The IVA International Fund (Trades, Portfolio), part of International Value Advisers, released is first-quarter portfolio earlier this week, listing one new position.
Managed by Charles de Vaulx (Trades, Portfolio) and Chales de Lardemelle, the value-oriented fund favors stocks of financially strong companies around the world that are temporarily trading below their intrinsic value.
During the quarter, IVA invested in a little over 1 million shares of Daou Technology Inc. (XKRX:023590, Financial) for an average price of 23,510.2 won ($21.93) per share, giving the stake 0.75% portfolio space.
The South Korean software company, which provides information technology products and services, has a market cap of 1.08 trillion won; its shares closed at 24,900 won on Wednesday with a price-earnings ratio of 8.26, a price-book ratio of 1.01 and a price-sales ratio of 1.52.
According to the Peter Lynch chart below, the stock is undervalued as it is trading below its fair value.
Daou’s financial strength was rated 4 out of 10 by GuruFocus. The company is burdened by mounting debt, which has ballooned from roughly 20 billion won at the end of 2012 to around 297 billion won in 2017.
In addition, the company’s Altman Z-Score of 0.39 indicates it is in danger of going bankrupt.
The company’s profitability and growth scored a 2 out of 10 rating. Although its operating margin is negative and has been declining for the past several years, it still outperforms 89% of its competitors. GuruFocus also warns Daou has a low Piotroski F-Score of 2, which implies poor business operations. The company has a business predictability rating of one out of five stars.
The fund holds 2.31% of the company’s outstanding shares.
Other trades
The fund also beefed up many of its other positions during the quarter, including Koninklijke Boskalis Westminster NV (XAMS:BOKA, Financial), Samsung Electronics Co. Ltd. (XKRX:005930, Financial), Criteo SA (CRTO, Financial) and Miraca Holdings Inc. (TSE:4544, Financial).
The New York-based fund’s portfolio, which is composed of 100 holdings, is largely invested in the industrials and consumer cyclical sectors. According to GuruFocus, the fund posted a 17.25% return in 2017, underperforming the S&P 500’s return of 21.71%.
Disclosure: No positions.
