The Oakmark International Fund disclosed in a regulatory filing that its top trades during the fourth quarter of 2022 included a new position in Akzo Nobel NV (XAMS:AKZA, Financial), boosts to its holdings of NAVER Corp. (XKRX:035420, Financial) and Fujitsu Ltd. (TSE:6702, Financial) and the closure of its positions in Hennes & Mauritz AB (OSTO:HM B, Financial) and UPM-Kymmene Oyj (OHEL:UPM, Financial).
Managed by David Herro (Trades, Portfolio), the fund seeks long-term capital appreciation by investing in the stock of companies that trade at a discount to intrinsic value and are expected to increase shareholder value over time. The fund’s stock selection process emphasizes high-quality, growing businesses with positive free cash flow and intelligent use of cash.
As of December 2022, the fund’s $18.24 billion equity portfolio contains 65 stocks with a quarterly turnover ratio of 5%. The top four sectors in terms of weight are consumer cyclical, financial services, industrials and communication services, which account for 25.24%, 18.85%, 17.88% and 10.10% of the equity portfolio.
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.
Akzo Nobel
The fund purchased 1,760,467 shares of Akzo Nobel (XAMS:AKZA, Financial), giving the position 0.65% equity portfolio weight. Shares of Akzo Nobel averaged 64.46 euros ($68.40) during the fourth quarter.
GuruFocus’ GF Value Line labeled the Dutch paint and coating company a possible value trap due to its low price-to-GF Value ratio of 0.59 as of Tuesday and poor scores for financial strength and momentum.
Akzo Nobel’s financial strength ranks 4 out of 10 on several warning signs, which include a low Altman Z-score of 1.65 and an interest coverage ratio that underperforms more than 70% of global competitors.
Despite low ranks for financial strength and momentum, Akzo Nobel has a GF Score of 81 out of 100, driven by a growth rank of 6 out of 10 and a rank of 8 out of 10 for profitability and GF Value.
NAVER
The fund added 980,400 shares of NAVER Corp. (XKRX:035420, Financial), boosting the position by 64.44% and its equity portfolio by 0.76%. Shares averaged 177,531 won ($134.52) during the fourth quarter; the stock is significantly undervalued based on its price-to-GF Value ratio of 0.47 as of Tuesday.
The South Korean online search company has a GF Score of 86 out of 100, driven by a rank of 10 out of 10 for profitability and growth despite financial strength ranking 6 out of 10, GF Value ranking 4 out of 10 and momentum ranking just 2 out of 10.
NAVER’s profitability ranks 10 out of 10 on several positive investing signs, which include a four-star business predictability rank and an operating margin that outperforms approximately 75% of global competitors.
Fujitsu
The fund invested in 947,500 shares of Fujitsu (TSE:6702, Financial), expanding the position by 959.01% and its equity portfolio by 0.70%. Shares averaged 17,536.30 yen ($128.92) during the fourth quarter; the stock is fairly valued based on its price-to-GF Value ratio of 0.98 as of Tuesday.
The Japanese information and communication technology company has a GF Score of 79 out of 100 based on a momentum rank of 9 out of 10, a GF Value rank of 7 out of 10, a growth rank of 5 out of 10 and a rank of 6 out of 10 for financial strength and profitability.
Fujitsu’s profitability ranks 6 out of 10 on the back of net profit margins and returns outperforming just over 60% of global competitors. Despite this, operating margins have increased by approximately 18.3% per year on average over the past five years.
Hennes & Mauritz
The fund sold all 25,981,161 shares of Hennes & Mauritz (OSTO: HM B), trimming 1.46% of its equity portfolio.
Shares of Hennes & Mauritz averaged 114.89 Swedish krona ($11) during the fourth quarter; the stock is significantly undervalued based on its price-to-GF Value ratio of 0.70 as of Tuesday.
The Swedish fashion conglomerate has a GF Score of 82 out of 100 based on a rank of 9 out of 10 for profitability and GF Value, a momentum rank of 7 out of 10, a financial strength rank of 5 out of 10 and a growth rank of 4 out of 10.
H&M’s profitability ranks 9 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7 out of 9 and a gross profit margin that outperforms more than 80% of global competitors.
UPM-Kymmene
The fund sold all 3,577,900 shares of UPM-Kymmene (OHEL:UPM, Financial), trimming 0.69% of its equity portfolio.
Shares of UPM-Kymmene averaged 34.92 euros during the fourth quarter; the stock is modestly undervalued based on its price-to-GF Value ratio of 0.90 during the fourth quarter.
The Finnish paper and biomaterials company has a GF Score of 76 out of 100 based on a momentum rank of 10 out of 10, a financial strength rank of 5 out of 10, a growth rank of 3 out of 10 and a rank of 7 out of 10 for profitability and GF Value.
UPM-Kymmene's profitability ranks 7 out of 10 on the back of profit margins and returns outperforming more than 70% of global competitors.
