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Old 03-01-2015, 02:17 PM   #1
I Like Cooters
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Default Investing in Subaru

Fuji Heavy, Subaru's parent company, has been on a roll for a while. Two and a half years ago, on Aug 31, 2012, FHI's American Depository Receipts (ADRs), FUJHY, closed at $16.01. By last Friday, Feb 27, 2015, those FHI ADRs had quadrupled in value and closed at $67.62. But, also on last Friday, the Wall Street Journal published an article about FHI, in its Heard on the Street page at http://www.wsj.com/articles/oil-and-...avy-1425021689, suggesting FHI is still undervalued by at least one measure compared to the major Japanese car manufacturers. Here's a copy of that WSJ article below. Could FHI still be a BUY, even after its recent massive run-up?

Quote:
Heard on the Street
Oil and the Dollar Mix Well for Fuji Heavy


Subaru cars await export at Yokohama, south of Tokyo in December. Photo: Reuters

By Abheek Bhattacharya
Updated Feb. 27, 2015 11:08 a.m. ET

On a road paved by a strong dollar and cheaper oil, one Japanese car maker is offering a sweet ride.

Fuji Heavy Industries , sporting a market capitalization of $27 billion, makes autos under the Subaru brand. It manufactures about 78% of its cars in Japan, more than bigger domestic rivals like Honda and Nissan who make only about a quarter at home. Plus, Fuji sold 85% of its cars overseas in the December quarter, with the U.S. accounting for 64% of its global volume.

That means Fuji is benefiting more from the dollar strengthening against the yen than most other Japanese car makers. With its mostly dollar-denominated revenue translating into more yen and its yen-denominated costs staying the same, its operating profit margin climbed to 16.6% in the quarter ended December from 13.3% in the three months ended March last year.

The currency winds should continue blowing in Fuji’s favor. The dollar is likely to stay strong against other currencies including the yen, if not strengthen further. Chairwoman Janet Yellen ’s remarks this week suggested the Federal Reserve is still edging toward raising interest rates.

On the flip side, the Bank of Japan’s asset-buying program, the chief pillar of Prime Minister Shinzo Abe ’s plans to revive the economy, is keeping the yen cheap. The dollar has climbed 15% against the yen in the past six months.

At the same time, Fuji is selling more cars in the U.S.: its sales volume there rose 26% between October and January from a year before. This reflects, in part, support from the same improving labor market that also bolsters the case for the Fed raising rates.

Equally, lower pump prices persuaded Americans to buy 19% more gas-guzzling light trucks in January compared with a year before, better than the 7.7% growth in car sales. Subaru is a beneficiary here, counting on SUVs for roughly 60% of its sales volumes outside Japan.

Cheaper oil should keep greasing Subaru sales. The rally in oil prices that began last month already seems to be petering out amid plentiful supply.

Fuji Heavy’s shares have soared 48% in the past year but still trade at only 9.5 times forward earnings. Toyota fetches 10.5 times forward earnings, Honda 10.8 times, and Nissan 10.2.



At this price, Fuji is hardly a heavy way to play two of the biggest trends in global markets.
In case nobody noticed, Heard on the Street enjoys employing painful puns.
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Old 03-01-2015, 02:31 PM   #2
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Why try to pick the needle in a haystack? Buy the whole haystack. <Jack Bogle>

Picking stocks is a fool's errand. It's gambling, not investing.
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Old 03-01-2015, 02:34 PM   #3
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Buying the "haystack" that includes FHI means buying Japan, which is closer to a heap of garbage than a haystack. No thanks.

Last edited by I Like Cooters; 03-01-2015 at 02:43 PM.
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Old 03-01-2015, 06:08 PM   #4
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Heaven right there!
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Old 03-02-2015, 12:53 PM   #5
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Quote:
Originally Posted by Jack View Post
Why try to pick the needle in a haystack? Buy the whole haystack. <Jack Bogle>

Picking stocks is a fool's errand. It's gambling, not investing.
This is very good advice, especially for your average investor. It's actually very difficult to "beat the market," and if you do, it is hard to do it consistently year after year. The time commitment alone for research makes it rarely worth it for most people anyway.

The guys who make the big money invest for the long term, not for short term gains...
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Old 03-02-2015, 01:06 PM   #6
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I guess I beat the market investing in Apple when it was $107 a share years ago

I do agree, though, that a lot of the stock market is highly irrational, at least short term. Long term not as bad
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Old 03-05-2015, 12:46 AM   #7
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If you've got the extra cash laying around do it up!
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Old 03-05-2015, 01:48 AM   #8
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Originally Posted by Angelus911 View Post
I guess I beat the market investing in Apple when it was $107 a share years ago

I do agree, though, that a lot of the stock market is highly irrational, at least short term. Long term not as bad
How did you buy it years ago at $107 when it just crossed that point in 2014?
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Old 03-05-2015, 03:53 AM   #9
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How did you buy it years ago at $107 when it just crossed that point in 2014?
It got up to over 600 then did a 6 to 1 split. So now it is back to around 100 again.
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Old 03-05-2015, 06:46 AM   #10
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7-to-1 stock split, so pre split value is now $896 a share
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Old 03-05-2015, 01:56 PM   #11
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Just for info:

Bloomberg shows as of today for 7270 JP (Fuji Heavy in Japan)...

