| 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 Capital Appreciation returned +31.7% in 2025, capitalizing on undervalued Japanese equities with strong fundamentals. Corporate governance reforms, record shareholder returns, and structural changes like cross-holding unwinding are unlocking significant value. With one-third of companies trading below book value versus 3-5% in the US, this multi-year opportunity appears in early innings. |
| Dec 31 2023 | 2023 Q4 | - | asset allocation, Fed policy, rebalancing, Valuations | 4832 JP | Fed Chair Powell's warning about high equity valuations sparked investor concerns, but the manager argues against market timing based on P/E ratios. Despite the S&P 500 trading 20% above historical averages, research shows no correlation between valuations and near-term returns. The recommended approach is maintaining investment discipline through systematic rebalancing rather than attempting to time market peaks. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIManager discusses AI monetization progress at Alphabet with strong third-quarter results and improving sentiment around digital advertising and AI. Google Cloud grew over 30% year-over-year supported by rapid adoption of AI training and inference services. Gemini platform enhancements were well received by customers and analysts. |
Cloud Monetization Infrastructure Training Inference |
GLP1Eli Lilly was a top performer driven by its GLP-1 franchises Mounjaro and Zepbound, where sales more than doubled year-over-year. Manager believes demand for GLP-1 treatments continues to outpace supply with additional indications on the horizon, positioning Lilly for sustained revenue and cash-flow growth over the coming decade. |
Diabetes Obesity Pharmaceuticals Growth Pipeline | |
StreamingNetflix was the portfolio's largest detractor following investor concerns around near-term subscriber growth and rising content spending. Management guided to slower net subscriber additions after recent price increases, and margins were pressured by elevated investment in live sports and international content. Despite headwinds, manager continues to view Netflix as the dominant global streaming platform with durable competitive advantages. |
Content Subscribers Sports International Competition | |
CloudCoreWeave shares declined despite revenue growing more than 40% year-over-year, with results slightly below elevated investor expectations. Management cited elongated lead times for GPU deliveries and slower ramp in certain enterprise AI workloads. Manager believes CoreWeave's purpose-built infrastructure is uniquely positioned within the high-performance cloud compute market. |
GPU Infrastructure Enterprise Computing Capacity |
| 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. |
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