John Coumarianos: Your portfolios, the foreign ones, the global and the overseas funds have a significant amount of Japanese exposure, certainly more than your peers. And Japan has had rough economic times arguably for a couple of decades. Now, tell us what you see in some of the firms you own in Japan and why you have such a significant exposure to those firms?
Abhay Deshpande: Well, Japan, it's a cliché. But Japan is a market of stocks, not a stock market. And to illustrate that, where we have some of our larger holdings such as Shimano, we bought in 1993-1994, we've actually made money on that first purchase over the last 17-18 years, even though the stock market itself is down by maybe 40% or 50% since then, the Japanese market.
And why is that? It's because Shimano – well, first of all, 80% to 90% of its business is not in Japan. Secondly, they've repurchased 30% to 35% of their stock over the last say 10 to 15 years. And the management itself is very fixated on this core business. They're not distracted by investing in non-core areas.
They spend a lot of time on the business trying to spend the capital wisely, create and to fortify its moat, as you say, and to assure that new competition doesn't erode it. And that's been the focus of the management team over the years. And that business consequently has grown its intrinsic value, and the stock prices have actually done relatively well compared to the U.S. stock market. It's a plus number in front of the return column.
Many of our Japanese names are like that. So, a Fanuc, for instance, which is a more recent purchase over last three or four years is a Japanese-listed company again, but where 80% of the business is outside of Japan, including 20% in China. So, we have our backdoor play into China. We have exposure to industrial automation around the world, and we get it through a business that has got 20% of its market cap in cash, so it's not leveraged with a solid competitive position.