Honda Motor Ltd. (HMC-N)

Believes Japanese quality is excellent.
Bullish on the company for the long term.
Investors must be willing to hold shares for long term (5-10 years).
Will see upside in electronic vehicles.

Took a leadership in hydrogen fuel cells. The problem is that we lack the infrastructure for hydrogen and he wonders where you could fill up your hydrogen car right now. Not confident Honda has chosen the right horse and he would rather buy BMW for their electric cars.

Probably a reasonable time to look at automotive companies. Honda builds quality products and an efficiently run company. They seem to be a little slower on the drive to build the electric vehicles. How well this does is going to be all about how they are going to adapt to a rapidly changing industry. Trading at a reasonably low multiple.

The Japanese are making great cars, and are doing a better job than the US automakers. A problem they face is a much stronger yen, which has happened in the last little while even though there are negative interest rates. US sold 80 million cars in North America last year, and that is going to be a hard number to achieve again. Expects car sales will be going down in NA.

It has not been very good. Investors thought they would benefit from the depreciating Yen and higher exports. If you bought it in Japan you would actually be down.

ADRs. They are US dollar denominated. You either have a currency tailwind or headwind. Last year it was a tailwind. It also harms earnings. If the earnings are off shore and US dollar is strong, exports are hampered. It was an off quarter for Honda. Toyota has done a better job in the last year at getting things sold. He prefers the ones they own – F-N and TTM-N.