Short Briefings on Long Term Thinking - Baillie Gifford Where obsession meets opportunity: Japan’s ‘overlooked’ small caps
Oct 23, 2025
Brian Lum, an investment manager at Baillie Gifford specializing in Japanese small caps, shares insights from his new role. He identifies Japan’s smaller companies as a prime growth opportunity, discussing standout firms like Weathernews, which uses AI for weather forecasts, and LITALICO, helping people with disabilities find work. Lum highlights the deep potential within Japan's market, the importance of in-person meetings, and the innovative ways companies integrate AI, making a strong case for why investors should not overlook this sector.
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The Galápagos Advantage
- Japan's market isolation creates unique product niches and opportunities for local innovators to scale domestically.
- That Galápagos-like environment plus a large domestic market makes Japan ideal for small-cap growth investing.
Tighten Discipline Without Style Drift
- Keep your growth-investing style intact but tighten portfolio discipline and tools to avoid overpaying and concentration risk.
- Reassess correlations and be ready to make quick decisions when facts change.
Do Meet Companies Face-To-Face
- Meet companies in person and build networks; there are no shortcuts to assessing small-cap potential.
- Speaking to many firms uncovers opportunities and leads to other useful introductions.
