The Matthews Japan Fund (Trades, Portfolio) disclosed last week that its top five trades during the fourth quarter of 2020 included three new positions: Advantest Corp. (TSE:6857, Financial), East Japan Railway Co. (TSE:9020, Financial) and ORIX Corp. (TSE:8591, Financial). The fund also reduced its position in Nintendo Co. Ltd. (TSE:7974, Financial) and Santen Pharmaceutical Co. Ltd. (TSE:4536, Financial).
Overseen by Taizo Ishida and Shuntaro Takeuchi, the fund seeks long-term capital appreciation through equity investments in Japanese companies that are capable of sustainable growth based on fundamental factors like balance sheet information, size and stability of cash flows and financial health. According to the shareholder letter, the fund returned 15.87% during the fourth quarter, compared to the MSCI Japan Index return of 15.29% during the same period.
As of the quarter-end, the fund's $1.63 billion equity portfolio contains 49 stocks, with seven new positions and a turnover ratio of 21%.
Advantest
The fund purchased 556,400 shares of Advantest (TSE:6857, Financial), giving the position 2.56% weight in the equity portfolio. Shares averaged 6600.32 yen ($62.67) during the fourth quarter; the stock is significantly overvalued based on Monday's price-to-GF Value ratio of 2.64.
GuruFocus ranks the company's financial strength 9 out of 10 on several positive investing signs, which include a strong Altman Z-score of 6.1 and a Beneish M-score that suggests little or no earnings manipulation.
East Japan Railway
The fund purchased 621,100 shares of East Japan Railway (TSE:9020, Financial), giving the position 2.54% weight in the equity portfolio. Shares averaged 6409.95 yen during the fourth quarter; the stock is modestly undervalued based on Monday's price-to-GF Value ratio of 0.9.
GuruFocus ranks the company's financial strength 2 out of 10 on several warning signs, which include a low Piotroski F-score of 1, a weak Altman Z-score of 0.64 and a debt-to-equity ratio that underperforms over 68% of global competitors.
ORIX
The fund purchased 2,661,800 shares of ORIX (TSE:8591, Financial), giving the position 2.51% weight in the equity portfolio. Shares averaged 1,469.97 yen during the fourth quarter; the stock is fairly valued based on Monday's price-to-GF Value ratio of 0.99.
According to GuruFocus, the company has a good Piotroski F-score of 5, buy debt ratios underperform more than half of global competitors, suggesting moderately low financial strength.
Nintendo
The fund sold 55,900 shares of Nintendo, trimming the position 46.70% and the equity portfolio 2.29%. Shares averaged 58,504 yen during the fourth quarter.
GuruFocus ranks the video game company's financial strength 10 out of 10 on several positive investing signs, which include no long-term debt and a double-digit Altman Z-score.
Nintendo's profitability ranks 8 out of 10 on the back of profit margins and returns outperforming over 85% of global interactive media competitors.
Santen Pharmaceutical
The fund sold 1,459,900 shares of Santen Pharmaceutical, trimming the equity portfolio 2.16%. Shares averaged 1,834.18 yen during the fourth quarter.
GuruFocus ranks the drug manufacturer's financial strength 9 out of 10 on several positive investing signs, which include a strong Altman Z-score of 6.1 and a safe Beneish M-score of -2.57.
Nikkei 225 tops 30,000 milestone while other stock markets are closed
On Monday, the Nikkei 225 closed at 30,084.15, up 564.08 points or 1.91% from the previous close of 29,520.07. The index, which tracks the performance of the top 225 Japanese companies in terms of market cap, topped 30,000 for the first time in over 30 years. According to GuruFocus' global market valuation pages, the Japanese stock market is overvalued based on Berkshire Hathaway Inc. (BRK.A)(BRK.B) CEO Warren Buffett (Trades, Portfolio)'s total market cap to gross domestic product ratio.
The stock markets in China, Hong Kong and Taiwan are closed for the Lunar New Year holiday while the U.S. stock market is closed for Presidents' Day.
Disclosure: No positions.
Read more here:
- Matthews Asia Small Companies Fund's Top 4th-Quarter Buys
- Matthews China Fund's Top 4 New Buys of the 4th Quarter
- Francisco Garcia Parames' Top 5 4th-Quarter Trades
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