HJPNX: How It’s Changing Its Portfolio in 2016



HJPNX: An overview

The Hennessy Japan Fund – Investor Class (HJPNX) “seeks long-term capital appreciation by investing in stocks of Japanese companies.” It intends to do that by screening for “companies with strong businesses and management, trading at an attractive price, regardless of market capitalization. Through in-depth and rigorous analysis and on-site research, the Portfolio Managers identify stocks with a significant ‘value gap.’”

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The fund is quite concentrated with only 21 holdings as of March 2016. It had the same number of holdings a quarter ago. Due to this, the top ten holdings of the fund form 57.3% of the fund’s assets. The fund was managing assets worth $124.9 million at the end of March. As of March, the fund was invested in Nidec (NJ), SoftBank Group (SFTBY), Sumitomo Mitsui Financial Group (SMFG), Toyota Motor (TM), and Mizuho Financial Group (MFG).

Portfolio changes in HJPNX

Industrials, consumer discretionary, healthcare, and consumer staples form the core of HJPNX. These four sectors combine to form 72% of the portfolio. While industrials and consumer discretionary command more than a fifth of the assets each, the other two core sectors form ~13% each. The fund isn’t invested in the energy and utilities sectors.

Exposure to industrials has increased in the one-year period until April 2016. Although fund managers have let go of two stocks from the sector, they’ve increased exposure to the sector by increasing the weight of some of the remaining stocks. Both consumer-oriented sectors have broadly maintained their respective shares of the portfolio.

Information technology stocks have seen an increase in allocation. Fund managers have done so by increasing the weight of the lone holding from the sector. No new stocks have been added. Meanwhile, financials is out of favor, with the sector forming less than 2.5% of the assets.

Fund management has reduced exposure to funds and deployed that money into equities.

Has this concentrated strategy worked for the fund in the first trimester of 2016? Let’s find out in the next article.


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