David Nadel's Top 5 Buys in 2nd Quarter

New positions include three Japanese companies and two European companies

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Aug 03, 2018
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David Nadel (Trades, Portfolio), manager of the Royce International Premier Fund, disclosed on Thursday five new positions for the second quarter.

The fund manager primarily invests in “premier” non-U.S. companies with market cap up to $3 billion, discernable competitive advantages, high returns on invested capital and sustainable, moat-like franchises. Nadel’s five new positions are Amadeus Fire AG (XTER:AAD, Financial), TKC Corp. (TSE:9746, Financial), NSD Co. Ltd. (TSE:9759, Financial), EPS Holdings Inc. (TSE:4282, Financial) and Kardex AG (XSWX:KARN, Financial).

Amadeus Fire

Nadel invested in 43,184 shares of Amadeus Fire for an average price of 95.46 euros ($110.67) per share. The manager dedicated 2.09% of his equity portfolio to the position.

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Germany-based Amadeus Fire provides specialized staffing services for business professions and executives through four operating segments: Temporary Staffing, Permanent Placement, Interim Project Management and Training. The company’s financial strength ranks 9 out of 10, driven by strong interest coverage and a robust Altman Z-Score of 14.95.

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Amadeus Fire’s trailing 12-month return on invested capital is 168.16%, significantly higher than its weighted-average cost of capital of 4.47%. GuruFocus ranks the company’s profitability 7 out of 10 and lists three positive investing signs, including expanding operating margins and a strong Piotroski F-Score of 7. The company’s net profit margin is near a 10-year high of 11.37% and outperforms 89% of global competitors.

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TKC Corp.

Nadel invested in 115,000 shares of TKC Corp. for an average price of 4274.62 yen ($38.46) per share. The manager dedicated 1.92% of his equity portfolio to the position.

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TKC Corp., a Japanese information technology services company, provides computer and Internet services such as printing, data storage, cloud computing and data security. The company’s financial strength ranks 9 out of 10, driven by robust interest coverage and a debt-to-EBITDA ratio near a 10-year low of 0.03. TKC Corp.’s equity-to-asset and debt-to-earnings before interest, taxes, depreciation and amortization ratios outperform over 90% of global competitors.

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GuruFocus ranks TKC’s business predictability three stars out of five as the company has consistent revenue growth over the last 10 years. The company’s profitability ranks 7 out of 10: TKC has an 11.86% return on invested capital and profit margins near a 10-year high.

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NSD Co. Ltd.

Nadel invested in 185,000 shares of NSD Co. Ltd. for an average price of 2361.15 yen per share. The manager dedicated 1.89% of his equity portfolio to the position.

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Japan-based NSD Co. Ltd. develops software, operates management labs and provides information processing services. The company’s financial strength ranks a perfect 10, driven by zero long-term debt and a robust Altman Z-Score of 11.07. Additionally, NSD’s Beneish M-Score suggests no earnings manipulation while the company’s return on invested capital of 26.40% significantly outperforms its weighted average cost of capital.

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EPS Holdings

Nadel invested in 185,000 shares of EPS Holdings for an average price of 2236.15 yen per share. The manager dedicated 1.78% of his equity portfolio to the position.

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Japan-based EPS Holdings performs clinical trials required for drug and medical device development. The company’s financial strength ranks 8 out of 10, driven by a strong Altman Z-Score of 5.33 and a debt-to-equity ratio that outperforms 81% of global competitors.

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GuruFocus lists several positive investing signs for EPS Holdings, including consistent revenue growth, a dividend yield near a one-year high and price valuations near a 52-week low. EPS Holdings’ earnings per share has grown approximately 25.20% over the past three years, a rate that outperforms 72% of global medical research companies.

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Kardex

Nadel invested in 25,000 shares of Kardex for an average price of 142.91 Swiss francs ($143.79) per share. The manager dedicated 1.55% of his equity portfolio to the position.

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Kardex provides automated storage solutions and materials handling systems worldwide through its two subdivisions: Kardex Remstar and Kardex Mlog. The company’s financial strength ranks 9 out of 10, driven by robust interest coverage and a strong Altman Z-Score of 9.36. Kardex’s Piotroski F-Score ranks 8 out of 9, suggesting strong business operations.

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Disclosure: No positions.