matjone Posted December 3, 2014 Share Posted December 3, 2014 Is anyone using IB with linux mint? I could only get quicktrade to work with it, and you cannot attach forex orders to stock trades with quicktrade. I imagine there is a way to use TWS with mint but I couldn't get it to work Link to comment Share on other sites More sharing options...
wknecht Posted December 5, 2014 Share Posted December 5, 2014 I'm having a hard time with the currency situation. I'm finding it frustrating having zero control over something I understand so little about with the hope that things will even out over time. I'll most likely be hedged going forward. Link to comment Share on other sites More sharing options...
mjohn707 Posted December 5, 2014 Share Posted December 5, 2014 I'm having a hard time with the currency situation. I'm finding it frustrating having zero control over something I understand so little about with the hope that things will even out over time. I'll most likely be hedged going forward. That's pretty much how I feel right now. But I'm sure if the yen had moved the other way I'd be congratulating myself for being so clever and hedging out my exposure to the US dollar ;D Link to comment Share on other sites More sharing options...
oddballstocks Posted December 5, 2014 Share Posted December 5, 2014 Yes, the Yen is working against us right now. But a few years ago I remember patting myself on the back for not hedging my foreign exposure. There's a Tweedy Browne paper on foreign investing. They show that a foreign portfolio can be very volatile in 1/3/5 years, but beyond that the gains and losses start to wash out. Over the longer term, 5 years plus the difference almost becomes unnoticeable. I remember in their paper they had 15 year results from a currency portfolio and the difference in returns was less than a quarter of a percent. Link to comment Share on other sites More sharing options...
peter1234 Posted December 5, 2014 Share Posted December 5, 2014 Yes, the Yen is working against us right now. But a few years ago I remember patting myself on the back for not hedging my foreign exposure. There's a Tweedy Browne paper on foreign investing. They show that a foreign portfolio can be very volatile in 1/3/5 years, but beyond that the gains and losses start to wash out. Over the longer term, 5 years plus the difference almost becomes unnoticeable. I remember in their paper they had 15 year results from a currency portfolio and the difference in returns was less than a quarter of a percent. +1 Easier said than done, but this seems to be the consensus from several researchers. One alternative is to be partially hedged like International Value Advisers. Since it will likely not add (much) value, lowest transaction costs will be key. Don't know a good and cheap way. ;) Link to comment Share on other sites More sharing options...
wknecht Posted December 5, 2014 Share Posted December 5, 2014 Why leave it to chance? I need to look into it but I don't think it's very expensive, at least not in IB. That type of research seems just as likely to be wrong as right going forward. Why did that result occur? Some fundamental truth that hasn't changed? It's like pricing gold. I have no clue if all pessimism is priced in. But there's still a long way to all time lows. Link to comment Share on other sites More sharing options...
writser Posted December 5, 2014 Share Posted December 5, 2014 FWIW my experience here is that a lot of US-based investors have a tendency to see all foreign-currency exposure as 'bad'. The Eurozone is going to collapse, China is in a bubble, Japan has too much debt, emerging countries face outflows due to QE - everything is going to zero except for the good old US dollar. I think this is a sort of home-bias that tends to influence you especially when you live in a large (patriotic?) country. As far as I know we are no macro experts - what's wrong with a bit of diversification? Why would you put all your eggs in the USD basket? Why leave it to chance? I need to look into it but I don't think it's very expensive, at least not in IB. This reply is typical of this line of thinking. Why would exposure to the JPY be intrinsically 'more risky' than exposure to the USD? Isn't it a bit vain to assume that the entire market is wrong with regards to the USD/JPY exchange rate and that you know better what is going to happen? Also, as pointed out currency hedging does not add any value. In the end you just own a piece of a company. I couldn't care less about exchange rates - I just hoard stuff below NCAV and wait for it to double. Please don't feel offended, I just wanted to chime in with a contrarian opinion :) . Link to comment Share on other sites More sharing options...
