The fund operates as part of New York-based value investing firm Tweedy, Browne Co. LLC. The portfolio managers aim to invest in a diverse range of companies in developing countries, with an emphasis on undervalued securities, in order to achieve long-term capital growth. Though it invests primarily in non-U.S. marketable equity securities, the fund does own shares of some U.S.-listed securities if the portfolio managers perceive an attractive enough growth opportunity.
Based on its investing criteria, the fund's top buys for the quarter were for Fresenius SE & Co. KGaA (XTER:FRE, Financial) and A-Living Smart City Services Co. Ltd. (HKSE:03319, Financial), while its biggest sells were for Ebara Corp. (TSE:6361, Financial) and Baidu Inc. (BIDU, Financial).
The fund established a new holding of 2,276,215 shares in Fresenius (XTER:FRE, Financial), impacting the equity portfolio by 1.67%. During the quarter, shares traded for an average price of 36.86 euros ($44.04).
Fresenius is a German health care company that operates through four segments: Medical Care, which provides a global network of dialysis clinics, products and services; Kabi, which specializes in generic IV drugs and nutrition; Helios, a private hospital operator; and Vamed, a provider of project management services for health care facilities.
On April 13, shares of Fresenius traded around 38.76 euros for a market cap of 21.39 billion euros and a price-earnings ratio of 12.56. The GuruFocus Value chart rates the stock as modestly undervalued.
The company has a financial strength rating of 4 out of 10 and a profitability rating of 8 out of 10. While the cash-debt ratio of 0.08 is lower than 88% of peers, the Piotroski F-Score of 6 out of 9 indicates that the financial situation is stable. The return on invested capital is consistently higher than the weighted average cost of capital, indicating the company is generating a positive return on investments.
A-Living Smart City Services
The fund increased its investment in A-Living Smart City Services (HKSE:03319, Financial) by 14,607,245 shares, or 2649.84%, for a total holding of 15,158,495 shares. The trade had a 1.06% impact on the equity portfolio. Shares traded for an average price of 33.37 Hong Kong dollars ($4.29) during the quarter.
Based in China, A-Living Smart City Services, as the name suggests, offers various services that relate to living and smart city management, such as hydropower maintenance, parking management, home cleaning, interior decoration and landscaping. It operates as a property management holding company.
On April 13, shares of A-Living traded around HK$32.25 for a market cap of HK$42.61 billion and a price-earnings ratio of 20.87. The GF Value chart rates the stock as a potential value trap, as the price is too far below the intrinsic value estimate.
The company has a financial strength rating of 8 out of 10 and a profitability rating of 8 out of 10. The interest coverage ratio of 60.01 and Altman Z-Score of 6.47 indicate a fortress-like balance sheet. The three-year revenue growth rate is 62.3%, while the three-year Ebitda growth rate is 59.6%.
The fund sold out of its 1,992,700-share stake in Ebara Corp. (TSE:6361, Financial), impacting the equity portfolio by -1.07%. During the quarter, shares traded for an average price of 3,951.31 Japanese yen ($36.23).
Ebara is a machinery manufacturing company headquartered in Japan. It primarily manufactures environmental and industrial machinery such as pumps and turbines for the hydropower and solar energy industries. It also owns Elliott Company in the U.S. and Sumoto S.r.l. in Italy.
On April 13, shares of Ebara traded around 4,915.00 yen for a market cap of 476.87 billion yen and a price-earnings ratio of 19.55. The GF Value chart rates the stock as significantly overvalued.
The company has a financial strength rating of 7 out of 10 and a profitability rating of 6 out of 10. The interest coverage ratio of 32.6 and Altman Z-Score of 6 out of 9 indicate a stable financial situation. The WACC has risen above the ROIC in recent years, indicating the company is not currently creating value as it grows.
The fund trimmed its Baidu (BIDU, Financial) holding by 269,100 shares, or 33.11%, for a remaining holding of 543,697 shares. The trade had a -0.96% impact on the equity portfolio. Shares traded for an average price of $261.90 during the quarter.
Baidu is a Chinese internet and technology giant that specializes in artificial intelligence, internet services, search engines and related products. It has access to the world's largest domestic addressable population of internet users.
On April 13, shares of Baidu traded around $216.56 for a market cap of $72.68 billion and a price-earnings ratio of 22.53. The GF Value chart rates the stock as significantly overvalued.
The company has a financial strength rating of 6 out of 10 and a profitability rating of 8 out of 10. The interest coverage ratio of 4.68 is lower than 84% of peers, but the Altman Z-Score of 3.5 indicates the company is not likely in danger of bankruptcy. The three-year revenue growth rate is 9.9%, while the three-year Ebitda growth rate is 13.2%.
As of the quarter's end, the fund held shares in 86 stocks valued at a total of $6.10 billion. The top holdings were Nestle SA (XSWX:NESN, Financial) with 4.88% of the equity portfolio, Diageo PLC (LSE:DGE) with 4.25% and CNH Industrial NV (CNHI) with 4.18%.
In terms of sector weighting, the firm was most invested in consumer defensive, financial services and industrials.
Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Portfolio updates reflect only common stock positions as per the regulatory filings for the quarter in question and may not include changes made after the quarter ended.
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