Can Turtles Fly?

If you though that only American, British, Spanish, and Irish homebuilders were having bankruptcy problems, well, add Japan to the mix . Shares of Japan's Sohken Homes Co. were suspended from trading Wednesday after the home builder filed for court-led rehabilitation with the Tokyo District Court, becoming the latest Japanese developer to enter into bankruptcy protection... The move comes in the wake of Urban Corp.'s filing for court protection earlier this month. July saw similar moves by condominium developer Zephyr Co., with debts of around 95 billion yen, and construction firm Suruga Corp. with debts of 62 billion yen. I'm not sure if this is the start of a trend or if it is just a few weak homebuilders falling by the wayside. I have been mildly bullish on Japanese real estate but it looks like it is starting to face some issues. The bullish case (from a contrarian point of view) for real estate in Japan lies with its massive decade+ bear market. The bearish case lies p...

Have you ever wondered if there was a possibility that you might invest in some criminal organization? Without knowing it, that is? Well, one of the Japanese companies I was following, Suruga (TSE: 1880), was recently outed as a business that thrived on corruption. Who knows what the final outcome will be but the CEO, who is also the majority owner of the company, just threw away his company. Crime does indeed not pay! I was looking at the chart of Suruga and couldn't figure out why the stock dropped so much. (source: Tokyo Stock Exchange) There were a few days where the stock didn't trade a few weeks ago. Being in Canada, it's hard to know what was happening but I finally found some news from Google. As a side note, news is one of the problems with investing in foreign stocks (although I will note that a small-cap like Suruga wouldn't generate much news even if it were Canadian.) It looks like Suruga's explosive growth over the last few years was due to the use o...

I have been researching Japanese stocks and started looking at real estate more deeply. Japanese real estate stocks and REITs had a big run-up in 2005 (mostly on foreign investor demand) but have come tumbling down in the last year. Suruga Corporation I have Suruga Corporation (TSE: 1880) on my watchlist and have been reading up on it. It's a small company so their website only has basic information in English (as a sidenote, for a tech-savvy society, Japan is weak when it comes to the Internet). Suruga's main business is real estate construction. A company trading 20% below book, with a P/E around 5, and an ROE of around 15% should make me jump at the opportunity but it doesn't. The problem I have is that due to my inexperience I don't know how to judge cyclical companies. I'm not sure if this low P/E is an earnings peak or not. The fact that the stock has sold off and is near multi-year lows makes me think the P/E is not a cyclical peak but I don't understand...

( UPDATE : added a minor comment and fixed the market cap (should be $250m not $25m) ( UPDATE 2 (Sat@9:39 PM) : I found out accidentally that bigcharts does have a log graph, so I updated the chart with a log graph) I'm adding Suruga (TSE: 1880) Corporation from Japan to the watch list. I looked at this a while ago when I saw the P/E ratio of around 4 but it turned out to be a mistake due to a stock split. I was thinking of researching Japanese small cap retail, food, and real estate companies (anything to take advantage of strengthening Yen and a possible resurgence in consumption. I came across this again and saw that it has sold off quite a bit since early this year--practically the whole Japanese small cap area is down quite a bit (it might be one of the cheapest on the whole planet). Just to quickly re-cap, Suruga is in the real estate sector. The whole real estate sector has been doing well over the last few years and Suruga is no exception. The question is whether it can kee...

I'm not sure if I'm late to the party (likely not, given that the Japanese market has been in a super-long bear market), but I'm looking at Japanese real estate companies. I was actually looking for low P/E stocks and noticed some real estate companies trading at low (trailing) P/Es. Real estate is cyclical so low P/Es don't necessarily mean they are "cheap". There is also some concern that the real estate market has peaked worldwide. My view is that even if real estate slows down in USA and in emerging markets, Japan should still see growth. After all, Japanese real estate did not join the rally in the other markets. Aging population in Japan is a negative for real estate but the positive economic news should overpower that IMO. Anyway, the company I'm most interested in is Suruga Corporation (TSE: 1880), a small-cap trading at a trailing P/E of 4.6, P/BookValue of 0.7, and Debt/Equity of 1.2 (these numbers need to be verified since there was a stock spli...