The fund returned +2.6% for the month which was marginally behind the +3.0% return of the IA Japan Sector average.

Stock selection was generally favourable. Our long-standing deep value construction company, Tomoe Corp (1921) rose by +20%. The company has ¥33bn of long-term Investment Securities and no net debt. In addition to this, the company is sitting on ¥50bn of unrealised gains on leased assets. Assuming the core business is worth 10X net profits, our overall Sum of the Parts (SOTP) suggests +100% upside even from here. The core construction business is focussing on higher margin orders and raw material prices are now levelling off.

TSI Holdings (3608), a retailer, surged during the month. Latent gains on Real Estate are a theme that Zennor have focussed on since launch. The company surprised the market by selling their main real estate asset for ¥24bn, or over 25% of their market capitalisation. With three years of special dividends being paid and 20% of the company being bought back (over three years), the shares rose by +17%. The shares pay a dividend yield of 5.3%.