Many stock investors collect dividends. Hiroto Kiritani, however, collects melons. And ramen noodles, McDonald’s hamburgers, the clothes on his back, anything, really, that Japanese companies send him, gratis, just for owning their stock.
Kiritani, 65, is a big-time player in an obscure corner of the Japanese investment world: “yutai,” which loosely translated means “hospitality.”
Yutai are gifts that a growing number of Japanese companies send to stockholders as a courtesy, a sort of thank you for owning their shares. While companies in other places occasionally throw perks at stockholders, the practice has reached its ultimate expression in Japan, where a cottage industry has sprung up around yutai.
Kiritani is the unlikely face of these freebies. A former professional player of a Japanese version of chess, he watched his stock investments plunge when the financial crisis hit in 2008. Rather than sell, he held on to as much as he could, and, he said, got by on yutai.
“Living off yutai saved me,” Kiritani says. Better still, his investments have bounced back. “Securities companies say cut your losses when stocks fall, but I say if they drop you should stick it out.”
Yutai come in many forms, from bags of rice to free hotel stays. Oriental Land Co., the operator of Tokyo Disneyland, gives one-day passes to the theme park, while ANA Holdings Inc. offers half-price plane tickets. Densan System Co., an information technology company, has options from ramen noodles to melons to ham.
The gifts are rooted in a culture where seasonal presents are part of life. Yutai usually arrive in midsummer and at the end of the year, when people give presents to family, friends and business associates.
These days, more Japanese businesses are turning to yutai to court individual investors. Some 1,146 public companies, or 30 percent, were providing the perks as of August, according to Nomura Investor Relations Co. That’s up from 251 in 1992, when Nomura started researching yutai.
Asset managers, particularly those outside Japan, are less enamored with the gift-giving. For starters, all investors often get the same yutai, regardless of how much stock they own. And generally you must be in Japan to collect the gifts. That means yutai mostly benefit local individual investors.
Don’t want that melon? Companies such as Yutai-Market Inc. are in the business of making a market in rejected freebies. Yutai-Market buys the benefits at a discount from money managers and others and sells them through its Ticket Online website.
Japanese individuals are “the only ones who feel any joy about yutai,” said Kiyoshi Ishigane, Tokyo-based chief strategist at Mitsubishi UFJ Asset Management Co. “For institutions, it just gives them more work to do. Cash or higher dividends would be better.”
Don’t tell that to Kiritani. During interviews in a cafe in suburban Tokyo where he gets free yogurt juice, he can scarcely contain his enthusiasm for yutai. He’s dressed head to toe in clothes got through owning stocks: a brown sweater from Jeans Mate Corp., brown trousers from Himaraya Co., and a watch from NEC Capital Solutions Ltd. His dark blue bag is full of yutai vouchers and prepaid cards, as well as handwritten notes about his investments.
Seven years ago it wasn’t like that. His hundreds of millions of yen in shares was evaporating and brokers were calling in margin loans. Kiritani had retired from professional chess, so he had no source of regular income. At the worst point, he’d lost about 80 percent of his wealth, he says.
“I thought I was going to die,” he said.
As his bank account dwindled Kiritani overhauled his shopping habits to take advantage of yutai.
While Kiritani may be the face of yutai living, bloggers are swarming to the topic. A scribe who goes by the name “Chinako” is one of a legion of Japanese housewives who rate the freebies and share strategies on how to get more of them.
Kiritani said he owns about 500 yutai stocks. Among his current picks are Colowide Co. and Diamond Dining Co., restaurant operators that send vouchers for free meals. Colowide shares soared 60 percent last year, and Diamond Dining’s more than doubled.
“If you buy stocks with yutai, the returns are good, as they have dividends and also benefits,” Kiritani said. A savvy yutai stock picker can get a combined yield, dividends plus the value of gifts, of about 5 percent, he said. A bank savings account, by contrast, pays next to nothing.
Government policy favors the perks. While the tax on dividends doubled to 20 percent last year for investments outside NISA accounts, yutai remain exempt.
After more than 30 years of stock investing, Kiritani said he’s up from when he started but down from his peak in 2005. He’s paid back a loan he took from his 93-year-old father during the crisis and vows never to trade on margin again. And he’s sticking with his yutai strategy.
“Everyone likes getting gifts,” he said.