Juan Matienzo of Mercor Investment Group discussed deep value investing and presented his investment thesis on Oriental Watch (Hong Kong: 398), Vietnam Manufacturing and Export (Hong Kong: 422), and Charle Co. (Tokyo: 9885) at Best Ideas 2018.
Oriental Watch is an HK/China luxury watch retailer that trading for less than half of tangible book value and below liquidation value. It has a long history of profitability but has struggled in the past few years due to China’s crackdown on corruption and higher rental costs. Throughout this period of turmoil, the company has managed to maintain profitability in every year except one. Rental costs have been declining lately, and consumer sentiment might be improving.
Vietnam Manufacturing and Export is a motorcycle manufacturer that has lost money over the past few years of rapidly declining sales. The shares trade at a discount to cash minus all liabilities, which renders the valuation too low in Juan’s view. The company was profitable for many years in the past and has returned cash to shareholders.
Charle Co. is a Japanese seller of women’s underwear that trades for less than cash minus all liabilities. The company remains profitable, has a long history of profitability, and returns cash to shareholders via buybacks and dividends.
About the instructor:
Juan F. Matienzo is Managing Director of Mercor Investment Group, where he is responsible for the portfolio. Juan follows a deep value investing philosophy, and prefers companies that trade for less than liquidating value and at low multiples of normalized earnings. Juan has a BBA from UDLAP, and an MBA from Harvard Business School.
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