Matthews Japan Fund's Top 5 Trades in the 2nd Quarter

Japan-based fund releases quarterly portfolio

Author's Avatar
James Li
Aug 03, 2021
Summary
  • Fund’s top trades include buys in Toyota and JSR.
  • Fund exits stake in Disco.
  • Fund also reduces its holdings in SMC and TDK.
Article's Main Image

The

Matthews Japan Fund (Trades, Portfolio) disclosed this week that its top five trades during the second quarter included new positions in Toyota Motor Corp. (TM, Financial)(TSE:7203, Financial) and JSR Corp. (TSE:4185, Financial), the closure of its stake in Disco Corp. (TSE:6146, Financial) and reductions to its holdings in SMC Corp. (TSE:6273, Financial) and TDK Corp. (TSE:6762, Financial).

Overseen by Taizo Ishida and Shuntaro Takeuchi, the fund seeks long-term capital appreciation by investing primarily in common and preferred stocks of companies located in Japan. The fund selects investments using a bottom-up, fundamental approach to investing.

1422313134672171008.png

According to its shareholder letter, the fund returned -0.33% during the second quarter, underperforming the MSCI Japan Index return of -0.25% in the same period. The letter added that while Japanese securities lagged global peers during the quarter as the nation’s current state of emergency status continued in the midst of the Tokyo Olympics, vaccination rates topped 20% in June compared to just 5% in May.

As of June 30, the fund’s $1.61 billion equity portfolio contains 52 stocks, with nine new positions and a turnover ratio of 16%. The fund’s top four sectors in terms of weight are technology, health care, industrials and basic materials, with weights of 23.25%, 16.65%, 15.09% and 10.86%, respectively.

1422316024262414336.png

Toyota Motor Corp

The fund purchased 584,600 shares of Toyota Motor Corp. (

TSE:7203, Financial), giving the position a 3.18% weight in the equity portfolio. Shares averaged 8,949.32 Japanese yen ($82.05) during the second quarter; the stock is significantly overvalued based on Tuesday’s price-to-GF-Value ratio of 1.45.

1422587142416224256.png

GuruFocus ranks the Japanese automaker’s profitability 6 out of 10 on the back of profit margins and returns outperforming more than 65% of global competitors despite three-year revenue growth rates topping just over half of global vehicles and parts companies.

1422621946121670656.png

The fund said in its letter that while Toyota lags competitors in the “ongoing shift to electric vehicles,” Toyota is “ahead of its peers in terms of electrification technology.” The fund established a holding in Toyota for the first time since early 2017 in view of the automaker’s “planned launch of key electric vehicle models.”

1422623767871475712.png

Gurus with holdings in Toyota’s U.S.-based shares (

TM, Financial) include Ken Fisher (Trades, Portfolio)’s Fisher Investments and Jim Simons (Trades, Portfolio)’ Renaissance Technologies.

1422622368584552448.png

JSR

The fund purchased 1,272,900 shares of JSR (

TSE:4185, Financial), giving the stake a 2.41% weight in its equity portfolio. Shares averaged 3,345.08 yen ($30.65) during the second quarter; the stock is significantly overvalued based on Tuesday’s price-to-GF-Value ratio of 2.17.

1422625090759151616.png

GuruFocus ranks the chemical company’s financial strength 5 out of 10 on the heels of a moderately-weak Altman Z-score of 2.71 and a debt-to-equity ratio that underperforms more than half of global competitors.

1422628128911642624.png

Disco

The fund sold 76,700 shares of Disco (

TSE:6146, Financial), impacting the equity portfolio by -1.56%. Shares averaged 34,897 yen ($319.78) during the second quarter; the stock is fairly valued based on Tuesday’s price-to-GF-Value ratio of 0.98.

1422628924961181696.png

GuruFocus ranks the semiconductor company’s financial strength and profitability 9 out of 10 on several positive investing signs, which include a four-star business predictability rank, a double-digit Altman Z-score, and an operating margin that has increased approximately 3.4% per year on average over the past five years and is outperforming more than 93% of global competitors.

1422630702213615616.png

SMC

The fund sold 41,600 shares of SMC (

TSE:6273, Financial), reduicng the position by 43.02% and impacting the equity portfolio by -1.56%. Shares averaged 64,683.30 yen ($592.78) during the second quarter; the stock is significantly overvalued based on Tuesday’s price-to-GF-Value ratio of 1.36.

1422631479934046208.png

GuruFocus ranks the filtration equipment company’s financial strength 9 out of 10 on several positive investing signs, which include a double-digit Altman Z-score and interest coverage and debt ratios outperforming more than 92% of global competitors.

1422633784406298624.png

TDK

The fund sold 160,700 shares of TDK (

TSE:6762, Financial), reducing the position by 37.51% and impacting the equity portfolio by -1.44%. Shares averaged 14,502.70 yen ($132.94) during the second quarter; the stock is fairly valued based on Tuesday’s price-to-GF-Value ratio of 1.02.

1422635790730645504.png

GuruFocus ranks the cassette-tape manufacturer’s profitability 7 out of 10 on the back of profit margins outperforming more than 60% of global competitors.

1422636848269873152.png

Also check out:

Disclosures

I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure
Rating:
0 / 5 (0 votes)
Author's Avatar
WRITTEN BY

Request A Demo

Learn more about GuruFocus' key features, including All-In-One Screener, backtesting, 30-year financial, stock summary page, guru trades, insider trades, excel Add-in, google sheets and much more.

GuruFocus Screeners

Related Articles