The T. Rowe Price Japan Fund (Trades, Portfolio) disclosed it established one new position and closed two others when it released its first-quarter portfolio on Wednesday.
Managed by Archibald Ciganer, the fund invests in Japanese companies to achieve long-term capital growth. When picking stocks, he looks for companies that can attain and sustain above-average, long-term earnings growth.
During the quarter, the fund started a position in Yume No Machi Souzou Iinkai Co. Ltd. (TSE:2484, Financial) and exited its Skylark Co. Ltd. (TSE:3197, Financial) and Mitsubishi Estate Logistics REIT Investment Corp. (TSE:3481, Financial) holdings.
Yume No Machi Souzou Iinkai
T. Rowe Price invested in 248,700 shares of Yume No Machi Souzou Iinkai for an average price of 1,988.09 yen ($18.54) per share, giving it 0.55% portfolio space.
The company, which operates an online site that facilitates ordering and delivery from a number of restaurants, has a market cap of 81.86 billion yen; its shares were trading around 2,022 yen on Tuesday with a price-earnings ratio of 177.06, a price-book ratio of 28.52 and a price-sales ratio of 16.90.
According to the Peter Lynch chart below, the stock is overpriced as it is trading above its fair value.
Bolstered by strong interest coverage and a high Altman Z-Score, the company’s financial strength was rated 8 out of 10 by GuruFocus. Its profitability and growth was also rated 8 of 10 as it has an expanding operating margin and a moderate Piotroski F-Score of 5.
With 1.35% of outstanding shares, the Wasatch International Growth (Trades, Portfolio) Fund is the company’s largest guru shareholder. The Japan Fund holds 0.61%.
Skylark
The fund sold its remaining 306,500 shares of Skylark for an average price of 14.24 yen per share, impacting the portfolio by -0.59%. GuruFocus estimates the fund has lost an estimated 94% on the investment since the fourth quarter of 2014.
Headquartered in Tokyo, the company, which owns and operates a number of restaurants, has a market cap of 306.83 billion yen; its shares were trading around 1,557 yen on Tuesday with a price-earnings ratio of 18.12, a price-book ratio of 2.45 and a price-sales ratio of 0.85.
The Peter Lynch chart below shows the stock is trading higher than its fair value, suggesting it is overpriced.
GuruFocus rated Skylark’s financial strength 6 out of 10. While the company has a comfortable level of interest coverage, its Altman Z-Score of 2.56 indicates it is under minor financial pressure. The company’s profitability and growth was rated 5 out of 10, boosted by a moderate Piotroski F-Score of 5 and an operating margin that outperforms 69% of competitors.
No other gurus are invested in the stock.
Mitsubishi Estate Logistics
The Japan Fund divested of its 425 remaining shares of Mitsubishi Estate Logistics, which went public last fall, for an average price of 269,609 yen per share. The trade had an impact of -0.14% on the portfolio. GuruFocus data shows the fund has made an estimated loss of 3% on the investment since the third quarter of 2017.
The real estate investment trust, which invests mostly in logistics facilities, has a market cap of 55.98 billion yen; its shares were trading around 261,600 yen on Tuesday with a price-earnings ratio of 46.88.
According to GuruFocus, the stock has fallen about 6% since its initial public offering last September and is down approximately 4% year to date.
GuruFocus rated the REIT’s financial strength 5 out of 10 as it has strong interest coverage. Its profitability and growth was rated 2 of 10.
The company has no guru shareholders currently.
Other trades
The fund also increased several positions during the quarter, including Japan Tobacco Inc. (TSE:2914, Financial), Miura Co. Ltd. (TSE:6005, Financial), CyberAgent Inc. (TSE:4751) and SoftBank Group Corp. (TSE:9984), among others. T. Rowe Price also trimmed its Eiken Chemical Co. (TSE:4549), UT Group Co. Ltd. (TSE:2146) and Seria Co. Ltd. (TSE:2782) holdings.
Composed of 83 stocks, the $930.57 million portfolio is largely invested in the industrials and consumer cyclical sectors. According to its fact sheet, the fund outperformed its benchmark, the MSCI Japan Index, in 2017 with a return of 32.66%. The index posted a 20.14%% return.
Disclosure: No positions.