cobafdek Posted December 5, 2014 Share Posted December 5, 2014 In the end you just own a piece of a company. I couldn't care less about exchange rates - I just hoard stuff below NCAV and wait for it to double. writser, I'll be your puppet and link your words over from a different Japanese company-related thread: "1. Most of my personal assets are denominated in my native currency. I don't mind (actually I like) diversifying a bit by having exposure to other currencies. Is the ideal situation that all your assets are only exposed to your 'home' currency? I think that is a bit of a fallacy. 2. I believe fx markets are quite efficient most of the time. Or, at least I don't assume I have a better outlook on the macro-economic future of the world (or Japan) than the fx market. So I don't believe I will generate alpha by hedging anyway. 3. But hedging costs money. 4. And hedging would be extra work and I am lazy. 5. This is up for discussion, but the yen and Japanese stock market are correlated. Yen devalues -> Nikkei goes up (check out the 10yr NKY vs USDJPY, for example). So you are already hedged in a way. If the yen goes to zero stock your Japanese assets wouldn't be worth zero in dollar (gold, euro) terms suddenly. So what you are doing by hedging is, in a way, creating exposure to the yen instead. You hope to outperform because you expect the yen will go down. If that is what you expect, don't fool yourself into believing it is a hedge - it is an opinion. You don't need a stock position to go short the yen. Some people here will undoubtedly disagree with me on the last point and that is fine. For me the most important are 1 - 4 anyway: I don't hedge any currencies. By the way, for some reason this mostly comes up with Japan stocks - some people have a very vocal opinion about where the yen should be trading and they are fine with having exposure to the euro or Canadese dollar. I think that is an inconsistent approach. (I am not implying that anyone in this topic is guilty of that)" ---which was further clarified by this: "1. If you own a piece of a business trading on the Tokyo Stock exchange you don't have any exposure to the yen _yourself_. The fact that your business is trading, yen denominated, on a Japanese stock exchange is completely irrelevant in theory. The yen could move all over the place but your factory, your order book and your inventory would be worth still the same when measured in ounces of gold. Put in a different way, if the same business was listed on the NY stock exchange instead the USD price would stay constant. The intrinsic value of your company stake doesn't change. The price in yen denominated will change, sure, but that is nullified by the move in the currency itself. At least, this is what you would expect in an efficient market. Otherwise I can arbitrage it (i.e. if the yen goes down I sell my dollars, buy a shitload of yens at a bargain price and use those to buy your company for basically nothing). 2. However, the underlying business _does_ have exposure to the yen, as yadayada pointed out. The exchange rate influences import & export prices, wages, interest rates, etc and thus will affect the intrinsic value of your business stake and thus, indirectly, it will influence the stock price over the long term. Surprisingly many people make the mistake of thinking they have to hedge because of scenario (1) which is, well, just wrong. As I pointed out in my previous post you are actually creating exposure instead. And if you want to protect yourself against (2) going short the yen for exactly the value of your position is an overly simplified way to do so. A company might have liabilities in yen and thus profit from a currency decline, wages could decrease which would be good (or bad), the company could start hedging currencies themselves, whatever. I think it is pointless to go short the yen against a long stock position because (1) is irrelevant and I have no clue about how (2) will influence my businesses. Not to mention that don't even know whether it will decline in the first place :) . " Link to comment Share on other sites More sharing options...
