A Deep Dive into Tokyo Electron’s Exit and Other Key Changes #JapanFinance

Matthews Japan Fund (Trades, Portfolio), a stalwart in Japanese equity investments, has recently disclosed its portfolio adjustments for the third quarter of 2024. Established on December 31, 1998, the fund is committed to long-term capital appreciation, focusing primarily on Japanese stocks. Employing a bottom-up, fundamental investment philosophy, Matthews Japan Fund (Trades, Portfolio) aims to uncover undervalued companies with strong growth potential. The fund’s strategy is characterized by active management, a long-term focus on Asia, rigorous bottom-up research, and a broad spectrum of Asia investment strategies.

During the third quarter of 2024, Matthews Japan Fund (Trades, Portfolio) expanded its portfolio by adding 12 new stocks. Noteworthy new acquisitions include:

• Advantest Corp (TSE:6857), purchasing 320,300 shares, making up 2.16% of the portfolio, valued at 15.06 billion.

• Mitsubishi Heavy Industries Ltd (NGO:7011), with 929,400 shares, representing about 2% of the portfolio, valued at 13.89 billion.

• Miura Co Ltd (TSE:6005), acquiring 448,100 shares, accounting for 1.59% of the portfolio, valued at 11.05 billion.

The fund also increased its stakes in 18 existing holdings, with significant boosts in:

• Sony Group Corp (TSE:6758), adding 359,500 shares, bringing the total to 1,563,500 shares. This adjustment increased the share count by 29.86%, impacting the portfolio by 1%, with a total value of 30.38 billion.

• Hikari Tsushin Inc (TSE:9435), adding 25,200 shares, for a total of 40,200 shares. This represents a 168% increase in share count, valued at 8.95 billion.

The fund exited nine positions entirely in this quarter, including:

• Tokyo Electron Ltd (TSE:8035), selling all 127,300 shares, which had a -4.23% impact on the portfolio.

• Mitsui Chemicals Inc (TSE:4183), liquidating all 393,900 shares, resulting in a -1.66% portfolio impact.

Reductions were made in 17 stocks, with the most significant being:

• Recruit Holdings Co Ltd (TSE:6098), reduced by 169,900 shares, a -37.94% decrease, impacting the portfolio by -1.39%. The stock traded at an average price of 8700.68 during the quarter and has returned 8.56% over the past three months and 53.76% year-to-date.

• Mitsubishi UFJ Financial Group Inc (TSE:8306), reduced by 822,100 shares, a -31.51% decrease, impacting the portfolio by -1.35%. The stock traded at an average price of 1576.06 during the quarter and has returned -4.47% over the past three months and 37.85% year-to-date.

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As of the third quarter of 2024, Matthews Japan Fund (Trades, Portfolio)’s portfolio comprised 48 stocks. The top holdings included 5% in Keyence Corp (TSE:6861), 4.66% in Hitachi Ltd (TSE:6501), 4.47% in Shin-Etsu Chemical Co Ltd (TSE:4063), 4.36% in Sony Group Corp (TSE:6758), and 4.24% in ORIX Corp (TSE:8591). The holdings are predominantly concentrated in nine industries: Industrials, Technology, Consumer Cyclical, Financial Services, Basic Materials, Healthcare, Consumer Defensive, Communication Services, and Real Estate.

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