Hennessy Japan Fund (Businesses, Portfolio), which is part of the Californian company Hennessy Advisors Inc. (HNNA, Financial), disclosed that its top five deals in its fiscal third quarter included new positions in Tokio Marine Holdings Inc. (EAST: 8766, Financial) and ORIX Corp. (EAST: 8591, Financial), reductions in its stakes in Sony Group Corp. (EAST: 6758, Financial) and Recruit Holdings Co. Ltd. (EAST: 6098, Financial) and closing its position in Nitori Holdings Co. Ltd. (EAST: 9843, Financial).
Managed by Masakazu Takeda and Yu Shimizu, the fund aims for long-term capital appreciation by investing primarily in large-cap stocks of Japanese companies. The fund looks for companies that have good businesses, quality management teams and are trading at attractive prices.
In July, the fund’s $375 million equity portfolio contained 32 stocks, with nine new positions and a quarterly turnover rate of 18%. The top three sectors in terms of weight are manufacturing, technology and financial services, with weights of 38.33%, 18.09% and 13.19%.
Investors should be aware that portfolio updates for mutual funds do not necessarily provide a complete picture of a guru’s holdings. The data comes from quarterly updates on the website of the fund(s) in question. These are usually long positions in US and foreign stocks. All figures are at the end of the quarter only; it is possible that the guru has already made changes to the positions after the end of the quarter. However, even this limited data can provide valuable information.
Tokyo Marine Holdings
The fund purchased 1,055,400 shares of Tokio Marine Holdings (EAST: 8766, Financial), giving the position an equity weighting of 5.50%. Shares averaged 2,506.71 Japanese yen ($17.36) during the company’s third fiscal quarter; the stock is fair valued based on Thursday’s GF price-to-value ratio of 0.94.
The IARD company has a GF score of 78 out of 100 based on a growth ranking of 8 out of 10, a financial strength ranking of 5 out of 10, a GF value ranking of 3 out of 10 and a 6 out of 10 ranking for profitability and dynamics.
Matthews Japan Fund (Trades, Portfolio) also owns a stake in Tokio Marine Holdings.
The fund invested in 713,400 shares of ORIX Corp. (EAST: 8591, Financial), giving the position an equity weighting of 3.39%. Shares averaged 2,337.04 Japanese yen ($16.19) during the third quarter; the stock is valued at fair value based on Thursday’s GF price-to-value ratio of 0.91.
The diversified financial services company has a GF score of 78 out of 100. Even though the company’s financial strength ranks only 1 out of 10, ORIX has a dynamic ranking of 10 out of 10, a growth ranking of 9 out of 10, a GF Value Rank of 7 out of 10 and Profitability Rank of 6 out of 10.
The fund sold 107,800 Sony shares (EAST: 6758, Financial), reducing 22.18% of the position and 2.13% of its equity portfolio. Despite this, Sony remains the fund’s largest holding with an equity weighting of 8.56%.
Shares of Sony averaged 11,443.60 Japanese yen ($79.27) during the third quarter; the stock is slightly undervalued based on Thursday’s GF price-to-value ratio of 0.79.
The consumer electronics giant has a GF score of 81 out of 100 based on an 8 out of 10 ranking for GF growth and value, a dynamic ranking of 7 out of 10, a profitability ranking of 6 out of 10 and a financial strength rating. out of 3 out of 10.
Gurus holding stakes in Sony US stocks (SONY, financial) include
PRIMECAP management (Businesses, Portfolio),
Jim Simons (Businesses, Portfolio)’ Renaissance Technologies and
Mario Gabelli (Trades, Portfolio)’s GAMCO Investors Inc. (GBL, Financial).
The fund sold 381,900 shares of Recruit Holdings (EAST: 6098, Financial), cutting 43.74% of the position and 3.18% of its equity portfolio. The transaction relegated Recruit from the fund’s third-largest holding to the fund’s sixth-largest holding.
Shares of Recruit Holdings averaged 4,395.82 Japanese yen ($30.43) during the third quarter; the stock is significantly undervalued based on Thursday’s GF price-to-value ratio of 0.70.
The HR business technology and solutions company has a GF score of 86 out of 100 based on a growth ranking of 9 out of 10, a profitability ranking of 8 out of 10, a financial strength ranking of 7 out of 10, a Dynamic Ranking of 5 out of 10 and a GF Value Ranking of 4 out of 10.
The fund sold all of its 91,800 shares of Nitori Holdings (EAST: 9843, Financial), reducing its equity portfolio by 2.16%. Shares averaged 13,010.10 Japanese yen ($90.07) during the third quarter.
GuruFocus called the home furnishings and fashion store company a possible value trap due to its low GF price-to-value ratio of 0.54 as of Thursday and weak momentum of 1 in 10.
Despite low rankings for momentum and GF value, Nitori has a GF score of 80 out of 100, driven by a 10 out of 10 ranking for profitability and growth and a financial strength ranking of 7 out of 10.