VALUE: After Hours (S07 E42): Global Value Opportunities: Japan, Hong Kong & Europe

During their recent episode, Taylor, Carlisle, and Tim Melvin discussed Global Value Opportunities: Japan, Hong Kong & Europe. Here’s an excerpt from the episode:

Tim: Yes. Well, everything’s up to date rather nicely. But when you look even at small-caps in the US market right now, if you apply credit filters, you’re still not coming up with a ton of names. As I said, what you do come up with continues to go down. Now, where outside of small banks where I can point and say, “That’s cheap. I want to own a lot of that.” Right now, it’s Europe and Asia.

Jake: In Asia, is it primarily Japan or where you finding– [crosstalk]

Tim: Actually, yeah.

[laughter]

Jake: Tim just did a Hail Mary with–

Tim: [laughs] Yeah. We’re buying Hong Kong.

Jake: Okay.

Tim: Look, I brought Swire Pacific, and I brought it and recommended it, bought it in my own account. Swire Pacific owns 82% of Swire’s property. That portion that they own of Swire’s properties is more than their market cap. They also own 45% of café or airlines. Oh, and most of the coca cola bottles bottlers in southeast Asia. So, it’s reasonably financed. There’s a 5% dividend. What’s the knock on it? It’s in Hong Kong, right?

Jake: Yeah.

Tim: China has been the quietest bull market, I think, in the history of the world, because we’ve all sat around for two years talking about how terrible China is.

Jake: Uninvestable, even.

Tim: Uninvestable, the government’s failing, they’re not using oil. It’s awful, it’s terrible. And the stocks just keep going up, and up, and up, and up. [Jake chuckles] It really hasn’t happened in Hong Kong so much. We’re playing a little bit of catch up. But God, it’s cheap. I look at the property markets, and they’re not having the same office vacancy problems and apartment vacancy problems were here in the United States. They have a PR problem, because they’re still kicking off cash.

As China continues to develop, Hong Kong is going to continue to play a bigger role. If you look how close Hong Kong is to the tech centers in China, as the Chinese technology industry develops, it’s really good for Hong Kong. Now, that’s all the big macro stuff, and that’s really cool stories. The truth is I’m buying it, because it’s too cheap not to buy.

Jake: Yeah. I was just there last week In Hong Kong, and it’s first time I’d ever been there. I really liked it. It’s amazing, these—Basically, if you took New York and put it on an island and, or a tropical island and just built it into the side of the mountains, it’s pretty incredible.

Tim: Right. It had no EPA overlooking the harbor and all.

Jake: [laughs]

Tim: Yeah, that’s Hong Kong right there, man. But things are happening in Hong Kong, and they’re pretty good.

Jake: Yeah, just– [crosstalk]

Tim: Yeah. They’re so close to the technology centers of mainland China that I think that’s going to be a big carry through. The fact that you can buy this stuff so cheap, get paid a nice dividend– Look, I didn’t put my net worth into it, and I don’t recommend anybody else do. But as part of a diversified portfolio of global stocks, Hong Kong is cheap, Japan is certainly cheap.

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VALUE: After Hours (S07 E42): Global Value Opportunities: Japan, Hong Kong & Europe

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