Cheap Stock Ideas In Japan

Our Gavekal Knowledge Leaders Developed World Index (KNLG, see here for more information) is an equal weighted index of the developed world's most innovate companies.  Relative to the MSCI World Index, our index has a couple significant country differences: 1) we are fairly underweight companies in the US and 2) we are very overweight companies in Japan.  In the table below, we identify the weighting by country in the KNLG index, then the weights in the MSCI World Index and lastly the difference.

Country Allocation of Gavekal Knowledge Leaders Developed World Index (KNLG)


Because of our structural emphasis on Japan, we spend a good portion of time sifting through Japanese stock ideas.  In Japan there is no shortage of statistically cheap companies.  In the tables below we show Japanese constituents of our KNLG index that are under 5x intangible adjusted cash flow.  We deduct from current period income all the intangible investments that companies make (like research and development, employee training or advertising) in order to arrive at our measure of intangible adjusted cash flow.

KNLG Japanese Consumer Discretionary


KNLG Japanese Consumer Staples


KNLG Japanese Health Care 


KNLG Japanese Industrials


KNLG Japanese Technology


KNLG Japanese Materials