The worst of it, for a yen bull, of which I am one, is the perceived certainty of things. At 121 to the dollar, the yen on Feb. 26 stood at a 15-year low against the euro and its predecessor currencies, and a 21-year low in real trade-weighted terms. Before the worldwide selloff that began on Feb. 27, there was supposedly nothing on the horizon to change things.
Grant's column also touches on Japanese stocks and the country's slowly changing corporate landscape. Regular readers know I have exposure to Japanese equities. So does Grant, who has a private investment fund called Nippon Partners:
As an investor in Japanese equities, I'll now talk my book. I believe that the yen is a worthwhile investment. It's a bargain in fundamental, purchasing-power terms, for one thing. And it provides low-cost disaster insurance, for another.
The yen is cheap for the merchandise it can buy today. It is also cheap for the corporate assets it could buy tomorrow, if only Japan's famously shareholder-unfriendly corporate managements would wake up to the best practices of the 20th century, never mind those of the 21st.
But more and more, they are. Late in February, for example, a Japanese fund manager did the heretofore impossible. Ichigo Asset Management, with all of $25 million under management, solicited more than 42% "no" votes to oppose the proposed acquisition of Tokyo Kohtetsu Co. by Osaka Steel, a union blessed by the two corporate managements and therefore, under the old rules, a done deal. But the rules have changed, and the merger is off.
Ichigo's success in blocking this transaction represents a bell-ringing first.
Grant goes on to write some things you've read here, among other places if you're a value investor. That many Japanese companies are cheap based on their assets. And that too many managements aren't exactly shareholder friendly.
His piece also discusses the "yen carry trade" and suggests an ETF that invests in yen.
Jim Grant has been wrongly written off as a "perma-bear" -- but he's actually a top-notch stock picker and his Forbes columns are real treats.