The Tweedy Browne (Trades, Portfolio) Global Fund saw opportunities in the Asia region, buying two Hong Kong stocks and one South Korean stock in Q1 2015.
The fund invests in undervalued foreign equities, and occasionally U.S. stocks if opportunities appear attractive. According to the fund’s fact sheet, Europe is the most heavily represented region in the portfolio at 54% of total assets.
Over the past five years, Tweedy Browne (Trades, Portfolio)’s average annual return was 9.25%, slightly outperforming the MSCI EAFE Index hedged to U.S. dollars at 9.17%. The fund’s average return over the past 10 years was 7.09%, compared to the Index’s return of 6.74%.
Hyundai Mobis Co (XKRX:012330, Financial)
Tweedy Browne (Trades, Portfolio)’s largest new purchase was 112,133 shares of Hyundai Mobis, which traded for an average price of â‚© 248,700 during the quarter. The holding has a 0.38% portfolio weighting.
Hyundai Mobis manufactures parts and modules for car production, after-sales services, and others. These products are then supplied to Kia and Hyundai Motors. The company’s stock price has declined 22% over the past year and currently trades at â‚© 241,000. The P/E ratio is 10.7 and the P/S ratio is 1.25.
Net income in 2014 was â‚© 2,138,479 million, up from â‚© 2,079,630 million the year before. The graph below shows the net income trend over time.
Hyundai Mobis has a healthy balance sheet with low current liabilities relative to its assets, as well as no long-term debt.
The current dividend yield is 1.24%, which is close to the five-year high. The payout ratio is 13%, indicating plenty of room to grow the dividend in the future.
Tai Cheung Holdings (HKSE:00088, Financial)
The fund bought 2,561,000 shares of Tai Cheung for an average price of HK$6.40 per share. The new position now has a 0.03% portfolio weighting.
The company is engaged in property developments and investments in Hong Kong, developing prestigious properties such as office towers, industrial and residential buildings. The stock price has increased 18% over the past year and is now priced at HK$6.56. Despite the price increase, the company is still undervalued when compared to the Peter Lynch earnings line.
EBIT per share in 2014 was HK$1.69, which has grown more than 28% over the past five years.
The current P/E ratio is 4, while the P/S ratio is 41. Tai Cheung’s dividend yield is close to its 10-year low at 2.9%, and the payout ratio is 39%.
Oriental Watch Holdings (HKSE:00398, Financial)
Tweedy Browne (Trades, Portfolio)’s third purchase of the quarter was 7,364,000 shares of Oriental Watch Holdings for an average of HK$1.32 per share. The investment holding company is engaged in watch trading and also provides watch repair services. The holding has a 0.02% portfolio weight.
The stock price dropped 32% over the past year and now trades for HK$1.32, with a P/E ratio of 36.7 and P/S ratio of 0.22. The stock is undervalued according to the Peter Lynch chart.
Over the past five years, Oriental Watch is struggling to improve its earnings growth rates, with EBIT growth declining by 16.6%, and revenue growth declining by 2%.
Net income took a hit in 2014, recording at HK$20 million, down from HK$163 million the year before.
The current dividend yield is 0.19%, which is close to the company’s 10-year low. Due to the low earnings, the payout ratio is a relatively high 49%.
View Tweedy Browne (Trades, Portfolio) Global Value Fund’s latest stock picks here. Not a Premium Member of GuruFocus? Try it free for 7 days.
