By on February 6, 2013

Some people like to bitch about the crafty Nips who are manipulating their currency again. Other people like to cash-in on sudden swings in currency valuations. If you are of the second kind, then Reuters recommends a look at formerly beaten-down stocks of Japanese carmakers who nearly went under during years of unfettered appreciation of the ¥en.

Reuters recommends a look at “Mazda Motor Corp and Fuji Heavy Industries Ltd that are best placed to benefit from the weakening yen, raising their earnings forecasts as exported goods bring in more cash.” True, if you look for a quick trade, those two promise wild swings, simply because they are the most exposed to the currency. According to Reuters,

“Mazda makes 71 percent of its vehicles in Japan and exports about 80 percent of them, while Fuji Heavy makes about three-quarters of its cars at home, shipping about 67 percent of those.”

Both shares are a reverse proxy for the yen and already had quite a run-up as the yen cheapened. According to Reuters, “Mazda stock is the best-performing among Japanese automakers in the past three months, jumping 167 percent, followed by Fuji Heavy Industries’ 73 percent leap, both on expectations the weaker yen would boost their businesses.”

I recommend having a look at Nissan also. It’s a bit bigger than Mazda and Fuji’s Subaru, and better positioned in the world markets. It also is quite an interesting currency play. Sure, only 23 percent of its global production is still in Japan. However, and now you know why Carlos Ghosn was jumping up and down, waving his arms against the obscenely high yen for the last two years. Quite interestingly, when Ghosn went on his rampage against the deviant yen in late 2011, he called a high point of the obscene currency at 76 to the greenback. Today, a dollar buys 93 yen. The yen is still expensive, and a currency play buy buying Japanese car stocks could make you some money.

Others have similar ideas. Fuji was up 5.1 % today, Mazda 4.4%, Nissan is up 4.3%. Perversely, the company that is least dependent on exports from Japan, Toyota, was up 6 percent today in Tokyo. Can’t beat good financials on top of an improving currency situation. Also not that I said “formerly beaten down stocks.”  The stock-in-question all had a good run-up in the past months. If the yen gets weaker, they will go up further. If Detroit gets its wish, you will lose money.

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27 Comments on “How To Get Rich Buying Mazdas And Subarus...”


  • avatar
    Eggshen2013

    “Nips”

    Oh my! How racially insensitive!

    I love it!

    • 0 avatar
      grzydj

      Maybe he can say that because he’s married to a woman who is Japanese?

      • 0 avatar
        onyxtape

        I chuckled when I read this as I scanned my rolodex in my head and noted the friends of mine with, say, black or Jewish wives.

        How nice that Asians are generally “exempt” from word-choice outrage.

      • 0 avatar
        corntrollio

        Casual racism against Asians is probably the most permitted of all groups these days, no? It’s not the “Me Chinese, Me play joke”-stuff of yore, but it’s still there.

        Trying to ban the phrase “chink in the armor” is silly though.

        I was thinking in the next article on Japan, Bertel could use the phrase “nip [object] in the bud”.

      • 0 avatar
        Pch101

        In this case, I’m sure that Mr. Schmitt’s intent was not to be racist himself, but to label those who complain about alleged Japanese practices as racists.

        He does have a point, as many of the complaints about Japanese policy and automakers do have an unfortunate racist component to them. But he’s also overstating it, as not all of the complaints are completely lacking in legitimacy.

      • 0 avatar
        bd2

        @corntrollio

        Very true.

  • avatar
    redav

    Almost a year ago there was a discussion here about Mazda stock being a potentially good buy. I actually thought currency fluctuation would hurt the investor, but I never considered that it would have this effect, which is why I’m not quitting my day job. (Also, BoA issued a buy recommendation a few months ago, and I’m sure that had a big effect on the stock price.)

    However, if you had bought Mazda stock at that time, you investment would be about double now. Also announced today, Mazda restated their earnings goal from 10B yen to 26B. I hope they pull it off.

  • avatar
    olddavid

    In 1986 I employed a straw man to import loaded diesel Ford and Chevy pickups to the US. At the time a Can$ was worth $.67/ US$1. The OEM’s couldn’t cope with the wild fluctuations, so recognizing I could sell these trucks in America for 20% less and still have waiting lists, I went crazy. I think we sold 300 units in 1987 alone. At a margin of approaching $3000 each. Needless to say, Ford and GM were livid.They finally went to court to curtail the franchisees from selling to anyone on the blacklist (me, and about 100 others). Currency manipulation is nothing new. How you take advantage of it is the key. The $$$ built my first house.Plus, once the hammer fell, we moved to lease returns and clean used vehicles. The strengthening Canadian currency as well as post 9/11 restrictions killed the market. But a great time was had by all while it lasted. You could argue my retirement fund was created by the money we made in those years.I believe there truly is nothing new under the sun.

