Oakmark Funds is out with their Q4 (year end) 2012 letters. The commentary from all the fund managers can be found here. I thought David Herro who runs the Oakmark International Fund, had some interesting comments about Daiwa and his overall views about the new Japanese PM, below is an excerpt from Herro:
Daiwa Securities Group, Japan’s second-largest broker, was the largest contributor to performance for the quarter, returning 44%. Daiwa has been mentioned as a detractor in previous letters because it had been hurt by numerous factors, including a particularly weak Japanese stock market and decreased equity- and capital-market activity in Japan. However, many recent positive events in Japan have caused the equity market to rally. A new prime minister was elected and has indicated his intention to press for macroeconomic reform. One of his goals is to increase inflation targets to try to reverse two decades of deflation. The mere discussion of such reforms caused the market to rally and the Japanese yen to weaken to levels not seen in more than two years. Further improvements in economic growth should have a positive impact on Daiwa. Management’s focus on retail and asset management may also be a game changer. Daiwa spent three years researching this venture and came up with an Internet bank that gives customers access to Daiwa branches. The company aims to attract customers by offering higher rates and a better platform than competitors in the hope that customers will move more of their deposits to investment products. Daiwa’s balance sheet is well-capitalized, and we continue to believe it is a powerful franchise.
Disclosure: No position
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