Links December 2024
12 investment write-ups, 13 articles and 10 podcast episodes
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My favorite three write-ups from the past month include:
Crossroads Capital on Nintendo (🇯🇵 7974 JP - US$69 billion). Nintendo’s new video game console － the Nintendo Switch 2 － will be released in 2025. It will be backwards compatible, meaning old Nintendo Switch games will be playable on it. Crossroads Capital points out that the new console will also be powerful enough to support AAA games. It might therefore take market share from both Xbox and PlayStation 5. They foresee an ex-cash P/E of 10x, but that would require significant earnings growth from here. That’s the bull case. For the bear case, check out the following Twitter thread here.
MileHighMonk’s post on Chinese online travel agent Trip.com (🇨🇳 TCOM US - US$47 billion). Trip.com dominates the Chinese market and has successfully expanded overseas through its international website Trip.com. Online travel agents such as Booking Holdings have been spectacular performers over the past few decades. It does look like Trip.com is earlier on in its growth journey. A current-year P/E ratio of 17.9x it lower than Booking Holdings’ 35x － especially once you adjust for Trip.com’s 49% stake in India’s MakeMyTrip.
Also, read the Central Tendency Substack’s post on EML Payments (🇦🇺 EML AU - US$227 million). Jeremy Raper has written about EML Payments in the past, and the stock price remains cheap. EML Payments’ core business is providing prepaid cards to merchants and collecting the interest on the prepaid balances. It’s a high-margin, cash-flow generative business. During COVID-19, EML Payments made several transformative acquisitions that turned out to be duds, and the company’s share price has cratered. The new management team is shedding underperforming assets, and the balance sheet will soon be in a net cash position. Central Tendency estimates that the stock will trade at a 10% free cash flow yield once the restructuring has been completed.
If you enjoy long-form writing, I recommend Bireme Capital’s pitch for Japanese equities. Evan Tindell is an excellent investor, and I find it remarkable that he has now invested 40% of his long book in Japan. His key arguments in favor of Japanese equities include the end of deflation, the high quality of Japan’s listed companies, low valuation multiples, the TSE’s reforms, and finally － METI’s new M&A guidelines, which he thinks will create a market for corporate control.
It was a treat to listen to Anthony Bolton, who achieved a near-20% CAGR during his tenure at Fidelity’s Special Situations Fund. In this conversation, he discusses how challenging it was to invest in Mainland China due to a lack of trust in local management teams. He also notes that Hong Kong’s listed property companies rarely act in the best interests of minority shareholders.
Crossroads Capital on console maker Nintendo (🇯🇵 7974 JP - US$69 billion)
MileHighMonk on Chinese OTA Trip.com (🇨🇳 TCOM US - US$47 billion)
Sweet Stocks on Japanese healthcare roll-up M3 (🇯🇵 2413 JP - US$6.3 billion)
Aristotle Capital on Tokyo Century Corporation (🇯🇵 8439 JP - US$4.9 billion)
Longleaf Partners on remodelling firm Katitas (🇯🇵 8919 JP - US$1.1 billion)
Japan Investing on SaaS company Appier (🇹🇼 4180 JP - US$900 million)
Scottish Oriental on Selamat Sempurna (🇮🇩 SMSM IJ - US$691 million)
Mobius Capital Partners on CTOS Digital (🇲🇾 CTOS MK - US$651 million)
Forager Fund on sports tech stock Catapult (🇦🇺 CAT AU - US$584 million)
Central Tendency on EML Payments (🇦🇺 EML AU - US$227 million)
PatchtTogether update on Universal Engeisha (🇯🇵 6061 JP - US$107 million)
Idea Hive on marina operator SUTL Enterprise (🇸🇬 SUTL SP - US$62 million)
(estimated reading time)
Praya’s Substack: the secrets of e-commerce company Pinduoduo (50 mins)
Ashmore’s 2025 Outlook for Emerging Markets (26 pages)
Bireme Capital on why it has 40% of its long book in Japan (25 mins)
My own summary of McMeekin’s book To Overthrow the World (19 tweets)
Saadiyat Capital: overview of the late 2024 global luxury sector (18 mins)
The Pari Passu newsletter with a primer on the software sector (17 mins)
Crescat Capital: The US Dollar cycle and what it means for EMs (14 mins)
East Asia Stock Insights on Japan’s dependence on US Big Tech (9 mins)
Clearbridge on Tokio Marine, Asics, Terumo, China’s stimulus (9 mins)
Value in Vietnam on several local stocks with insider buying (6 mins)
Wasatch on Johns Lyng, Japan Elevator, baudroie, etc. (5 pages)
Brandes Value Fund on Alibaba, Takeda Pharmaceuticals, etc. (5 pages)
One Foot Hurdle: Summary of Morris Chang’s new biography (4 mins)
(listening time)
Anthony Bolton on his career, including 4 years investing in China (1:20 hrs)
Juan Torres Rodriguez at Schroders on value in Hong Kong, Japan (1:03 hours)
Banker Ken Wilcox on his experience doing business in the PRC (58 mins)
Felix Zulauf is bearish US stocks and talks about the yen carry trade (57 mins)
Russell Napier: trade & monetary policy will change in Cold War 2 (57 mins)
Dan Rasmussen on Japan’s reforms and big investing myths (55 mins)
Asif Suria on his new book The Event-Driven Edge in Investing (43 mins)
John Hempton discussing Donald Trump, the AI boom and fraud (43 mins)
Seraya Investments’ Andrew Limond on Trump’s impact on Asia (40 mins)
Reporter Youkyung Lee on Korea Zinc’s chilling effect on chaebols (19 mins)
