The Wasatch International Growth (Trades, Portfolio) Fund disclosed this week its top six buys for the second quarter were Prestige International Inc. (TSE:4290, Financial), Homeserve PLC (LSE:HSV, Financial), Royal UNIBREW A/S (OCSE:RBREW, Financial), Breville Group Ltd. (ASX:BRG, Financial), Silergy Corp. (TPE:6415, Financial) and Kusuri No Aoki Holdings (TSE:3549).
The Utah-based fund seeks long-term capital growth primariy through investments in small-cap growth companies domiciled in developing and emerging markets. The fund managers said in their quarterly letter that the fund returned 4.55% for the three months ending June 30, outperforming the MSCI All Country World Index ex U.S. Small Cap Index's return of 1.21%. Despite the outperformance, the fund managers detailed several factors that increased volatility, including the re-escalation of the U.S.-China trade war and the resignation of U.K. Prime Minister Theresa May.
As of quarter-end, the fund’s equity portfolio contains 83 stocks, of which six represent new positions. The top three sectors in terms of weight are technology, industrials and consumer staples, with weights of 29.19%, 19.21% and 13.04%.
Prestige International
Having established a 36,479-share stake in the prior quarter, the fund added 1,059,797 shares of Prestige International, increasing the position 2,905.22% and the equity portfolio 1.24%. Shares averaged 1,562.94 yen ($14.66) during the second quarter.
The Tokyo-based company provides various business support services to clients. GuruFocus ranks Prestige’s financial strength 9 out of 10: The company has a robust Altman Z-score of 8.76 despite a weak Piotroski F-score of 3. Additionally, Prestige’s interest coverage and debt ratios are outperforming over 87% of global competitors.
Wasatch said in its shareholder letter that the fund remains overweight Japanese securities, which contributed to the fund’s outperformance. The fund managers said in the outlook section that the Japanese market “is still inefficient and misunderstood by many investors,” allowing the fund to seek companies with good market potential using their research and expertise.
Homeserve
The fund purchased 938,400 shares of Homeserve, giving the position 1.11% equity portfolio weight. Shares averaged 11.53 pounds ($14.04) during the quarter.
The U.K.-based company specializes in home assistance for plumbing, heating and electrical-related emergencies and repairs. GuruFocus ranks the company’s financial strength and profitability 6 out of 10 on several positive signs, which include a strong Altman Z-score of 4.08 and operating margins that have increased approximately 19.10% per year on average over the past five years and are outperforming 73.38% of global competitors.
Royal Unibrew
The fund purchased 139,039 shares of Royal Unibrew, giving the holding 0.80% equity portfolio weight. Shares averaged 484.45 Danish kroner ($71.84) during the quarter.
The Denmark-based company produces and sells alcoholic and nonalcoholic beverages, including beer, malt beverages, cider, soft drinks, juice and water. GuruFocus ranks Royal Unibrew’s profitability 8 out of 10 on several positive indicators, which include a strong Piotroski F-score of 7, expanding profit margins and a return on assets that outperforms 80.13% of global competitors.
Breville
The fund purchased 790,644 shares of Breville, giving the position 0.71% weight in the equity portfolio. Shares averaged 17.53 Australian dollars ($11.79) during the quarter.
The Sydney-based company develops, markets and distributes small kitchen appliances, which are sold in markets like Australia, New Zealand and Hong Kong. GuruFocus ranks Breville’s financial strength and profitability 8 out of 10 on several positive indicators, which include a strong Piotroski F-score of 7, a robust Altman Z-score of 9.20, expanding profit margins and a return on assets that outperforms 89.86% of global competitors.
Wasatch said in its shareholder letter that the fund is investing in Australian securities that are “taking advantage of dislocations and disrupting the norms,” e.g., in financial technology and information technology services companies.
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Silergy
The fund added 223,000 shares of Silergy, increasing the position 22.45% and the equity portfolio 0.34%. Shares averaged 484.56 New Taiwan dollars ($15.47) during the quarter.
Although Silergy is headquartered in Hangzhou, China, the stock trades on the Taiwan Stock Exchange. GuruFocus ranks the analog integrated circuits designer’s profitability 5 out of 10: While the company’s net margin outperforms 85.77% of global competitors, its three-year Ebitda and earnings growth rates underperform over 67% of global competitors.
Despite modest profitability, Silergy’s financial strength ranks 9 out of 10 on several positive indicators, which include robust interest coverage and Altman Z-scores. Additionally, Silergy’s debt ratios are outperforming over 94% of global semiconductor companies.
The Matthews Asia Small Companies Fund (Trades, Portfolio) also has a position in Silergy.
Kusuri No Aoki
The fund purchased 59,200 shares of Kusuri No Aoki, increasing the holding 31.01% and the equity portfolio 0.33%. Shares averaged 7,413.54 yen during the quarter.
The Hakusan, Japan-based company retails health, beauty and cleaning supplies. GuruFocus ranks the company’s financial strength and profitability 7 out of 10 on several positive indicators, which include a five-star business predictability rank, robust interest coverage and a strong Altman Z-score of 4.5. Despite this, Kusuri No Aoki has a poor Piotroski F-score of 3.
Disclosure: No positions.
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