oddballstocks Posted December 5, 2014 Share Posted December 5, 2014 In the end you just own a piece of a company. I couldn't care less about exchange rates - I just hoard stuff below NCAV and wait for it to double. writser, I'll be your puppet and link your words over from a different Japanese company-related thread: "1. Most of my personal assets are denominated in my native currency. I don't mind (actually I like) diversifying a bit by having exposure to other currencies. Is the ideal situation that all your assets are only exposed to your 'home' currency? I think that is a bit of a fallacy. 2. I believe fx markets are quite efficient most of the time. Or, at least I don't assume I have a better outlook on the macro-economic future of the world (or Japan) than the fx market. So I don't believe I will generate alpha by hedging anyway. 3. But hedging costs money. 4. And hedging would be extra work and I am lazy. 5. This is up for discussion, but the yen and Japanese stock market are correlated. Yen devalues -> Nikkei goes up (check out the 10yr NKY vs USDJPY, for example). So you are already hedged in a way. If the yen goes to zero stock your Japanese assets wouldn't be worth zero in dollar (gold, euro) terms suddenly. So what you are doing by hedging is, in a way, creating exposure to the yen instead. You hope to outperform because you expect the yen will go down. If that is what you expect, don't fool yourself into believing it is a hedge - it is an opinion. You don't need a stock position to go short the yen. Some people here will undoubtedly disagree with me on the last point and that is fine. For me the most important are 1 - 4 anyway: I don't hedge any currencies. By the way, for some reason this mostly comes up with Japan stocks - some people have a very vocal opinion about where the yen should be trading and they are fine with having exposure to the euro or Canadese dollar. I think that is an inconsistent approach. (I am not implying that anyone in this topic is guilty of that)" ---which was further clarified by this: "1. If you own a piece of a business trading on the Tokyo Stock exchange you don't have any exposure to the yen _yourself_. The fact that your business is trading, yen denominated, on a Japanese stock exchange is completely irrelevant in theory. The yen could move all over the place but your factory, your order book and your inventory would be worth still the same when measured in ounces of gold. Put in a different way, if the same business was listed on the NY stock exchange instead the USD price would stay constant. The intrinsic value of your company stake doesn't change. The price in yen denominated will change, sure, but that is nullified by the move in the currency itself. At least, this is what you would expect in an efficient market. Otherwise I can arbitrage it (i.e. if the yen goes down I sell my dollars, buy a shitload of yens at a bargain price and use those to buy your company for basically nothing). 2. However, the underlying business _does_ have exposure to the yen, as yadayada pointed out. The exchange rate influences import & export prices, wages, interest rates, etc and thus will affect the intrinsic value of your business stake and thus, indirectly, it will influence the stock price over the long term. Surprisingly many people make the mistake of thinking they have to hedge because of scenario (1) which is, well, just wrong. As I pointed out in my previous post you are actually creating exposure instead. And if you want to protect yourself against (2) going short the yen for exactly the value of your position is an overly simplified way to do so. A company might have liabilities in yen and thus profit from a currency decline, wages could decrease which would be good (or bad), the company could start hedging currencies themselves, whatever. I think it is pointless to go short the yen against a long stock position because (1) is irrelevant and I have no clue about how (2) will influence my businesses. Not to mention that don't even know whether it will decline in the first place :) . " I don't hedge, haven't hedged, and don't plan on hedging. For the above reasons and also diversification. No one would put 100% of their portfolio on one stock, but we do it with currencies. Somehow with currencies it's 'good' to have all eggs in a single basket, but bad with stocks. Most of the problem is closely linked to the fact that the US is big, we have zero historical memories, and most Americans can't fathom an America where we're not #1 (perceived or otherwise, realistic or not). My view of history is much different, zero empires last forever, so why are we different? Not everything disappears, but there's a slow fade. This isn't a macro call, but I think most could agree that the US empire isn't expanding anymore, so if we're not expanding we're either stagnant or going to slowly fade. Being 100% dollars was a great strategy coming out of WWII, now? Not sure it's great anymore. Was at an event recently where a fund manager railed on Japan. All of the common sayings, said they are as good as dead etc etc. But then said "and I think for the common Japanese person the standard of living won't change, life will be the same." So stepping back from the WSJ scary headlines if Japan's standard of living is going to remain the same won't companies that service the population stay around? It's easy to read the stuff on Japan and have this vision that in 30 years it will be an island devoid of people with lions and wild beasts running around. Since that's not likely why are people investing or treating the place like that? Japan to me is a great example of extreme value pessimism. There are a few die hard value investors there and everyone else is scared to death of the place. But make no mistake, if the market ran up 200% then suddenly there'd be opportunities... I find it no coincidence that Buffett had the Japan Company Handbook on his desk a year or two ago. Seems part of him is still a fan of picking up cheap things, no matter the market. Link to comment Share on other sites More sharing options...
oddballstocks Posted December 5, 2014 Share Posted December 5, 2014 One other thought on this. Most of the really cheap stocks are smaller, under $1b. This manager I was talking to said that his mandate wouldn't allow him to buy anything that small. That if he purchased anything in Japan it'd have to be a large cap. It's worth noting that the same Japan stigma doesn't seem to be attached to large Japanese companies. I don't hear anyone worried about investing in Toyota or Sony. Incidentally these large Japanese companies appear to trade a similar multiples to other large companies worldwide. So the Japan stigma is clearly attached to the smaller caps. With a 6% Japanese population equity participation rate I can see how they've been left for dead. Link to comment Share on other sites More sharing options...
frommi Posted December 5, 2014 Share Posted December 5, 2014 I see currency hedging as a risk reduction tool, i can pay 1% per year and don`t have to worry about currency movements anymore. My fair value estimation for a japanese company is in Yen, so any currency movement can throw me into the position of a possible loss even when the market values it someday at fair value in Yen. Link to comment Share on other sites More sharing options...
