(Bloomberg News) Hideto Fujino, a former Goldman Sachs Group Inc. manager whose independent fund is ranked one of Japan's best, is beating peers by buying carparks and women's gyms and shunning companies in the Nikkei 225 Stock Average, which has lost 80 percent since 1989.
Stocks such as Park24 Co. and women's fitness-club operator Koshidaka Holdings Co. have helped Fujino's 2.3 billion yen ($29.3 million) Hifumi Fund return 31 percent since October 2008, compared with a 23 percent drop on the Nikkei 225 and a 9 percent loss for the Tokyo Stock Exchange's small shares index. The mutual fund, which includes eight companies from the Nikkei 225 in its 58-stock portfolio, was named Japan's best this year by Rating & Investment Information Inc., the country's top rating company.
"Investing in the big Japanese companies is a real gamble because they are so exposed to the volatile global economy, especially recently," said Fujino, 45, chief investment officer at Rheos Capital Works Inc. in Tokyo. "If you look at small stocks, you can find a lot of companies where decision-making is fast and the focus is on long-term growth."
Smaller companies have been insulated from slumping global demand and the yen's two-year, 10 percent climb against the dollar that has hurt large Japanese manufacturers such as Sony Corp., he said. While companies on the Nikkei 225 get 27 percent of their revenue abroad on average, those on the Topix's small shares index look overseas for only 10 percent of their sales, according to Bloomberg data.
Members of the Tokyo Stock Exchange's Second Section Index, where the average market value of firms is $95.2 million and shares have returned an average of 9.4 percent this year, report a mean of 7.4 percent of sales from abroad, the data show. Shares of Nikkei 225 companies have lost 3.3 percent this year on average, the data show. The Nikkei 225 dropped 0.2 percent today, while the smaller-share measure fell 0.3 percent.
Park24, an operator of automated parking lots catering to as few as one vehicle, is the most heavily weighted stock in Fujino's fund. By leasing unused land, including tight spaces between buildings, the company has amassed almost a half million parking spaces, taking advantage of property prices that have fallen 57 percent since 1991. Earnings per share more than tripled since 2000, according to data compiled by Bloomberg.
There were 1.7 million parking places in facilities of 500 square meters (5,380 square feet) or more in Japan as of March 2011, according to government data. Park24, whose sites have an average capacity of 14 cars, said it had 487,000 parking spots at the end of April.
"The high market share and stable earnings growth attracted me," he said. "Besides, the company's business has nothing to do with what's going on in Europe."