Hennessy Japan Fund (Trades, Portfolio), part of California-based Hennessy Advisors Inc. (HNNA, Financial), disclosed that its top five trades during its fiscal third quarter included new positions in Tokio Marine Holdings Inc. (TSE:8766, Financial) and ORIX Corp. (TSE:8591, Financial), reductions to its holdings in Sony Group Corp. (TSE:6758, Financial) and Recruit Holdings Co. Ltd. (TSE:6098, Financial) and the closure of its position in Nitori Holdings Co. Ltd. (TSE:9843, Financial).
Managed by Masakazu Takeda and Yu Shimizu, the fund seeks long-term capital appreciation by investing primarily in large-cap equity investments of Japanese companies. The fund looks for companies that have good businesses, quality management teams and are trading at attractive share prices.
As of July, the fund’s $375 million equity portfolio contains 32 stocks, with nine new positions and a quarterly turnover ratio of 18%. The top-three sectors in terms of weight are industrials, 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 is sourced from the quarterly updates on the website of the fund(s) in question. This usually consists of long equity positions in U.S. and foreign stocks. All numbers are as of the quarter’s end only; it is possible the guru may have already made changes to the positions after the quarter ended. However, even this limited data can provide valuable information.
Tokio Marine Holdings
The fund purchased 1,055,400 shares of Tokio Marine Holdings (TSE:8766, Financial), giving the position a 5.50% equity portfolio weight. Shares averaged 2,506.71 Japanese yen ($17.36) during the firm's fiscal third quarter; the stock is fairly valued based on Thursday’s price-to-GF-Value ratio of 0.94.
The property and casualty company has a GF Score of 78 out of 100 based on a growth rank of 8 out of 10, a financial strength rank of 5 out of 10, a GF Value rank of 3 out of 10 and a rank of 6 out of 10 for profitability and momentum.
The Matthews Japan Fund (Trades, Portfolio) also has a holding in Tokio Marine Holdings.
ORIX Corp
The fund invested in 713,400 shares of ORIX Corp. (TSE:8591, Financial), giving the position a 3.39% equity portfolio weight. Shares averaged 2,337.04 Japanese yen ($16.19) during the third quarter; the stock is fairly valued based on Thursday’s price-to-GF-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 just 1 out of 10, ORIX has a momentum rank of 10 out of 10, a growth rank of 9 out of 10, a GF Value rank of 7 out of 10 and a profitability rank of 6 out of 10.
Sony
The fund sold 107,800 shares of Sony (TSE:6758, Financial), trimming 22.18% of the position and 2.13% of its equity portfolio. Despite this, Sony remains the fund’s top holding with an equity portfolio weight of 8.56%.
Shares of Sony averaged 11,443.60 Japanese yen ($79.27) during the third quarter; the stock is modestly undervalued based on Thursday’s price-to-GF-Value ratio of 0.79.
The consumer electronics giant has a GF Score of 81 out of 100 based on a rank of 8 out of 10 for growth and GF Value, a momentum rank of 7 out of 10, a profitability rank of 6 out of 10 and a financial strength rank of 3 out of 10.
Gurus with holdings in Sony’s U.S.-based shares (SONY, Financial) include PRIMECAP Management (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies and Mario Gabelli (Trades, Portfolio)’s GAMCO Investors Inc. (GBL, Financial).
Recruit Holdings
The fund sold 381,900 shares of Recruit Holdings (TSE:6098, Financial), slicing 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 price-to-GF-Value ratio of 0.70.
The human resource technology and business solutions company has a GF Score of 86 out of 100 based on a growth rank of 9 out of 10, a profitability rank of 8 out of 10, a financial strength rank of 7 out of 10, a momentum rank of 5 out of 10 and a GF Value rank of 4 out of 10.
Nitori Holdings
The fund sold all 91,800 of its shares of Nitori Holdings (TSE:9843, Financial), reducing its equity portfolio by 2.16%. Shares averaged 13,010.10 Japanese yen ($90.07) during the third quarter.
GuruFocus labeled the furnishing and fashion store company a possible value trap based on its low price-to-GF-Value ratio of 0.54 as of Thursday and a weak momentum rank of 1 out of 10.
Despite low ranks for momentum and GF Value, Nitori has a GF Score of 80 out of 100, driven by a rank of 10 out of 10 for profitability and growth and a financial strength rank of 7 out of 10.
