We also initiated a position in the common stock of Kurita Water Industries Ltd. ("Kurita") (TSE:6370, Financial), a Japan-based provider of water treatment chemicals, facilities and maintenance. Kurita's business is currently depressed, as many of its Japanese electronics customers have been struggling and the company has experienced cost over-runs as part of its recent international expansion efforts. nevertheless, Kurita has remained profitable and generated positive free cash flow despite the challenging industry environment. The company is well positioned, with a debt free and cash rich balance sheet. This financial flexibility will allow for the continued international expansion efforts. The management team has a good long-term track record, having operated the business profitably in each of the last ten years. Additionally management is much more shareholder friendly than most Japanese companies, as evidenced by a history of share repurchases (7% of the outstanding shares since 2011) and a dividend increase in each of the last ten years. Kurita common was purchased at a slight premium to book value and about a 7.5% free cash flow yield. Cash and marketable short-term investments account for about one third of the company's market cap.
From Third Avenue Management (Trades, Portfolio)'s first quarter 2014 letter.
