Hennessy Japan Fund (Trades, Portfolio), part of California-based Hennesy Advisors Inc. (HNNA, Financial), disclosed in a portfolio update filing that its top trades during the fourth quarter of 2022 included new positions in Hoya Corp. (TSE:7741, Financial) and Olympus Corp. (TSE:7733, Financial), a boost to its holding in Seven & I Holdings (TSE:3382, Financial) and reductions to its positions in Mercari Inc. (TSE:4385, Financial) and Murata Manufacturing Co. Ltd. (TSE:6981, Financial).
Managed by Masakazu Takeda and Yu Shimizu, the fund seeks long-term capital appreciation by investing primarily in Japanese companies. Hennessy looks for companies that have strong management teams, quality earnings, balance sheet strength and attractive valuations.
As of October 2022, the fund’s $296-million equity portfolio contains 34 stocks, with three new positions and a quarterly turnover ratio of 7%. The top-four sectors in terms of weight are industrials, consumer defensive, technology and financial services, with weights of 36.45%, 16.34%, 14.98% and 13.69%.
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.
Hoya
The fund invested in 44,220 shares of Hoya Corp. (TSE:7741, Financial), giving the position 1.39% equity portfolio weight. Shares averaged 14,421.5 yen ($109.22) during the fourth quarter; the stock is modestly undervalued based on its price-to-GF-Value ratio of 0.80 as of Friday.
The life care and information technology company has a GF Score of 99 out of 100 based on a rank of 10 out of 10 for profitability and growth, a financial strength rank of 9 out of 10 and a rank of 8 out of 10 for GF Value and momentum.
Hoya’s profitability ranks 10 out of 10 on several positive investing signs, which include a five-star business predictability rank, a high Piotroski F-score of 7 out of 9 and an operating margin that has increased by approximately 1.1% per year on average over the past five years and is outperforming more than 95% of global competitors.
Olympus
The fund purchased 138,700 shares of Olympus Corp. (TSE:7733, Financial), giving the position 0.99% equity portfolio weight.
Shares of Olympus averaged 2,960.02 yen ($22.42) during the fourth quarter; the stock is modestly undervalued based on its price-to-GF-Value ratio of 0.83 as of Friday.
The medical instruments company has a GF Score of 87 out of 100 based on a GF Value rank of 10 out of 10, a growth rank of 7 out of 10, a financial strength rank of 5 out of 10 and a rank of 8 out of 10 for momentum and profitability.
The company’s profitability ranks 8 out of 10 on several positive investing signs, which include a high Piotroski F-score of 8 out of 9 and an operating margin that has increased by more than 13% per year on average over the past five years and is outperforming approximately 80% of global competitors.
Seven & I Holdings
The fund added 191,400 shares of Seven & I Holdings (TSE:3382, Financial), boosting the position by 131.64% and its equity portfolio by 2.42%.
Shares of Seven & I Holdings averaged 5,638.13 yen ($42.70) during the fourth quarter; the stock is modestly undervalued based on its price-to-GF-Value ratio of 0.79 as of Friday.
The company operates the convenience store chain 7-Eleven. Seven & I Holdings has a GF Score of 88 out of 100 based on a growth rank of 10 out of 10, a rank of 8 out of 10 for profitability and GF Value, a momentum rank of 6 out of 10 and a financial strength rank of 3 out of 10.
Mercari
The fund sold 494,100 shares of Mercari (TSE:4385, Financial), slicing 71.53% of the position and 2.27% of its equity portfolio. Shares averaged 2,236.85 yen ($16.94) during the fourth quarter.
GuruFocus’ GF Value line labeled the Japanese e-commerce company a possible value trap due to its low price-to-GF-Value ratio of 0.36 as of Friday and low scores for profitability and financial strength.
Mercari’s financial strength ranks 2 out of 10 on several warning signs, which include a low Piotroski F-score of 3 out of 9, a weak Altman Z-score of 1.22 and a debt-to-equity ratio that underperforms more than 90% of global competitors.
Mercari has a GF Score of 61 out of 100 driven on a momentum rank of 7 out of 10 and a growth rank of 6 out of 10 despite low scores for financial strength, profitability and GF Value.
Murata Manufacturing
The fund sold 132,600 shares of Murata Manufacturing (TSE:6981, Financial), chopping 54.41% of the position and 2.07% of its equity portfolio.
Shares of Murata Manufacturing averaged 7,368.08 yen ($55.80) during the fourth quarter; the stock is modestly undervalued based on its price-to-GF-Value ratio of 0.79 as of Friday.
The electronic circuits company has a GF Score of 95 out of 100 driven on a rank of 10 out of 10 for profitability and growth, a financial strength rank of 9 out of 10, a GF Value rank of 8 out of 10 and a momentum rank of 4 out of 10.
