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Steven Towns
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In January 2015, Steven launched the Uguisu Value letter. Published quarterly, each issue features one thoroughly researched Japanese smaller-cap equity write-up that has baseline 2x upside. With returns of 30%-plus (40%+ yen-denominated) in 2013 and 2014, Steven remains focused on smaller caps... More
My company:
Uguisu Research, LLC
My blog:
Active Investing
My book:
Investing in Japan
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  • The Day Before GE's Shareowner Meeting

    General Electric's (NYSE:GE) annual shareowner meeting is tomorrow (Weds.) in Detroit. I urge those that haven't voted to do so as soon as possible today to ensure votes are counted. To help make readers better informed and to generate discussion, I prepared two write-ups surrounding GE's annual meeting: (1) a review of each item for vote on its proxy, and (2) a look at why GE is undervalued. It's unmistakable to me the market has been efficient in valuing GE shares when considering GE's deficient corporate governance and management. Please continue reading even if you have read the above two linked articles.

    However, shareowners have limited recourse since a majority of shares are owned by institutional investors that often either vote in-line with management or simply aren't putting clients' interests first when voting proxies. Another matter is the inadequate shareowner proposal system, which limits shareowners' rights, is non-binding, and has been hijacked by corporate and private lawyers. Finally, there is almost no accountability of directors (shareowners pay costly indemnity insurance for their own directors) and at GE, to make matters worse, executives do not appear to be held accountable by the board (instead they have been compensated very well throughout while shareowners continue to exercise great patience that is showing signs of wearing thin).

    With that being said, a start is to vote the proxy items. Low vote turnout by individuals fuels companies', lobbyists', and academics' arguments that certain proxy reform measures aren't needed simply because shareowners would essentially not be reading them anyway or would not care. One such critical matter is the disclosure of CEO pay to median worker pay. I will share thoughts on next steps following the vote results.

    Disclosure: I am long GE.

    Apr 24 8:11 AM | Link | 4 Comments
  • Critical dividend proposal for GE approved by SEC
    Seeking Alpha readers, sharing with you great news I received last Friday regarding a dividend proposal I submitted to General Electric (NYSE:GE) for its 2012 annual meeting and proxy. The SEC's ruling that GE may not omit my proposal is significant for both GE shareholders and all public equity shareholders. Please visit my site for a full review of the proposal, GE's reaction thus far, and the SEC's opinion, especially regarding the importance of dividends to shareholders.

    Link to article:

    Jan 19 8:42 AM | Link | Comment!
  • Martin Whitman on value investing

    The following was originally published on my website a week ago. SA has an increasing number of new book reviews it can re-post and thus didn't want to re-post one from 1999 unless it happened to be short on content, even though my second line begins with, "Don't let the date of the publication fool you into thinking his (Marty Whitman's) approach is dated." Anyhow, I tracked down a copy of Whitman and Martin Shubik's The Aggressive Conservative Investor (1979), and I'll tell you only having just opened it, the ideas in Value Investing: A Balanced Approach had certainly been cultivated over a long, long time.  If you aren't familiar with Whitman, perhaps this will compel you to learn more. And if you are familiar, it can only reinforce sound investment practice.

    I recently finished reading Martin Whitman's, "Value Investing: A Balanced Approach" (1999). Don't let the date of publication fool you into thinking his approach is dated. In his interviews over the past few years one hears the same terms and mindset as described in the book. Whitman's firm, Third Avenue Management, is recognized for its track record in value and distress investing; the latter has led Whitman to be regarded as a "vulture" investor, which is apparently something he doesn't mind, especially considering all of his success. Value Investing will probably not be a fun read for casual or passive investors ("OPMIs" according to Whitman; more on that later) and it certainly won't be for traders who would have a hard time finding current assets on the balance sheet. However, for those devoted to value investing (thinking at times like control investors), this book is among the best.

    Readers will appreciate Whitman's effort to hammer home what exactly is meant by true value investing. While he concedes that there are some similarities between what he calls value investing and Graham & Dodd fundamentalism, he for instance, emphasizes that the income statement (its primacy) is far less a concern, and macroeconomics is really not a concern -- that includes the trading levels of whatever market benchmarks. Interestingly, while he obviously is no proponent of academic finance (efficient markets/portfolio), he says, "no market participant is assumed to be stupid or crazy." Still, he mentions that the best in the value investing business, such as Buffett, are basically control activists, who are not in the business of predicting securities prices. Accordingly, they are not weighed down by "analytic baggage."

    Regarding the mention of OPMI above, which stands for Outside Passive Minority Investors, Whitman argues there is an over-emphasis on stock prices as pertains to effectively the greater fool theory. Instead, Whitman espouses the view that there are other markets and means for which prices can be derived and attained (e.g. LBO, MBO, going private, M&A, etc), and thus focuses on what he calls "resource conversion activities." So, for Whitman, value investing is about what you buy, and it had better be safe and cheap. He talks of quantity and quality of assets, in addition to long-term wealth creation potential. One doesn't get the impression of cigar butt investing, and that is not Whitman's game either.

    In conclusion, I want to leave readers with Whitman's argument that value investors use available information in a superior manner; lack of access to superior information (e.g. insider or material) is immaterial. Value Investing provides readers with very limited examples of actual how-to (value a company), mostly appearing as brief anecdotal references. However, the wisdom of what is value investing that Whitman shares is invaluable and found magnanimously within some 260 pages.

    Disclosure: The author of does not have money invested in, or managed by, Third Avenue, nor does he have any business relationship.

    Tags: book review
    Mar 26 11:11 AM | Link | Comment!
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