By Eric Winter
Austin-based Yacktman Asset Management recently released its 13F filing for the fourth quarter of 2012. The document describes the fund's holdings and can give investors an inside peek at which stocks the tenured manager favors. Donald Yacktman has been at the helm of his firm for over 20 years, working alongside his son to create two of the fastest-growing stock funds in the world, taking on almost $13bn in assets since 2008 alone. We've studied the latest filing to find Yacktman's five largest holdings, which collectively comprise almost half of his total portfolio.
Robert Murdoch's News Corp. (NWS) (NWSA) stands at the top of the list, occupying over 12% of the fund's capital. Yacktman owns both common and preferred shares, building his position going into the recession in 2008 to ultimately watch the stock rise from its lows near $6 to current trading levels north of $28. The holdings reflect Yactkman's mantra to buy good companies when they are devalued, holding tight as they recover, until they are seen favorably in the eyes of Wall Street once again. NWS' media prowess extends to all reaches of print, digital and visual mediums, and analysts expect this firm stronghold on the industry to keep the stock rising as 2013 extends. Chris Hohn of Childrens Investment Fund shares Yacktman's sentiment and has over $1.1bn invested (see his other top holdings here).
Yacktman's second largest holding can be found in household name Procter & Gamble Co. (PG), another stock that the investor believed in during the collapse in the economy. He now owns over $1.8bn worth. The fund believes that the stock can achieve double-digit returns over the next five years, according to his son, Steve. That would mean conquering their low-margin woes and weakening position amongst competition, which Wall Street analysts are citing as real problems for PG. Fortunately, PG's high dividend yield of 3.00% is a saving grace. Billionaire Ken Fisher has dedicated a half a billion dollars to PG within his fund Fisher Asset Management (read more about his positions here).
PepsiCo, Inc. (PEP) also commands nearly 10% of the fund, and the managers echo the same convictions they have for PG. Yacktman and his son believe that PEP can overcome their CEO-related woes and have their brands do the talking while beating inflation along the way. PEP had a positive year in 2012, helped along by continuous earnings beats, but it was still unable to beat the market's overall growth in the end. We are hoping for continued growth as well, citing the higher mean price target a year out from current levels. Platinum Asset Management, headed up by billionaire Kerr Neilson, holds over 2.5mm shares (check out his other large positions here).
Communications and networking giant Cisco Systems, Inc. (CSCO) has a large place mark in Yacktman's portfolios as well. The company has a large positive following on Wall Street, where over two-thirds of analysts polled rate the stock as a buy. CSCO provides Yacktman with a dividend yield of 2.7%, augmenting the quarterly income received from his other holdings like PEP and PG. CSCO is set to report Q4 2012 earnings on the thirteenth of this month. Jim Simons of Renaissance Technologies has over $250mm invested in the stock (read about this billionaire's other top holdings here).
Sysco Corporation (SYY) rounds out Yacktman's top five holdings. The food wholesaler has slightly more than 5% of the fund's assets, with Yacktman Asset Management being one of sixteen funds that hold the company in their top 10. Despite operating in such a resource-intensive, low-margin business, SYY has solidified itself as the industry leader with its pervasive distribution network and array of goods offered. They also offer investors a dividend yield of 3.6%, the highest of this list. Billionaire Israel Englander of Millennium Management fame is bullish with his SYY calls (see his other options positions here).