The fund, which is part of Sarah Ketterer (Trades, Portfolio)'s Los Angeles-based Causeway Capital Management, was founded in 2001. Relying on a bottom-up approach based on fundamental research, the portfolio managers look for value opportunities among mid- to large-cap companies in developed international markets to achieve long-term capital growth.
Based on these criteria, the fund established positions in Carrefour (XPAR:CA) and Coca-Cola Bottlers Japan Holdings Inc. (TSE:2579) during the quarter.
The fund invested in 3.2 million shares of Carrefour, allocating 0.96% of the equity portfolio to the stake. The stock traded for an average price of 16.99 euros ($18.79) per share during the quarter.
The French retail company, which operates one of the largest hypermarket chains in the world, has a market cap of 12.45 billion euros; its shares closed at 15.61 euros on Mondaywith a forward price-earnings ratio of 10.07, a price-book ratio of 1.47 and a price-sales ratio of 0.15.
The median price-sales chart shows the stock is trading below its historical average, suggesting it is undervalued.
GuruFocus rated Carrefour's financial strength 4.8 out of 10. As a result of issuing approximately 647 million euros in new long-term debt over the past three years, the company has poor interest coverage. In addition, the low Altman Z-Score of 1.78 warns the retailer could be in danger of going bankrupt.
The company's profitability and growth scored a 4 out of 10 rating on the back of a declining operating margin, negative returns that underperform a majority of competitors and a decrease in revenue per share over the last five years. Carrefour also has a low Piotroski F-Score of 3, which indicates operating conditions are poor, and 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 annum over a 10-year period.
Causeway holds 0.40% of the company's outstanding shares.
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Coca-Cola Bottlers Japan
Causeway picked up 660,600 shares of Coca-Cola Bottlers Japan, dedicating 0.26% of the equity portfolio to the holding. Shares traded for an average price of 2,694.55 yen ($25.46) during the quarter.
The Japanese company, which bottles and distributes carbonated drink products under the Coca-Cola brand, has a market cap of 410.72 billion yen; its shares closed at 2,290 yen on Monday with a price-book ratio of 0.82 and a price-sales ratio of 0.47.
According to the median price-sales chart, the stock is undervalued.
Weighed down by a low cash-debt ratio, Coca-Cola Bottlers' financial strength was rated 4.9 out of 10 by GuruFocus. In addition, the Altman Z-Score of 1.65 warns the company could be at risk of bankruptcy.
The company's profitability and growth did not fare much better, scoring a 5 out of 10 rating on the back of a declining operating margin and negative returns that underperform a majority of industry peers. It also has a moderate Piotroski F-Score of 4, which suggests business conditions are stable. Coca-Cola Bottlers' one-star business predictability rank is on watch as a result of assets accumulating at a faster rate than revenue is growing, indicating the company could be becoming less efficient.
The fund is the company's largest guru shareholder with 0.37% of outstanding shares. The T. Rowe Price Japan Fund (Trades, Portfolio) also owns the stock.
During the quarter, the International Value Fund added to several other positions, including Ryanair Holdings PLC (NASDAQ:RYAAY), Total SA (XPAR:FP), KDDI Corp. (TSE:9433), Fanuc Corp. (TSE:6954), Samsung Electronics Co. Ltd. (XKRX:005930), China Mobile Ltd. (HKSE:00941), Rolls-Royce Holdings PLC (LSE:RR.), Volkswagen AG (XTER:VOW3), AstraZeneca PLC (LSE:AZN) and Ingenico Group SA (XPAR:ING).
Causeway's $6.47 billion equity portfolio, which is composed of 56 stocks, is largely invested in the financial services and industrials sectors.
According to its website, the fund returned -18.61% in 2018, underperforming the MSCI EAFE Index's -13.36% return.
Disclosure: No positions.
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This article first appeared on GuruFocus.
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