Hielko Posted December 5, 2014 Share Posted December 5, 2014 It's perhaps a bit off topic, but I don't think that you don't need to worry about currency movements if you are completely "hedged": you just don't directly see the impact on your daily account statement. But what happens if inflation in Germany picks up and the euro depreciates against other major currencies? And what about foreign companies that import/export? Currency movements have so many effects direct and indirectly on stocks and your buying power that a hedge at the portfolio level is probably fairly ineffective in the long run. Link to comment Share on other sites More sharing options...
turar Posted December 5, 2014 Share Posted December 5, 2014 Agree with posters above. You can't really hedge out "currency" movements, since your base currency is still just a currency. You won't see it moving on your statements, since it's your base currency, but it surely is moving. Link to comment Share on other sites More sharing options...
frommi Posted December 6, 2014 Share Posted December 6, 2014 To be fair, i am good at predicting currency movements and have added alpha with currency trading in the past. I hedge only currencies when i think it adds to my returns. This year more than half of my overall gains are currency gains. And i am pretty sure that the forex market is unefficient like the stock market, because there are humans and human emotions at work. At the moment i don`t want Yen exposure, but that can change in the future. Link to comment Share on other sites More sharing options...
matjone Posted December 7, 2014 Share Posted December 7, 2014 Say you found one like Buffett's union street railway investment, but it was a japanese company. The company has 1000 yen/shr in cash and no liabilities, selling for 300 yen, and they are planning special dividends. Would you hedge in that case? Link to comment Share on other sites More sharing options...
Hielko Posted December 7, 2014 Share Posted December 7, 2014 Especially when you think the company is very undervalued (and are right about it) there is a limited need to hedge since your gains will be a lot bigger than some noise from currency movements. Link to comment Share on other sites More sharing options...
matjone Posted December 7, 2014 Share Posted December 7, 2014 Ok, that might not have been the best example to get at what I was saying. Say instead that it is at 600 and the payout is scheduled three years from now. Obviously that is a pretty far fetched scenario but it could still have some validity to some of the investments I have over there. Link to comment Share on other sites More sharing options...
writser Posted December 7, 2014 Share Posted December 7, 2014 I hedge only currencies when i think it adds to my returns. That's not what I would call hedging .. Why bother buying the stock in the first place in that case. Link to comment Share on other sites More sharing options...
frommi Posted December 7, 2014 Share Posted December 7, 2014 That's not what I would call hedging .. Why bother buying the stock in the first place in that case. Because its undervalued? Why not hedge your yen exposure, do you really want to hold yen when the BoJ is actively destroying its value? A lot of these companies have only income streams in yen, assets in yen and they are valued in yen. I want to take advantage of that without being diluted by the BoJ. You can call me stupid, i say its a prudent move, regardless of its outcome. Link to comment Share on other sites More sharing options...
