Far East Banking Stocks Look Attractive

Mizuho Financial Group (MFG) is the second largest financial company in Japan and the ninth largest in the world. It serves over 26 million Japanese households, international corporations and investment clients. The stock, actively traded on the NYSE, is actually up about 12% year-to-date. Also on the NYSE worth looking at is Mitsubishi UFJ Financial Group (MTU), a large international banking concern whose shares are up 10% year-to-date. Neither is included in the popular Financial Select Sector SPDR (XLF) ETF. (Note, my hedge fund owns both of these stocks.)

Knowing my recent interest in off-the-radar screen names, I've also dug through the dustbins at adr.com to unearth some lesser followed picks that are traded over-the-counter. As a rule, most people simply will not consider stocks that trade on the over-the-counter bulletin board (OTC). The lack of transparency, especially trade reporting, is a big negative, even if many investors end up buying mutual funds that own these securities anyway.

Yet to anybody who says that legitimate profits can't be earned on over the counter stocks, just take a gander at shares of Nintendo (OTC: NTDOY), which have risen over 300% over the past two years as the market has continued to reflect the growing popularity of the company's Wii game console.

The risk with trading over the counter is liquidity risk. And while I admit transaction costs are usually higher for OTC stocks, when you play for the big moves, an extra percent or two haircut is more than worth it. That being said, limit orders and a reasonable position size is a must.