13 Buys, 7 Holds and 3 Sells with an average 12 month price target of 4,823.53 JPY (spot is 4015 JPY)

Make your own decision. You can trade it in the US under FUJHY, an ADR.


Disclaimer: No advice given. I'm long the stock, but do no intend to make any trades in the next 72 hours.
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Old 03-08-2015, 12:41 AM   #12
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7-to-1 stock split, so pre split value is now $896 a share
That is correct. Don't know why I was thinking 6 to 1.
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Old 03-09-2015, 12:39 AM   #13
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Quote:
Originally Posted by Angelus911 View Post
I guess I beat the market investing in Apple when it was $107 a share years ago

I do agree, though, that a lot of the stock market is highly irrational, at least short term. Long term not as bad
You can always find someone that beat the market last year. The real question is if there is any correlation between beating the market last year and beating the market this year. And on that front, the answer in general is pretty much no. And it's not because the stock market is irrational. If it was irrational, it would actually be easier to make money.

I think for individual investors, just about the only consistent way to make money is to find a "signal" that is very time consuming to dig out, but too small to make it worth the effort for the professionals.
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Old 03-09-2015, 08:35 AM   #14
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Quote:
Originally Posted by Len View Post
You can always find someone that beat the market last year. The real question is if there is any correlation between beating the market last year and beating the market this year. And on that front, the answer in general is pretty much no. And it's not because the stock market is irrational. If it was irrational, it would actually be easier to make money.

I think for individual investors, just about the only consistent way to make money is to find a "signal" that is very time consuming to dig out, but too small to make it worth the effort for the professionals.
Someone who subscribes to the efficient market hypothesis
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Old 03-09-2015, 12:49 PM   #15
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Someone who subscribes to the efficient market hypothesis

Yeah well, I think it's efficient enough for the purpose of an individual investor being able to beat the market consistently. Hell, even most hedge funds don't beat the market consistently, and that's before their hefty fees.
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Old 03-18-2015, 08:52 PM   #16
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I have been passionate about financial markets for 25 years and worked in financial services for 14 years. After just completing some research on FUJHY, including a review of the info on this thread, I have decided to take a small position (Limit order for tomorrow is in.)

Investing is risky but if you think long term and do a little homework, eventually you MAY be able to keep up with the S&P500 performance. Have fun and educate yourself along the way. If you want to keep it simple just buy the S&P500 with SPY and hold it. Btw, AAPL has been my largest position for three years. Now it's Fed Watch so if they don't raise interest rates in June the market will keep rising this year.

GL!
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Old 03-18-2015, 09:43 PM   #17
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inb4 pump and dump

I like my vanguard all in one retirement fund lol
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Old 03-18-2015, 11:02 PM   #18
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Quote:
Originally Posted by mcganz121 View Post
inb4 pump and dump

I like my vanguard all in one retirement fund lol
Oh gawd, please don't tell me you've been suckered into:
https://personal.vanguard.com/us/fun...FundIntExt=INT
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Old 03-20-2015, 07:14 PM   #19
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That Vanguard Fund isn't so bad...expenses are reasonable but if you like funds I would find ETF (Exchange Traded Fund) alternatives if available for the style/industry/sector you want with more liquidity (they trade like a stock) and lower expenses.

I opened a small position in FUJHY at 67.33. If the markets remain strong, and FUJHY continues to perform well, I'll add to it on weakness. It's a very compelling investment given the strengthening Japanese economy, soaring Dollar, and earnings growth for FUJHY. Both Honda (HMC) and Toyota (TM) have also performed well but the earnings growth from Fuji is more attractive...tons of marketshare out there for them to gain.

If the Fed starts raising rates later this year you'll need to be far more cautious about the markets overall and consider some reallocation to cash or other safe haven. Rare collector cars increase in value very well btw

GL.
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Old 03-21-2015, 02:23 AM   #20
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Quote:
Originally Posted by Cas002Rex View Post
That Vanguard Fund isn't so bad...expenses are reasonable but if you like funds I would find ETF (Exchange Traded Fund) alternatives if available for the style/industry/sector you want with more liquidity (they trade like a stock) and lower expenses.



I opened a small position in FUJHY at 67.33. If the markets remain strong, and FUJHY continues to perform well, I'll add to it on weakness. It's a very compelling investment given the strengthening Japanese economy, soaring Dollar, and earnings growth for FUJHY. Both Honda (HMC) and Toyota (TM) have also performed well but the earnings growth from Fuji is more attractive...tons of marketshare out there for them to gain.



If the Fed starts raising rates later this year you'll need to be far more cautious about the markets overall and consider some reallocation to cash or other safe haven. Rare collector cars increase in value very well btw



GL.

Cas002

Is it really that complex??

Im just looking to have soapbox chime in... :P
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Old 03-21-2015, 09:56 AM   #21
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It doesn't have to be complex...just buy SPY and hold it for many years
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