Hennessy Japan Fund (Trades, Portfolio) revealed its second-quarter buys and sells this week, which showed managers only reduced their exposure to Japanese common stocks and bought nothing new.
The Japan Fund, managed by Masakazu Takeda and Tadahiro Fujimura, has 99.67% of its assets invested in common stocks, all of which are of Japanese businesses. Of its 21 positions, it shed shares of 14 in the second quarter.
Japan has faced the risk of recession this year, causing Prime Minister Shinzo Abe to authorize 265 billion in fiscal stimulus in July. He also initiated three new “arrows” of his economic plan in his second term to enhance structural reform inhibiting growth: targeting nominal GDP target of approximately 6 trillion, increasing the birth rate and improving senior services to free caretakers to stay in the workforce. Meanwhile, the Bank of Japan doubled its rate of buying exchange traded funds and increased its U.S. dollar lending program to expand companies’ access to foreign funding.
“We believe that no one policy can improve the economy; rather, all the structural initiatives in aggregate are needed to make a meaningful impact,” Japan Fund managers said in their second quarter letter.
“We are confident that several reforms, collectively, will likely improve the economy due to the fact that the government and the Bank of Japan have become more business friendly in the pursuit of sustainable long-term growth.”
In this context, the managers have 28.5% of the $116 million portfolio in consumer industrial stocks, 22.8% in consumer discretionary and 14.6% in consumer staples.
The stocks the Hennessy Japan Fund (Trades, Portfolio) trimmed the most in the second quarter were: Sumitomo Corp. (TSE:8053, Financial), Mizuho Financial Group Inc. (TSE:8411, Financial), Toyota Motor Corp. (TSE:7203, Financial), Sumitomo Mitsui Financial Group Inc. (TSE:8316, Financial) and Pigeon Corp. (TSE:7956, Financial).
Sumitomo Corp. (TSE:8053, Financial)
The fund reduced its holding of Sumitomo Corp. by 31,500 shares, or 54.69%. It retained 26,100 shares at second quarter-end, representing 0.24% of the portfolio.
Sumitomo Corp. has a market cap of 1,404.11 billion yen; its shares were traded around 1126.50 yen with a P/E ratio of 91.72 and P/S ratio of 0.35. The trailing 12-month dividend yield of Sumitomo Corp. stocks is 4.44%. The forward dividend yield of Sumitomo Corp. stocks is 4.44%.
Mizuho Financial Group Inc. (TSE:8411, Financial)
The fund reduced its holding of Mizuho Financial Group Inc. by 216,500 shares, or 36.28%. It retained 380,200 shares, representing 0.53% of the portfolio.
Mizuho Financial Group Inc. has a market cap of 4,221.48 billion yen; its shares were traded around 171.60 with a P/E ratio of 5.08 and P/S ratio of 1.54. The trailing 12-month dividend yield of Mizuho Financial Group Inc. stocks is 4.45%. The forward dividend yield of Mizuho Financial Group Inc. stocks is 4.45%. Mizuho Financial Group Inc. had an annual average earnings growth of 10% over the past five years.
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Bottom of Form
Toyota Motor Corp. (TSE:7203, Financial)
The fund reduced its holding of Toyota Motor Corp. by 6,500 shares, or 26.64%. It retained 17,900 shares, representing 0.86% of the portfolio.
Toyota Motor Corp. has a market cap of 19,330.34 billion yen; its shares were traded around 5899.00 yen with a P/E ratio of 8.0 and P/S ratio of 0.63. The trailing 12-month dividend yield of Toyota Motor Corp. stocks is 3.19%. The forward dividend yield of Toyota Motor Corp. stocks is 3.19%. Toyota Motor Corp. had an annual average earnings growth of 3.70% over the past 10 years.
Sumitomo Mitsui Financial Group Inc. (TSE:8316, Financial)
The fund reduced its holding of Sumitomo Mitsui Financial Group Inc. by 10,800 shares, or 15.52%. It retained 58,800 shares, representing 1.61% of the portfolio.
Sumitomo Mitsui Financial Group Inc. has a market cap of 4619.85 billion yen; its shares were traded around 3432.00 yen with a P/E ratio of 5.99 and P/S ratio of 1.26. The trailing 12-month dividend yield of Sumitomo Mitsui Financial Group Inc. stocks is 4.44%. The forward dividend yield of Sumitomo Mitsui Financial Group Inc. stocks is 4.44%.
Pigeon Corp. (TSE:7956, Financial)
The fund reduced its holding of Pigeon Corp. by 12,600 shares, or 12.99%. It retained 84,400 shares, representing 1.82% of the portfolio.
Pigeon Corp. has a market cap of 373.66 billion yen; its shares were traded around 3105.00 yen with a P/E ratio of 35.43 and P/S ratio of 4.03. The trailing 12-month dividend yield of Pigeon Corp. stocks is 1.41%. The forward dividend yield of Pigeon Corp. stocks is 1.6%. Pigeon Corp. had an annual average earnings growth of 15.8% over the past 10 years. GuruFocus rated Pigeon Corp. the business predictability rank of 3.5-star.
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