Hennessy Japan Small Cap Fund (Trades, Portfolio) (HJPSX) purchased six new stocks in the second quarter, bringing its total holdings to 59 in a portfolio valued at $15 million. Each of the fund's new holdings composes more than 1% of the entire portfolio.
The Hennessy Japan Small Cap Fund (Trades, Portfolio) invests in Japan's 15% smallest market-cap companies. In its stock selecting judgment, it incorporates in-depth analysis and on-sight research. Managers prize a sizable "value gap" and invest in their best ideas.
Managers are also optimistic about prospects for Japan, even after the Japanese market advanced 50% in yen terms in 2013. In their first quarter letter, they said, "Now with favorable top line and bottom line result, cash flow is enhanced, which can stimulate future capital expenditures and R&D spending. The trickle-down effect should benefit many domestic industries and create a positive economic cycle. We believe that corporate profits should remain strong for years to come. As a result, investors worldwide should take notice and find Japanese equities much more attractive than before."
The top five stocks the fund purchased in the second quarter were: Dai-Ichi Seiko Co. Ltd. (TSE:6640), Tokai Tokyo Financial Holdings Inc. (TSE:8616), Hitachi Zosen Corp (TSE:7004), Eagle Industry Co. Ltd. (TSE:6486) and Studio Alice Co. Ltd. (TSE:2305).
Dai-Ichi Seiko Co. Ltd. (TSE:6640)
Hennessy Japan Small Cap Fund (Trades, Portfolio) purchased 25,000 new shares of Dai-Ichi Seiko Co. Ltd., at an average price per share of 1,430 yen. The portfolio weight for the holding is 2.1%, and the stock's price has advanced 21.4% from the average.
Dai-Ichi Seiko Co. Ltd. is engaged in manufacturing electronic components, automotive components, and precision components. Dai-Ichi Seiko Co. Ltd. has a market cap of 29.03 billion; its shares were traded at around 1,736.00 with and P/S ratio of 0.68. The dividend yield of Dai-Ichi Seiko Co. Ltd. stocks is 0.46%.
Tokai Tokyo Financial Holdings Inc. (TSE:8616)
Hennessy purchased 38,000 Tokai Tokyo Financial shares, which traded for 747 yen per share in the first quarter. Tokai Tokyo has a 1.7% portfolio weight, and its share price has climbed 5% from the average.
Tokai Tokyo Financial Holdings Inc. has a market cap of 204.96 billion; its shares were traded at around 788.00. The dividend yield of Tokai Tokyo Financial Holdings Inc. stocks is 1.44%.
Hitachi Zosen Corp (TSE:7004)
Hennessy purchased 49,500 shares of Hitachi Zosen, whose stock price averaged 496 yen per share for the quarter. The holding consumes 1.6% of the portfolio, and its share price has increased 5% from the average.