The IVA International Fund (Trades, Portfolio), part of New York-based International Value Advisers, disclosed four new holding in its first-quarter portfolio, which was released earlier this week.
Managed by Charles de Vaulx (Trades, Portfolio) and Charles de Lardemelle, the value-oriented fund typically invests in financially strong companies from around the world that are temporarily trading below their intrinsic value in order to generate long-term growth of capital.
Based on these criteria, the fund established positions in Sony Corp. (TSE:6758, Financial), Ipsos SA (XPAR:IPS, Financial), Inchcape PLC (LSE:INCH, Financial) and Promotora y Operadora de Infraestructura SAB de CV (MEX:PINFRAL, Financial) during the quarter.
Sony
The fund invested in 444,300 shares of Sony, dedicating 0.77% of the equity portfolio to the position. The stock traded for an average price of 5,170.29 yen ($47.71) per share during the quarter.
The Japanese conglomerate, which operates in the consumer and professional electronics, gaming, entertainment and financial services businesses, has a market cap of 6.67 trillion yen; its shares closed at 5,334 yen on Thursday with a price-earnings ratio of 7.54, a price-book ratio of 1.83 and a price-sales ratio of 0.79.
The Peter Lynch chart shows the stock is trading below its fair value, suggesting it is undervalued.
Boosted by comfortable interest coverage, GuruFocus rated Sony’s financial strength 6 out of 10. The Altman Z-Score of 0.92, however, warns the company could be at risk of going bankrupt since it has recorded a decline in revenue per share over the last five years.
The company’s profitability and growth scored a 5 out of 10 rating. In addition to operating margin expansion, Sony is supported by strong returns that outperform over half of its competitors and a high Piotroski F-Score of 7, which indicates business conditions are healthy. It also has a business predictability rank of one out of five stars. According to GuruFocus, companies with this rank typically see their stocks gain an average of 1.1% per year.
Of the gurus invested in Sony, the Matthews Japan Fund (Trades, Portfolio) has the largest stake with 0.11% of outstanding shares. De Vaulx and the Signature Select Canadian Fund (Trades, Portfolio) are also shareholders.
Ipsos
IVA picked up 474,264 shares of Ipsos, allocating 0.49% of the equity portfolio to the holding. During the quarter, the stock traded for an average price of 21.9 euros ($24.59) per share.
The French global market research and consulting company has a market cap of 1.03 billion euros; its shares closed at 23.75 euros on Thursday with a price-earnings ratio of 9.88, a price-book ratio of 1.07 and a price-sales ratio of 0.61.
According to the Peter Lynch chart, the stock is undervalued.
Ipsos’ financial strength was rated 6 out of 10 by GuruFocus. Although the company has issued approximately 68.4 million euros in new long-term debt over the last three years, it is at a manageable level due to sufficient interest coverage. The Altman Z-Score of 1.73, however, warns the company could be in danger of bankruptcy. It has also recorded a decline in revenue per share over the last 12 months.
The company’s profitability and growth fared a bit better, scoring a 7 out of 10 rating on operating margin expansion, good returns that outperform over 60% of industry peers and a moderate Piotroski F-Score of 6, which suggests business conditions are stable. Ipsos also has a one-star business predictability rank.
The fund is now the company’s largest guru shareholder with 1.09% of outstanding shares. Bernard Horn (Trades, Portfolio) and de Vaulx also have positions in the stock.
Inchcape
The International Fund purchased a 303,358-share holding of Inchcape, giving it 0.09% space in the equity portfolio. Shares traded for an average price of 5.81 British pounds ($7.32) during the quarter.
The London-based distributor and retailer of premium and luxury cars has a market cap of 2.53 billion pounds; its shares closed at 6.11 pounds on Thursday with a price-earnings ratio of 50.92, a price-book ratio of 1.83 and a price-sales ratio of 0.27.
Based on the Peter Lynch chart, the stock appears to be overvalued.
GuruFocus rated Inchcape’s financial strength 6 out of 10. Despite issuing approximately 121.1 million pounds in new long-term debt over the last three years, it is at a manageable level since the company has adequate interest coverage. In addition, the Altman Z-Score of 2.92 indicates it is under some minor fiscal pressure.
The company’s profitability and growth scored a 7 out of 10 rating. While margins underperform competitors, the returns are outperforming over 60% of industry peers. Inchcape is also supported by a moderate Piotroski F-Score of 6 and a one-star business predictability rank, which is on watch as a result of a slowdown in revenue per share growth over the last year.
The Tweedy Browne (Trades, Portfolio) Global Value Fund is Inchcape’s largest guru shareholder with a 1.27% stake. De Vaulx and Horn also own the stock.
Promotora y Operadora de Infraestructura
IVA bought 268,884 shares of Promotora y Operadora de Infraestructura, expanding the equity portfolio 0.07%. During the quarter, shares traded for an average price of 125.24 pesos ($6.54).
The Mexican engineering and construction company, which develops infrastructure projects such as highways, ports, railways and sewer systems, has a market cap of 78.41 billion pesos; its shares closed at 119.01 pesos on Thursday with a price-earnings ratio of 14.81 and a price-book ratio of 1.72.
The Peter Lynch chart shows the U.S.-listed shares (PUODY, Financial) are trading near fair value.
Promotora y Operadora’s financial strength and profitability and growth were both rated 8 out of 10 by GuruFocus. In addition to adequate interest coverage, the robust Altman Z-Score of 7.31 indicates the company is in good fiscal standing.
The company is also supported by an expanding operating margin, strong returns, consistent earnings and revenue growth, a moderate Piotroski F-Score of 5 and a five-star business predictability rank. GuruFocus says companies with this rank typically see their stocks gain an average of 12.1% per year.
The fund is the only guru invested in Promotora y Operadora.
Additional trades
The International Fund also boosted its position in multiple holdings during the quarter, including Bayerische Motoren Werke AG (XTER:BMW), Rohto Pharmaceutical Co. Ltd. (TSE:4527), Yahoo Japan Corp. (TSE:4689), Grupo Comercial Chedraui SAB de CV (MEX:CHDRAUIB) and Phoenix New Media Ltd. (FENG).
The fund’s $2.42 billion equity portfolio, which is composed of 98 stocks, is largely invested in the industrials and consumer cyclical sectors. According to GuruFocus, the International Fund posted a -12.93% return in 2018, outperforming the MSCI All Country World (except U.S.) Index’s return of -14.20%.
Disclosure: No positions.
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