Yacktman, famous for its Yacktman Fund (YACKX), also manages a focused fund called Yacktman Focus Fund (YAFFX). The Focus Fund is different because it utilizes a more concentrated large-blend strategy. The team has a real nose for value but within a subset of companies with strong competitive advantages that aren't very economically sensitive. This is the track record of the fund since inception versus the S&P 500 and the Large Blend category:
Because Donald Yacktman managed to achieve such a stellar long term record, even better than that of the Focus Fund shown above, I keep an eye on the holdings of both funds. The Focus Fund portfolio has been updated on 16 January:
|Stock||% of portfolio||Shares||Recent activity||Buying Price*|
|PepsiCo Inc. (PEP)||12.10||13,825,000||Add 20.74%||$82.94|
|Procter & Gamble (PG)||9.14||10,640,000||$81.41|
|Twenty-First Century Fox (FOXA)||8.75||23,555,000||Reduce 14.35%||$35.18|
|Coca Cola Co. (KO)||8.46||19,400,000||Add 14.12%||$41.31|
|Cisco Systems (CSCO)||5.91||24,936,000||Add 26.90%||$22.45|
|Microsoft Corp. (MSFT)||5.21||13,180,000||Reduce 5.86%||$37.43|
|Sysco Corp. (SYY)||4.91||12,885,000||Reduce 3.12%||$36.10|
|Oracle Corp. (ORCL)||4.52||11,205,000||Add 12.50%||$38.26|
|Bard Inc. (BCR)||4.24||3,000,000||Reduce 29.91%||$133.94|
|Stryker Corp. (SYK)||4.04||5,100,000||$75.14|
|Johnson & Johnson (JNJ)||3.67||3,800,000||$91.59|
|Exxon Mobil Corp. (XOM)||3.10||2,900,000||$101.20|
|Viacom Inc. (VIA.B)||2.77||3,000,000||$87.34|
|Clorox Co. (CLX)||2.60||2,660,000||$92.76|
|eBay Inc. (EBAY)||1.85||3,200,000||Buy||$54.89|
|U.S. Bancorp (USB)||1.71||4,000,000||$40.40|
|C.H. Robinson (CHRW) Worldwide||1.60||2,600,000||$58.34|
|WellPoint Inc. (WLP)||1.56||1,600,000||$92.39|
|Avon Products (AVP)||1.31||7,200,000||$17.22|
|Comcast Corp. (CMCSK) CL A Spl||1.21||2,300,000||$49.88|
|Corning Inc. (GLW)||1.01||5,350,000||$17.82|
|Wells Fargo (WFC)||0.89||1,850,000||$45.40|
|Wal-Mart Stores (WMT)||0.83||1,000,000||$78.69|
|Bank of New York (BK)||0.83||2,250,000||$34.94|
|Becton Dickinson (BDX)||0.78||670||$110.49|
|Apollo Education (APOL) Group Inc.||0.78||2,705,000||$27.32|
|State Street Corp. (STT)||0.72||925||$73.39|
|Covidien Plc. (COV)||0.57||800||$68.10|
|Aggreko Plc (OTCPK:ARGKF)||0.50||1,686,000||Buy||$28.36|
|Goldman Sachs Group (GS)||0.47||250||$177.26|
|Northern Trust Corp. (NTRS)||0.36||550||$61.89|
|Patterson Cos. Inc. (PDCO)||0.28||650||$41.20|
|BlackBerry Ltd. (BBRY)||0.17||2,190,000||$7.45|
|Samsung Electronics Co. Ltd. (OTC:SSNLF)||0.12||11,35||Buy||$961.67|
|Resource America Inc. (REXI)||0.02||215||$9.36|
My attention was immediately drawn to the large stake that is being built in Pepsi . By coincidence I just wrote a short article about Pepsi. Pepsi is the world market leader in salty snacks and the second largest in carbonated soft drinks. The company has a long track record with stellar RoE. According to my calculations it is trading significantly below intrinsic value while there is very little risk on the downside.
Coca-Cola is also a position that is being increased. I've written several articles in 2013 saying that it's a good time to add some Coca-Cola to your portfolio. Same excellent company as always but not as expensive as it used to be, on a relative basis. Most likely investments in both companies are driven by a love for competitive advantages, defensive positioning of the portfolio and because the price is right.
3. Cisco Systems
Cisco Systems is another name with significant competitive advantages. The firm benefits from economies of scale and its clients have to deal with high customer switching costs after they are sucked in. Meanwhile recently the stock is out of favor in the market. Yacktman is taking advantage by backing up the truck.
4. Oracle Corp
Oracle Corp is a similar play to that in Cisco systems. Oracle's database and middleware solutions aren't very sensitive to price after the relationship has been acquired. The risk of implementation problems when switching to another database provider provide Oracle with a wide moat. Staying with Oracle is often just cheaper than running the risk of experiencing downtime of key business systems, even if just for a short while, for clients.
Conviction appears to be a little lower as the position is smaller than that in Cisco Systems. As I'm writing this, the stock can be acquired at the same price Yacktman built its position.
eBay Inc, Other mutations in positions are not as interesting as the changes were relatively minor. One exception is the new position in eBay. This is a stock I like a lot, which I wrote about two times in 2013: Why PayPal is well positioned. This buy is a little bit out of character given the Yacktman style of investing as the competitive advantage of the business isn't as robust as that of the other companies discussed so far. Mainly because eBay is a very strange company. It consists of quite different businesses, that are quite complimentary. I suspect Yacktman recognizes that the e-Commerce puts a floor under the stock while PayPal brings the possibility of huge upside into the equation.
The most recent Yacktman Focus Fund filing confirms quite a few of my investment ideas. Five positions were significantly increased. I've written about most of these over the past few months on Seeking Alpha. The huge position in Pepsi and the new position in eBay are of particular interest in my opinion. The turnover in this Yacktman fund is only 3%. That means it is easier to ride its coattails as its strategy is clearly long term in nature.