´´ Mabuchi Motors (JP:6592) - A Fallen Angel That Turned Out to Be a Threebagger

Friday, September 26, 2014

Mabuchi Motors (JP:6592) - A Fallen Angel That Turned Out to Be a Threebagger


Sold Mabuchi Motors at 9560 Yen. The position was mentioned at 3150 Yen in July 2012 on this blog. The post is to be found here:

The Fallen Angel - Mabuchi Motors (JP:6592)

So the performance without dividends is a 203% in roughly 2 Years (100% p.a.).

In addition the stock paid out 270 Yen in dividends during the holding period. Thus, total performance comes in at 212% (106% p.a.).

The Nikkei gained about 80% in the same period. Therefore Mabuchi Motors outperformed the Nikkei by 120% (dividends excl.) and contributed significantly to the overall portfolio performance and was one contributing factor for its outperformance compared to the Nikkei.





Why I sold Mabuchi Motors

I regard selling as one of the "art" aspects of value investing.  I find it way harder than buying into a position. One has to be flexible strategic wise, while having the overall value investing framework and guidelines in sight.




Mabuchi surpassed all of my valuation models by a significant margin.




The exit price is 50% over its intrinsic value. The premium of 50% over fair value was delivered by momentum and growth investors.





Valuation has become very stretched. A lot of good news has been priced into the stock.








Corporate Action to remedy undervaluation

  • Significant dividend increase
  • Turned around operations successfully
  • Cancelled treasury stocks



Mabuchi Motors is a very good business with a very capable management. I wish the company all the best for the future.

And I should not feel remorse, should I find out that this stock was not only a threebagger, but rather a tenbagger.




Disclosure: No Position

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