The Wasatch International Growth (Trades, Portfolio) Fund, part of the Wasatch Funds, released its fourth-quarter 2018 portfolio earlier this week, listing five new holdings.
Managed by Ken Applegate, Roger Edgley and Linda Lasater, the Salt Lake City-based fund primarily invests in foreign small- and mid-cap growth companies to achieve long-term capital appreciation.
Based on these criteria, the fund established positions in ICICI Lombard General Insurance Co. Ltd. (BOM:540716, Financial), DiaSorin SpA (MIL:DIA, Financial), Miroku Jyoho Service Co. Ltd. (TSE:9928, Financial), RaySearch Laboratories AB (OSTO:RAYB, Financial) and M&A Capital Partners Co. Ltd. (TSE:6080, Financial) during the quarter.
ICICI Lombard
The fund invested in 1.2 million shares of ICICI Lombard for an average price of 827.98 rupees ($12.08) per share, dedicating 1.42% of the equity portfolio to the stake.
The Indian insurance company has a market cap of 446.43 billion rupees; its shares closed at 982.65 rupees on Wednesday with a price-earnings ratio of 42.80, a price-book ratio of 8.19 and a price-sales ratio of 1.53.
The Peter Lynch chart shows the stock is trading above its fair value, suggesting it is overpriced.
Weighed down by poor cash-debt and debt-to-equity ratios, GuruFocus rated ICICI Lombard’s financial strength 5 out of 10. The company’s profitability and growth scored a 4 out of 10 rating, supported by good margins and returns that outperform competitors. GuruFocus also noted the company’s assets are building at a faster rate than its revenue is growing, indicating the company may be becoming less efficient.
The International Growth Fund holds 0.27% of the company’s outstanding shares.
DiaSorin
Wasatch picked up 183,654 shares of Diasorin for an average price of 79.01 euros ($89.80) per share, allocating 1.40% of the equity portfolio to the holding. It previously sold out of the stock in first-quarter 2013.
The Italian company, which produces in vitro diagnostics kits, has a market cap of 4.82 billion euros; its shares closed at 88.1 euros on Wednesday with a price-earnings ratio of 30.38, a price-book ratio of 7.32 and a price-sales ratio of 7.32.
According to the Peter Lynch chart, the stock is overvalued.
DiaSorin’s financial strength was rated 7 out of 10 by GuruFocus, boosted by a comfortable level of interest coverage. The company’s profitability and growth scored a 6 out of 10 rating, driven by strong margins and returns that outperform industry peers and consistent earnings and revenue growth. Its business predictability rank of three out of five stars is on watch as a result of assets building at a faster rate than revenue, which suggests deteriorating efficiency. GuruFocus says companies with this rank see their stocks gain an average of 8.2% per year.
With its purchase of 0.34% of outstanding shares, the fund is now DiaSorin’s largest guru shareholder. David Nadel (Trades, Portfolio) also owns the stock.
Miroku Jyoho Service
The International Growth Fund purchased 298,526 shares of Miroku Jyoho for an average price of 2,435.89 yen ($21.98) per share, giving it 0.63% space in the equity portfolio.
The Japanese software company, which serves accounting firms and their client companies, has a market cap of 88.11 billion yen; its shares closed at 2,854 yen on Wednesday with a price-earnings ratio of 28.85, a price-book ratio of 5.19 and a price-sales ratio of 3.14.
Based on the Peter Lynch chart, the stock appears to be overvalued.
Boosted by a comfortable level of interest coverage, GuruFocus rated Miroku Jyoho’s financial strength 7 out of 10. In addition, the robust Altman Z-Score of 7.32 indicates the company is in good fiscal health. The company’s profitability and growth scored an 8 out of 10 rating, driven by operating margin expansion, strong returns that outperform competitors, consistent earnings and revenue growth and a moderate Piotroski F-Score of 4, which suggests business conditions are stable. It also has a four-star business predictability rank. According to GuruFocus, companies with this rank typically see their stocks gain an average of 9.8% per year.
Wasatch holds 0.97% of the company’s outstanding shares.
RaySearch Laboratories
Having previously closed a position in RaySearch Laboratories in fourth-quarter 2017, the fund opened a new 568,277-share holding for an average price of 109.62 krona ($11.82) per share. The trade had an impact of 0.59% on the equity portfolio.
The Swedish medical technology company, which develops software for radiation therapy, has a market cap of 3.52 billion krona; its class B shares closed at 102.2 krona on Tuesday with a price-earnings ratio of 29.07, a price-book ratio of 5.49 and a price-sales ratio of 5.61.
The Peter Lynch chart suggests the stock is overvalued.
RaySearch’s financial strength was rated 7 out of 10 by GuruFocus. Despite seeing a slowdown in revenue per share growth over the last 12 months, the company has sufficient interest coverage and a sturdy Altman Z-Score of 6.45. The company’s profitability and growth fared a bit better, scoring an 8 out of 10 rating. It is supported by strong margins and returns that outperform industry peers, a moderate Piotroski F-Score of 5 and a one-star business predictability rank. GuruFocus says companies with this rank typically see their stocks gain an average of 1.1% per year.
The International Growth Fund holds 1.66% of the company’s outstanding shares.
M&A Capital Partners
Wasatch bought 105,300 shares of M&A Capital Partners for an average price of 4,758.92 yen per share, expanding the equity portfolio 0.49%.
The Japanese company, which provides brokerage services for mergers and acquisitions, has a market cap of 84.58 billion yen; its shares closed at 5,420 yen on Wednesday with a price-earnings ratio of 31.70, a price-book ratio of 5.80 and a price-sales ratio of 8.92.
According to the Peter Lynch chart, the stock is overvalued.
As a result of having no long-term debt and comfortable interest coverage, M&A Capital’s financial strength scored a perfect 10 out of 10 rating from GuruFocus. In addition, it has a strong Altman Z-Score of 20.87. The company’s profitability and growth was ranked 7 out of 10. Although its margins have declined over the last several years, they still outperform at least 72% of competitors. While the company has recorded a slowdown in revenue per share growth over the last 12 months, it has strong returns. The Piotroski F-Score of 3, however, suggests poor operating conditions.
The fund owns 0.96% of the company’s outstanding shares.
Portfolio and performance
Wasatch’s $1.06 billion equity portfolio, which is composed of 84 stocks, is largely invested in the technology and industrials sectors.
According to its fact sheet, the International Growth Fund posted a -15.71% return in 2018, outperforming both the MSCI AC World Ex. U.S.A. Small Cap Index’s return of -18.02% and the MSCI World Ex. U.S.A. Small Cap Index’s return of -18.07%.
Disclosure: No positions.
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