishi Group ecosystem. We identified this as a responsible value play—a firm with a 50-year history and mission-critical industrial clients, yet trading at a steep discount to its intrinsic value. This was a classic double play of earnings growth and multiple expansion. Ryoyu saw its EPS compound at 21% over the last 4 years. As the market recognized this fundamental acceleration, its Price-to-Earnings multiple expanded from 9 to 13x. Furthermore, management rewarded shareholders by growing the annual dividend from ¥30 to ¥85 per share over the 5 year, in line with eps growth. |
| 9658.T | A consultant and BPO provider specializing in management accounting. Our interest was piqued by their BBS2026 roadmap, which aimed to transition toward higher-margin recurring revenue. Execution was the key catalyst. BBS achieved an organic sales growth rate of 13.0% while improving business profit margins to 7.3%. The company also demonstrated a shareholder-first mindset by announcing a significant change in its dividend policy and completing a share repurchase program in early 2025. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
