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Hennessy Japan Fund Invests in Pet Insurance Company Anicom

- By Sydnee Gatewood

The Hennessy Japan Fund (Trades, Portfolio) disclosed it established a position in Anicom Holdings Inc. (TSE:8715) in its first-quarter 2019 portfolio, which was released earlier this week.

Managed by Masakazu Takeda and Yu Shimizu, the fund, which is part of California-based Hennessy Advisors, invests in a concentrated number of high-quality Japanese companies. The portfolio managers look for value opportunities among companies that have good management, a strong balance sheet with little to no debt, a durable competitive advantage, a high return on equity, strong cash flow generation and above-average earnings growth.

Hennessy invested in 244,800 shares of the Japanese insurance company for an average price of 3,582.88 yen ($32.18) per share, dedicating 1.31% of the equity portfolio to the holding.

The company, which provides casualty insurance for pets, has a market cap of 61.24 billion yen; its shares closed at 3,030 yen on Tuesday with a price-earnings ratio of 33.30, a price-book ratio of 2.89 and a price-sales ratio of 1.63.

The Peter Lynch chart shows the stock is trading above its fair value, suggesting it is overpriced.


According to GuruFocus' 30-year financial data, a Premium feature, the company recorded earnings of 16.34 yen per share on 8.9 billion yen in revenue for the quarter ending Dec. 31.

As a result of having no long-term debt, GuruFocus rated Anicom's financial strength 7 out of 10. The company's profitability and growth did not fare as well, scoring a 4 out of 10 rating. While the return on equity and return on assets outperform over half of competitors, the insurer's revenue per share growth has slowed down over the past 12 months.


The fund holds 1.21% of Anicom's outstanding shares.

Additional trades

While the Japan Fund did not reduce or eliminate any positions during the quarter, it did add to a number of holdings. Among its largest increases were Rohto Pharmaceutical Co. Ltd. (TSE:4527), SoftBank Group Corp. (TSE:9984), Mitsubishi UFJ Financial Group Inc. (TSE:8306), Nidec Corp. (TSE:6594) and Keyence Corp. (TSE:6861).

Hennessy's $524.42 million equity portfolio, which is composed of 24 stocks, is largely invested in the industrials and consumer cyclical sectors. According to its fact sheet, the fund posted a return of -6.57% in 2018, outperforming both the Russell/Noruma Total Market Index, which returned -14.42%, and the Tokyo Stock Price Index's -14.30% return.

Disclosure: No positions.

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This article first appeared on GuruFocus.