Japan stocks have disappointed this year, but some portfolio managers are betting companies will finally start putting the piles of cash on their balance sheets to work for shareholders.
"The managers [of Japanese companies] were able to accumulate tons of cash sitting on their balance sheet generating zero returns without any idea of returns for shareholders," Peter Boardman, managing director at Tradewinds, told CNBC.
Over $2 trillion worth of cash is estimated to be sitting on Japan Inc. balance sheets.
"Now you're starting to see -- and this is part of the Abenomics third arrow – [companies] actually use that cash," he said, adding investors are starting to put "peer pressure" on companies to redeploy the cash.
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Abenomics – a series of policy measures unveiled under Prime Minister Shinzo Abe to jump start the economy – has been described as a series of "arrows," with the "first arrow" aggressive easing from the Bank of Japan, which weakened the yen. It was followed by a "second arrow" of ambitious government spending, although the "third arrow" of structural reforms has proved difficult for the government to implement.
Boardman expects insurers -- including his stock pick MS&AD, one of the world's largest insurers -- will be among companies redeploying cash.