The Hennessy Japan Small Cap Fund (Trades, Portfolio) invests in companies that rank in the bottom 15% of Japanese companies for market capitalization, and has said that its ability to research companies from within the nation allows it to “uncover hidden gems.”
As for specific qualities it seeks in companies, managers said in their fourth quarter letter:
The Japan Fund seeks to own a concentrated portfolio of mid- to large-cap companies with a higher return on equity, strong cash flow generation, and above average, sustainable earnings growth. Our goal is to hold high-quality, globally-oriented Japanese companies with smart management and time-tested business models.”
Hennessy’s Japan small-cap fund reported Wednesday that it selected four new stocks in the first quarter of 2015. At the end of the quarter, the portfolio contained 54 stocks in total with a value of $15 million.
The new stocks were: Benefit One Inc. (TSE:2412, Financial), NIFTY Corporation (TSE:3828, Financial), Furuya Metal Co. Ltd. (TSE:7826, Financial) and Paltac Corp (TSE:8283, Financial).
Benefit One Inc. (TSE:2412, Financial)
Hennessy purchased 21,000 shares of Benefit One Inc. in the first quarter, giving it a 1.5% portfolio space. The shares cost on average 1,417 yen per share for the quarter.
Benefit One Inc. is engaged in providing employee benefits consulting and brokerage. Benefit One Inc. has a market cap of $67.12 billion; its shares were traded at around 1,651.00 yen with a P/E ratio of 30.2 and P/S ratio of 3.18. The dividend yield of Benefit One Inc. stocks is 1.28%. Benefit One Inc. had an annual average earnings growth of 6.3% over the past five years.
NIFTY Corporation (TSE:3828, Financial)
Hennessy purchased 14,900 shares of NIFTY Corporation, reflecting 1.1% of the portfolio. The company’s share price averaged 1,336 for the quarter.
NIFTY Corporation was incorporated in February 1986. Nifty Corporation has a market cap of 31.03 billion yen; its shares were traded at around 1,345.00 yen with a P/E ratio of 11.9 and P/S ratio of 0.46. The dividend yield of Nifty Corporation stocks is 2.94%.
Furuya Metal Co. Ltd. (TSE:7826, Financial)
Hennessy bought 6,100 Furuya Metal Co. Ltd. shares, a 1% portfolio holding. The share price of the company was 2,885 yen per share.
FURUYA METAL CO. LTD. manufactures & sells industrial-use precious metal products such as iridium and platinum, and temperature sensors. Furuya Metal Co. Ltd. has a market cap of 19.07 billion yen; its shares were traded at around 2,669.00 yen with a P/E ratio of 17.8 and P/S ratio of 0.8. The dividend yield of Furuya Metal Co. Ltd. stocks is 1.5%.
Paltac Corp (TSE:8283, Financial)
Hennessy purchased 6,400 shares of Paltac Corp, a 0.55% portfolio weight. The stock’s price averaged 1,576 yen per share for the quarter.
Paltac Corp is a wholesaler that distributes cosmetics, daily necessities, and medicine to drug stores, convenience stores, supermarkets, and home centers. Paltac Corp has a market cap of 107.53 billion yen; its shares were traded at around 1,710.00 yen with a P/E ratio of 10.80 and P/S ratio of 0.13. The dividend yield of Paltac Corp stocks is 2.6%.
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