    • 0 avatar
      danio3834

      I remember the same thing occurring in the mid 2000s, except it was Canadian customers importing from the US. The dollar coming into parity rather rapidly with the MSRP gap still wide. At the time I was with Nissan who sold the 350Z in Canada starting at around $47,000, where that car started at under $30,000 in the US.

      The OEMs try and stave off the tide with things like allocation restrictions and warranty cancellations, but in the end, cost rules. Enterprising entrepreneurs will find a way to satisfy the market.

  • avatar
    missinginvlissingen

    My family fleet consists of one Mazda and one Subaru, so I’ll complain that this article did not deliver the riches that the headline promised me.

    Nonetheless, I root for both of these carmakers, so hopefully the falling yen will ensure that they both gain enough financial strength to continue offering unconventional choices in the US market.

  • avatar
    stottpie

    “nips”?

    what the fuck is wrong with you?

  • avatar
    skor

    “Some people like to bitch about the crafty Nips who are manipulating their currency again.”

    Oh yeah, those inscrutable orientals are so crafty. They craft-ied themselves into a two decades long economic malaise. Only now does it appear that they will snap out of it…….and only by employing economic policies that are similar to the those utilized by Imperial Japan back in the 1930’s to pull the Empire out of Depression 1.0.

    Keep your heads up, it’s only a matter of time before some new jet powered Zeros appear over the West Coast.

  • avatar
    icemilkcoffee

    Sounds good. Too bad you forgot something rather important. For those of us sitting here stateside- Let’s say we bought Mazda or Subaru stocks while the yen was strong, and the stocks were down. Guess what, our gains in these stocks would have been neatly canceled out by the weakening yen.

    • 0 avatar

      Good point. But always check the chart (in this case of the ADR) first:

      investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ticker=MZDAY

      • 0 avatar
        Pch101

        Mazda trades in the pink sheets, not on the NASDAQ, and the trading volume is thin. It’s an aggressive, speculative bet more than it is an investment.

        Caveat emptor: http://www.investopedia.com/articles/fundamental-analysis/08/pink-sheets-ottcb.asp

      • 0 avatar

        Rolleyes – The price of an ADR generally reflects that of the underlying stock converted to US Dollars. The link was not given as an invitation to trade, but to point to an illustrative chart, in US Dollars, that goes straight up, and not sideways as icemilkcoffee insinuated. I thought this is an area familiar to you.

      • 0 avatar
        Pch101

        “The price of an ADR generally reflects that of the underlying stock converted to US Dollars.”

        That’s fine, but that wasn’t my point at all.

        The issue here is that the Mazda shares trade in the pink sheets (the OTC market).

        My prior comment and the link that I provided explain why pink sheet stocks are inherently more risky than are shares traded on the NASDAQ, NYSE and AMEX exchanges. The OTC market is less transparent and less liquid than the major exchanges, and that is not a good thing.

  • avatar

    Everybody seems to get upset by my writing today.

    Frau Schmitto-san, leaning over my shoulder: “NIPS? Are you writing about nipples again?????”

    • 0 avatar
      Lorenzo

      People ARE rather sensitive these days. I was attacked in another forum awhile back for using the word “niggardly”. Whatever you do, don’t refer to some sad sack as a “poor bugger”.

      Note: definition 3. Slang: a humorous or affectionate term for a man or child: a silly old bugger a friendly little bugger.

  • avatar
    SKT

    Nips?

    Was the use of that word necessary ? Keep it on the cars and the car biz.

    The writing piece could have stood on its own without having to use a racial slang.

    It’s still your choice to write however you like, just found it jarring and un-TTAC-like.

    But hey, what the hell do I know – I own a 2008 Shelby GT 500.

  • avatar
    jim brewer

    Could be worse, I guess. My Dad the WWII veteran told me that GIs rarely referrred to the Japanese as “nips”. They customarily referred to the Japanese as “yellow bellies”

  • avatar
    cgjeep

    My mom would never buy a Japanese car because of “what they did in WWII”. Funny though she had no problem buying a Mercedes.


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