wknecht Posted December 9, 2014 Share Posted December 9, 2014 In the end you just own a piece of a company. I couldn't care less about exchange rates - I just hoard stuff below NCAV and wait for it to double. writser, I'll be your puppet and link your words over from a different Japanese company-related thread: "1. Most of my personal assets are denominated in my native currency. I don't mind (actually I like) diversifying a bit by having exposure to other currencies. Is the ideal situation that all your assets are only exposed to your 'home' currency? I think that is a bit of a fallacy. 2. I believe fx markets are quite efficient most of the time. Or, at least I don't assume I have a better outlook on the macro-economic future of the world (or Japan) than the fx market. So I don't believe I will generate alpha by hedging anyway. 3. But hedging costs money. 4. And hedging would be extra work and I am lazy. 5. This is up for discussion, but the yen and Japanese stock market are correlated. Yen devalues -> Nikkei goes up (check out the 10yr NKY vs USDJPY, for example). So you are already hedged in a way. If the yen goes to zero stock your Japanese assets wouldn't be worth zero in dollar (gold, euro) terms suddenly. So what you are doing by hedging is, in a way, creating exposure to the yen instead. You hope to outperform because you expect the yen will go down. If that is what you expect, don't fool yourself into believing it is a hedge - it is an opinion. You don't need a stock position to go short the yen. Some people here will undoubtedly disagree with me on the last point and that is fine. For me the most important are 1 - 4 anyway: I don't hedge any currencies. By the way, for some reason this mostly comes up with Japan stocks - some people have a very vocal opinion about where the yen should be trading and they are fine with having exposure to the euro or Canadese dollar. I think that is an inconsistent approach. (I am not implying that anyone in this topic is guilty of that)" ---which was further clarified by this: "1. If you own a piece of a business trading on the Tokyo Stock exchange you don't have any exposure to the yen _yourself_. The fact that your business is trading, yen denominated, on a Japanese stock exchange is completely irrelevant in theory. The yen could move all over the place but your factory, your order book and your inventory would be worth still the same when measured in ounces of gold. Put in a different way, if the same business was listed on the NY stock exchange instead the USD price would stay constant. The intrinsic value of your company stake doesn't change. The price in yen denominated will change, sure, but that is nullified by the move in the currency itself. At least, this is what you would expect in an efficient market. Otherwise I can arbitrage it (i.e. if the yen goes down I sell my dollars, buy a shitload of yens at a bargain price and use those to buy your company for basically nothing). 2. However, the underlying business _does_ have exposure to the yen, as yadayada pointed out. The exchange rate influences import & export prices, wages, interest rates, etc and thus will affect the intrinsic value of your business stake and thus, indirectly, it will influence the stock price over the long term. Surprisingly many people make the mistake of thinking they have to hedge because of scenario (1) which is, well, just wrong. As I pointed out in my previous post you are actually creating exposure instead. And if you want to protect yourself against (2) going short the yen for exactly the value of your position is an overly simplified way to do so. A company might have liabilities in yen and thus profit from a currency decline, wages could decrease which would be good (or bad), the company could start hedging currencies themselves, whatever. I think it is pointless to go short the yen against a long stock position because (1) is irrelevant and I have no clue about how (2) will influence my businesses. Not to mention that don't even know whether it will decline in the first place :) . " This logic makes sense but I'm personally not too sure about the diversification part. I feel like stocks have already provided me quite a bit of diversification. So I still worry about all the cash and financial assets these companies own, given their large role in the valuation. Link to comment Share on other sites More sharing options...
writser Posted July 9, 2015 Share Posted July 9, 2015 For those still interested: I translated and uploaded the 2015 AR: http://www.writser.nl/beurs/fujimak2015.htm . Cliffnotes: at 865 JPY this is trading at ~45% book, they have ~1000 JPY in cash per share, dividend increased 5 years in a row, trades at 9 x FCF / share. Link to comment Share on other sites More sharing options...
writser Posted September 1, 2016 Share Posted September 1, 2016 Annual report 2016: http://www.writser.nl/beurs/fujimak2016.htm Cliffnotes: at 761 this is trading at 40% of tangible book. 5yr avg. PE around 5.5. 1200¥ / share in cash. Book value compounded 10% / year the past five years while paying out a nice dividend (~3% yield currently). Inventory buildup looks a bit worrying. Still a decent stock for a lazy Japan basket approach imho. Link to comment Share on other sites More sharing options...
ccplz Posted September 2, 2016 Share Posted September 2, 2016 Why are these guys hoarding cash? Link to comment Share on other sites More sharing options...
hillfronter83 Posted February 13, 2017 Share Posted February 13, 2017 They released new earnings. stock up 15%. Link to comment Share on other sites More sharing options...
writser Posted March 17, 2017 Share Posted March 17, 2017 Yeah, looks like Fujimak had a decent 2016. However, stock is up 75% YTD already and now at 73% tangible book. I'm considering selling. Link to comment Share on other sites More sharing options...
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