Investment Activity Review – February 2014

 After a flurry of trades in January to take advantage of the mini-micro correction, things calmed down in February. Only one trade was made.

Opened Position in Toyota Motors
I haven’t been a fan of car companies, more specifically the North American firms in my time as they have historically destroyed significant amounts of capital. On most of my rankings they have often placed near the bottom in terms Economic Profit. From a product quality perspective, the level of cars were not in the same zip code as the Japanese and Euro car makers. After a negative experience of owning the Japan ETF’s, I was looking for another way to get direct exposure to the Japan reflation theme that is in full effect and show no signs of going away. I figure there is no better way than buying one of the most well run, highly profitable Japanese companies on the planet. Despite the 8 million vehicle recall debacle a few years ago as well as the long process to recover from the tsunami/earthquake, the company has still remained a blue chip company. In late January when everyone was selling anything Asian, I looked at the numbers for Toyota and they were solid. The company reported for the 9 month period a profit of $15 BILLION. A weaker yen helped. Despite a weak consumer market in Japan, sales have been strong and in the US, Toyota is a close second to Ford in sales. It just became the first auto maker to produce 10 million cars in 2013. The stock was trading into the low $110’s, down from the $130 range. On a discounted cash flow basis, it has a valuation in the $150’s, so lots of upside from a company that the market has not really recognized. Probably because the market is busy trading/gambling on Tesla. Long term Toyota is solid company and the lower price point, made me decide to open a position. Should the market tank, I would have no issue buying more shares.