The Matthews Emerging Markets Small Companies Fund (Trades, Portfolio) revealed in a portfolio update filing that its top trades during the first quarter included new positions in Inpost SA (XAMS:INPST, Financial), Tongcheng Travel Holdings Ltd. (HKSE:00780, Financial) and Eugene Technology Co. Ltd. (XKRX:084370, Financial). The fund also boosted its holding of Bandhan Bank (BOM:541153, Financial) and sold out of Marico Ltd. (BOM:531642, Financial).
The fund seeks long-term capital appreciation by investing in small-cap companies trading in emerging markets, including frontier markets like Sri Lanka and Vietnam. The fund employs a bottom-up, fundamental approach to investing, emphasizing key factors like balance sheet strength, size and stability of cash flows and management depth.
As of March, the fund’s $426 million equity portfolio contains 67 stocks, with seven new positions and a quarterly turnover ratio of 15%. The top four sectors in terms of weight are industrials, technology, financial services and health care, which represent 27.27%, 20.61%, 17.51% and 12.92% of the equity portfolio.
Investors should be aware that portfolio updates for mutual funds do not necessarily provide a complete picture of a guru’s holdings. The data is sourced from the quarterly updates on the website of the fund(s) in question. This usually consists of long equity positions in U.S. and foreign stocks. All numbers are as of the quarter’s end only; it is possible the guru may have already made changes to the positions after the quarter ended. However, even this limited data can provide valuable information.
Inpost
The fund purchased 647,686 shares of Inpost (XAMS:INPST, Financial), giving the position 1.39% equity portfolio weight. Shares averaged 8.21 euros ($9.03) during the first quarter.
The Luxembourg-based postal service company has a GF Score of 44 out of 100 based on a growth rank of 9 out of 10, a profitability rank of 7 out of 10 and a financial strength rank of 2 out of 10. Despite this, the company does not have enough information to compute ranks for GF Value and momentum and thus, the GF Score may give an incomplete picture of its potential.
Despite the company not having enough data to compute a predictability rank, Inpost’s high growth rank is driven by three-year revenue and earnings growth rates that are outperforming more than 96% of global competitors.
Tongcheng Travel Holdings
The fund invested in 1,892,400 shares of Tongcheng Travel Holdings (HKSE:00780, Financial), giving the position 0.97% equity portfolio weight. Shares averaged 17.26 Hong Kong dollars ($2.20) during the first quarter; the stock is fairly valued based on its price-to-GF Value ratio of 0.98 as of Tuesday.
The Chinese travel agency has a GF Score of 80 out of 100 based on a momentum rank of 10 out of 10, a growth rank of 9 out of 10, a GF Value rank of 3 out of 10 and a rank of 5 out of 10 for financial strength and profitability.
Although the company’s gross margin of 70% outperforms approximately 84% of global competitors, Tongcheng has a low Piotroski F-score of 3 out of 9 and a return on equity that underperforms more than 60% of global travel and leisure companies.
Eugene Technology
The fund purchased 145,472 shares of Eugene Technology (XKRX:084370, Financial), giving the position 0.84% equity portfolio weight.
Shares of Eugene Technology averaged 26,697.58 won ($19.89) during the first quarter; the stock is significantly undervalued based on its price-to-GF Value ratio of 0.60 as of Tuesday.
The South Korean semiconductor equipment company has a GF Score of 96 out of 100 based on a financial strength rank of 10 out of 10, a GF Value rank of 8 out of 10 and a rank of 9 out of 10 for momentum, profitability and growth.
The company’s high financial strength rank is driven by several positive investing signs, which include a high Altman Z-score of 7.2 and a cash-to-debt ratio that outperforms approximately 88% of global competitors.
Bandhan Bank
The fund added 3,294,458 shares of Bandhan Bank (BOM:541153, Financial), expanding the position by 47.22% and its equity portfolio by 1.85%.
Shares of Bandhan Bank averaged 229.54 rupees ($2.81) during the first quarter; the stock is significantly undervalued based on its price-to-GF Value ratio of 0.64 as of Tuesday.
The Indian banking service company has a GF Score of 70 out of 100 based on a growth rank of 6 out of 10, a GF Value rank of 4 out of 10, a financial strength rank of 3 out of 10 and a rank of 5 out of 10 for momentum and profitability.
Marico
The fund sold all 716,815 shares of Marico (BOM:531642, Financial), trimming 1.21% of its equity portfolio.
Shares of Marico averaged 496.36 rupees during the first quarter; the stock is fairly valued based on its price-to-GF Value ratio of 0.91 as of Tuesday.
The Indian beauty and wellness company has a GF Score of 90 out of 100 based on a rank of 10 out of 10 for growth and GF Value, a profitability rank of 9 out of 10, a financial strength rank of 8 out of 10 and a momentum rank of 2 out of 10.
