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Komfie Manalo, Opalesque Asia:

Singapore-based APS Asset Management's flagship APS Japan Alpha Fund gained 6.60% (gross) in January, ahead of its benchmark by 2.31 percentage points. The TOPIX Net Index return was 4.29%.

The hedge fund said that it continued to exploit perception gaps in January between APS' and the market's assessment of specific stocks. It added that they initiated positions in stocks such as Takara Bio, where research indicated that they were trading far below their intrinsic value.

On the other hand, APS liquidated positions that reached its target price and will continue to pare down positions with narrowing perception gaps.

The hedge fund said, "We expect volatility to increase in the Japanese market as the recent rally was not only driven by strong corporate performance but also because of global liquidity. However, domestic macroeconomic factors have been stable which should offer support for the market. APS will remain focused on fundamentals and valuations while paying less attention to trends in global flows.

"Heightened market volatility presents opportunities for us to initiate or increase positions in companies that have significant upside potential over a longer horizon based on our bottom-up research. In addition, the Japanese market remains in a stage of a corporate renaissance and we believe that we can continue to find structural growth opportunities in the years to ......................

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