Thoughts on Tweedy Browne's Top 10 Holdings

by: Efsinvestment

Tweedy, Browne is an investment partnership directed by William H. Browne, John D. Spears, Thomas H. Shrager, and Robert Wyckoff Jr. Tweedy, Brown LLC is a successor of Tweedy & Co. The partnership is in the mutual fund business for more than 90 years. The managing partners consider themselves as Benjamin Graham style investors:

The Firm's investment approach derives from the work of the late Benjamin Graham, co-author of the first textbook on investment research, Security Analysis (1934) and author of The Intelligent Investor (1949).

According to Edgar Online, Tweedy, Browne currently has around $3 billion dollars of assets invested in U.S. securities. The partnership mostly invests in non-cyclical consumer goods [25.02%], financials [21.70%], and services [15.15%]. Here is a brief analysis of Browne's top 10 equity holdings:

Philip Morris International Inc. (NYSE:PM): PM is one of the largest tobacco producers around the world. Through its subsidiaries and affiliates, PM manufactures and retails cigarettes and other tobacco products in markets outside USA. Phillip Morris products are sold in 180 countries. The company owns 7 of the top 15 cigarette brands in the world. PM's strong mix of international products target a wide range of adult smokers. PM enjoys a %14.07 share in the cigarette sector. The company has a market cap of $120.89 billion, and a P/E ratio of 16.51. Forward P/E ratio is 13.53. Shareholders experienced an annualized EPS growth of 21.06%, this year. PM is one of the top 11 consumer companies paying substantial dividends with a dividend yield of 3.79%. Net profit margin is 11.26%.

ConocoPhillips (NYSE:COP): COP is the third-largest U.S. oil company, operating as a global, integrated energy producer. Market cap stands at $116.22 billion, with a forward P/E ratio of 9. ConocoPhillips had an annual average earnings growth of 18.2% over the past 10 years. Although the company's EPS growth over the past five years was -4.57%, analysts have optimistic growth expectations. Net profit margin of COP is 5.75%, and dividend yield is 3.31%. COP is one of the top 12 yield-generating stocks.

Johnson & Johnson (NYSE:JNJ): JNJ is engaged in the manufacture and sale of a broad range of products in the health care field on a global scale. Johnson & Johnson has a market cap of $179.68 billion; its shares trade around $65, with a P/E ratio of 14.87, and P/S ratio of 2.89. The dividend yield of Johnson & Johnson stocks is 3.29%, with a net profit margin of 19.77%. EPS growth for the past five years was 7.35%. JNJ is one top 5 drug manufacturers paying excellent dividends.

Coca-Cola FEMSA S.A.B de C.V. (NYSE:KOF): Coca-Cola Femsa S.A., through its subsidiaries, produces, markets, and distributes soft drinks in Mexico and Argentina. The company has a market cap of $14.73 billion. Shares trade around $79, with a P/E ratio of 17.80, and P/S ratio of 1.64. The dividend yield is 2.47%. With a 9.70% net profit margin, the company has a P/E ratio of 17.80, and a forward P/E of 14.17. Analysts estimate an annualized EPS growth of 11.93% in next five years. Tweedy Browne owns 7.01% of this company. Tweedy's investment in Coca-Cola FEMSA is an admirable long-term investment, given the huge potential company has in unsaturated markets.

Berkshire Hathaway, Inc. (NYSE:BRK.A)(NYSE:BRK.B): Berkshire Hathaway, Inc. is a publicly owned investment manager. Through its subsidiaries, the firm primarily engages in the insurance and reinsurance of property, and casualty risks business. Berkshire has a P/E ratio of 15.68, and forward P/E ratio of 16.88. EPS growth for this year is 52.67%, with an expected EPS growth of 9.69% for the next 5 years. One can think of Berkshire as a giant mutual fund, where the fund manager, Warren Buffet, has an excellent record.

Baxter International Inc. (NYSE:BAX): Baxter engages in the development, manufacturing and distribution of a diversified line of products and services in the health-care field. Baxter operates in three segments: Bioscience, Medication Delivery, and Renal. The company has a market cap of $33 billion. The company has a relatively high P/E ratio of 16.35, while forward P/E ratio is 12.30. Net profit margin is 15.64%, with a dividend yield of 2.17%. Baxter had an annualized earnings growth of 9.44% over the past 5 years. If analyst estimates of 10.14% EPS growth holds, Baxter could be an extremely profitable investment in long-term.

SK Telecom Co., Ltd. (NYSE:SKM): SKM Telecom provides wireless telecommunications services in Korea. The company offers wireless Internet services, including mobile music and game portal services, as well as multimedia services. Its market capital is $11.14 billion, while P/E and forward P/E ratios are 8.67 and 8.71, respectively. SKM had an annual EPS growth of -2.32% over the last five years, however, earnings increased by 39.11% this year. It offers a fat yield of 4.19%. Net profit margin is 14.13%.

Emerson Electric Co. (NYSE:EMR): EMR produces electrical, electromechanical, and electronic products, used by households, as well as industrials. With a market cap of $45.27 billion, Emerson has a P/E ratio of 22.40, and a forward P/E ratio of 15.59. This year earnings are expected to increase by 15.10%. EMR has a net profit margin of 9.62%, and dividend yield of 2.30%. Shares trade around $60. Oppenheimer has a target price of $74.

Devon Energy Corporation (NYSE:DVN): Devon engages in the exploration, development, and production of natural gas and oil products. Market cap is $45.27 billion. DVN has a relatively high P/E ratio of 22.40 with a forward P/E ratio of 15.59. However, past EPS growth is 8.92%, and net profit margin is 9.62%.

Union Pacific Corporation (NYSE:UNP): UNP, through its subsidiary, Union Pacific Railroad Company, provides rail transportation services. Established in 1862, it is one of the oldest companies in the market. The market cap of UNP is $49.93 billion, while its P/E ratio is 17.49. It has a forward P/E ratio of 13.24. Shareholders enjoyed an annualized EPS growth of 23.40%. Having a profit margin of 16.60%, Pacific paid a 1.49% dividend in 2010.

Wal-Mart Stores, Inc. (NYSE:WMT): The giant of the service industry, Wal-Mart provides service in the U.S., Canada, Argentina, Brazil, Chile, Costa Rica, India, Japan, Mexico, PRC and the U.K. The market capital of WMT is $189.72 billion, and its trailing ratio is 12.76, while forward P/E ratio is 11.15. Shares trade around $54.42, with a P/E ratio of 12.96, and P/S ratio of 0.45. Wal-Mart shareholders enjoyed an average EPS growth of 8.96% over the last five years, and a dividend yield of 2.68%. UBS has a target price of $60.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.