Japanese Problems

### Japanese Problems

#### Underinvestment

Japanese corporations, regardless of size, are often reluctant to invest in growth. The public market’s excessive sensitivity to consolidated financials discourages businesses from making bold investments. This issue is even more pronounced in smaller companies, where liquidity constraints and market expectations further stifle capital allocation.

I categorize portfolio companies into three groups:

1. **Large enterprises with undervalued growth potential** – Companies with strong fundamentals but trading below intrinsic value due to market inefficiencies.

2. **Post-IPO companies with insufficient investment** – Businesses that struggle with depressed prices, liquidity and size constraints, limiting their ability to reinvest in growth.

3. **Undervalued growing small caps** – Smaller firms with significant upside potential but underappreciated by the market.

Addressing these structural challenges requires a shift in mindset—one that prioritizes long-term productivity and sustainable growth over short-term financial optics.