The Oakmark Intl Small Cap (Trades, Portfolio) Fund recently disclosed its portfolio updates on its website for the fiscal quarter ended March 31. The company’s fiscal year ends on Sept. 30.
Founded in 1995 and managed by portfolio managers David Herro (Trades, Portfolio), Michael Manelli and Justin Hance, the Oakmark International Small Cap Fund invests in a relatively small number of non-U.S. small cap stocks (approximately 50 to 60). The fund aims to invest in securities that are trading at a discount to intrinsic value and show strong potential to increase value for shareholders.
According to its latest portfolio update, the fund added three new value plays to its holdings: Kansai Paint Co. Ltd. (TSE:4613, Financial), Medmix AG (XSWX:MEDX, Financial) and Colliers International Group Inc. (TSX:CIGI, Financial).
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.
Kansai Paint
The fund initiated an 887,100-share position in Kansai Paint (TSE:4613, Financial), giving it a weight of 0.89% in the equity portfolio. During the quarter, shares traded for an average price of 1,748.63 Japanese yen ($12.37).
Kansai Paint is a Japanese chemicals company that primarily manufactures automotive, industrial and decorative coatings. With manufacturing sites in over 43 countries around the world, Kansai Paint develops, manufactures and distributes highly engineered coatings that are designed to last even in the toughest conditions.
The company's historical growth has been slow but steady. In recent years, the company has achieved a three-year revenue per share growth rate of 2% and a three-year earnings per share growth rate of 18.1%. It continues to focus on business expansion, both organically and via acquisitions, with the latest acquisition for the railway coatings business of Becker Industrie SAS marking a key foothold in Europe.
GuruFocus gives the company a financial strength rating of 5 out of 10 and a profitability rating of 8 out of 10. The GF Value chart rates the stock as significantly undervalued.
Medmix
The fund took a 443,200-share holding in Medmix AG (XSWX:MEDX, Financial), giving it a weight of 0.69% in the equity portfolio at the quarter’s average share price of 17.85 Swiss francs ($19.88).
Medmix is a leading Swiss technology company focusing on high-precision delivery devices and fluid mixing for the industrial, health care and consumer segments. Its products include self-injection and advanced biologic mixing devices, adhesives, sealants, lip gloss, concealer and more.
The company was spun off from Sulzer AG’s (XSWX:SUN, Financial) applicators business in September 2021. According to Herro’s commentary, the Oakmark International Small Cap Fund actually held shares of Medmix after the spinoff but soon sold them because the price reached the portfolio managers’ estimate of fair value. Since then, Medmix’s stock price has fallen, likely due to a combination of the typical post-IPO selloff and the company’s relation to Russian oligarch Victor Vekelsberg, who is its largest shareholder with a 40% stake. The Polish government thus deemed the company to be Russian-controlled and forced it to close a plant that accounted for 15% of its revenue. Medmix plans to move the Polish capacity to Spain by 2024.
Due to the Russia headwinds, earnings have fallen, leading to a rich price-earnings ratio of 81.25. The forward price-earnings ratio of 14.73 anticipates better days to come, if analysts’ expectations can be met.
Colliers International Group
The fund also purchased 35,699 shares of Colliers International Group (TSX:CIGI, Financial). At the stock’s average price of 144.80 Canadian dollars ($109.39) for the quarter, this gives the stock an equity portfolio weight of 0.28%.
Colliers is a Canadian professional services, real estate services and investment management company that aims to maximize the potential of property and real assets on behalf of its clients and investors. It also helps connect buyers with attractive properties in the health care, retail, hotel, industrial, office and special purpose markets.
The company is mainly known for its leadership in commercial real estate services. The company has historically done a good job of growing this business organically and through acquisitions, though nowadays it is moving more towards higher-margin activities such as investment management, which has the added benefit of diversification. This may be a wise move considering how the net margin has struggled in recent years.
Colliers receives a financial strength rating of 4 out of 10 and a profitability rating of 8 out of 10 from GuruFocus. The GF Value chart rates the stock as modestly undervalued.
See also
The fund’s notable sells for the quarter included reductions to Julius Baer Gruppe AG (XSWX:BAER, Financial), Kimberly-Clark de Mexico SAB de CV (MEX:KIMBERA, Financial) and Metso Corp. (OHEL:METSO). The turnover for the period was 4%.
As of the quarter’s end, the top holding was Konecranes Oyj (OHEL:KCR) with 3.61% of the equity portfolio, followed by Azimut Holding SPA (MIL:AZM) with 3.30% and Julius Baer Gruppe AG with 3.14%.
By sector weighting, the fund was most invested in the industrials, financial services and consumer cyclical sectors.
