Tracking Yacktman Asset Management's Portfolio - Q4 2015 Update

| About: AMG Yacktman (YACKX)

Summary

Yacktman's US long equity portfolio decreased ~13% from $15.24B to $13.21B this quarter.

Yacktman Asset Management reduced all of their larger positions during the quarter.

Yacktman’s largest five stakes are at ~51% of the 13F portfolio.

This article is part of a series that provides an ongoing analysis of the changes made to Donald Yacktman's US stock portfolio on a quarterly basis. It is based on Yacktman Asset Management's regulatory 13F Form filed on 02/04/2016. Please visit our Tracking Donald Yacktman's Yacktman Asset Management series to get an idea of his investment philosophy and our previous update highlighting the fund's moves during Q3 2015.

This quarter, Yacktman Asset Management's (MUTF:YACKX) (MUTF:YAFFX) (MUTF:YASSX) US long portfolio decreased 13.34% from $15.24B to $13.21B. The number of holdings decreased from 47 to 46. The largest holding is Twenty-First Century Fox (NASDAQ:FOX) (NASDAQ:FOXA) at 14.01% of the US long portfolio. The largest five individual stock positions are Twenty-First Century Fox, Procter & Gamble (NYSE:PG), PepsiCo Inc. (NYSE:PEP), Coca-Cola (NYSE:KO), and Sysco Corporation (NYSE:SYY) and they together account for 50.88% of the 13F portfolio. The firm currently holds around 18% in cash - a far cry compared to zero cash immediately following the financial crisis. The portfolio is concentrated with recent 13F reports showing around 50 individual positions. 27 of their stakes are significantly large (over ~0.5% of the US long portfolio each) and they are the focus of this article.

To know more about Yacktman's bottom-up value investing philosophy, check-out the book "Value Investing: From Graham to Buffett and Beyond."

Stake Decreases:

Anthem Inc. (NYSE:ANTM) previously Wellpoint Inc.: ANTM is ~1% of the US long portfolio position purchased in 2012 at prices between $55 and $74. Since then, the position had seen minor trimming every quarter. Q1 2015 saw a ~15% reduction at prices between $123 and $158 and that was followed with a huge ~58% reduction in the following quarter at prices between $151 and $171. The last two quarters have seen marginal further reductions. The stock currently trades at around $123. Yacktman has a large exposure to the healthcare industry, a group that also includes Johnson & Johnson (NYSE:JNJ), C.R. Bard (NYSE:BCR), and Stryker Corporation (NYSE:SYK). The last six quarters have seen stake reductions in all of them and that indicates a shift in bias.

Avon Products (NYSE:AVP): AVP is ~1% of the US long portfolio position. The original stake was a 15M share position established in 2011 at prices between $16 and $29. The position was increased to 18.9M shares by the end of 2012 at prices between $14 and $23. 2014 saw another two-thirds increase at prices between $9 and $17. The stock currently trades well below its cost basis at $3.23. The last two quarters have seen minor reductions.

Note: In December 2015, AVP announced a deal with Cerberus Capital whereby the North American business is separated in a private equity transaction. Cerberus is investing a total of $605M: $170M for an 80% interest in the NA division and $435M for 16.6% of the parent business in the form of preferred stocks convertible at $5 per share.

C.R. Bard Inc.: BCR is 1.84% of the US long portfolio position. 2014 had seen a ~42% reduction at prices between $129 and $172. The selling accelerated in 2015: ~71% further reduction at prices between $165 and $200. The stock currently trades at $183. The original position consisted of ~2.14M shares purchased in 2010 at prices between $76 and $96. The stake was built up to just over 7.4M shares by 2012 and since then has seen selling. Yacktman is harvesting huge gains. They still control ~1.7% of the business.

C.H. Robinson Worldwide Inc. (NASDAQ:CHRW): CHRW was an insignificantly small position (~700K shares) purchased in 2012. During Q1 & Q2 2013, ~5.4M additional shares were purchased at prices between $54 and $67 and since then the stake had been kept relatively steady. The last two quarters had seen a ~15% combined reduction at prices between $61.64 and $73.22. The selling accelerated this quarter: ~38% reduction at prices between $60.51 and $72.79. The stock currently trades at $68.08 and the position stands at 1.45% of the US long portfolio.

Cisco Systems (NASDAQ:CSCO): CSCO is a fairly large 6.38% of the US long portfolio position first purchased in 2010. The bulk of the current position was purchased in 2011 and 2012 at prices between $15 and $22. The stake has seen selling in the last two years. 2015 saw a combined ~45% reduction at prices between $25.52 and $29.61. The stock currently trades at $22.89. Yacktman is harvesting gains from this position.

Clorox Company (NYSE:CLX): CLX is a very long-term 0.36% portfolio position that has been in the portfolio since Yacktman's first 13F filing in Q1 1999. The bulk of the original position was purchased in 2012 when almost 4M shares were acquired at prices between $67 and $76. Q3 2014 saw a ~17% stake reduction at prices between $86 and $97 and that was followed with another one-third reduction in the following quarter at prices between $95 and $106. The selling accelerated in 2015: ~88% further reduction at prices between $104 and $129. The stock currently trades at $124. Yacktman harvested long-term gains from this position.

Coca-Cola Company & PepsiCo Inc.: KO & PEP are very long-term positions that have been in the portfolio for over fifteen years. During Yacktman's first 13F filing in Q1 1999, the positions consisted of just a few thousand shares each. The KO stake was built up to almost 2.4M shares by Q4 2006. The position size dropped below 1.5M shares in Q4 2008 but since then the stake was consistently increased - the position doubled in both 2009 & 2010 and increased by ~150% each in 2012 & 2013. The huge stake build-up happened at prices between $21 & $30 and $33.50 & $43 in the 2009-10 & 2012-13 periods respectively.

The stock currently trades at $42.44 and the position stands at 6.48% of the US long portfolio. The even larger 10.87% PEP stake was similarly built up over multiple years with the bulk of the buying happening in the 2011-13 time frame: over 22M shares were purchased during that time at prices between $60 and $86. The stock currently trades at $97.31. The last three quarters have seen significant reductions in both: KO was sold down by ~51% at prices between $38 and $42 while PEP saw a ~44% reduction at prices between $90 and $100.

Comcast Corporation (NASDAQ:CMCSA): CMCSA is 0.93% of the US long portfolio position first purchased in 2008. The bulk of the original position was purchased in 2009 in the $15 price range. Q3 2014 saw a ~27% reduction at prices between $53 and $57 and the following quarter saw another ~15% reduction at prices between $53.15 and $60.57. 2015 saw a further ~65% reduction at prices between $53 and $64. The stock currently trades at $59.41. Yacktman is harvesting large long-term gains from this position.

Exxon Mobil (NYSE:XOM): XOM is a 2.52% of the US long portfolio stake first purchased in 2007. The bulk of the position was acquired in 2013 in the low-90s price range. The stock currently trades below that range at $80.08. This quarter saw a ~28% reduction at prices between $74 and $87.

Johnson & Johnson: JNJ is a medium-sized 5.69% of the US long portfolio position that has been in the portfolio since their first 13F filing in Q1 1999. The bulk of the current position was purchased in 2011 in the low $60s price range. The stock currently trades at around $100. Q2 2015 saw a ~12% reduction at prices between $97 and $104. The last two quarters have also seen minor reductions.

Microsoft Corporation (NASDAQ:MSFT): MSFT has been in the portfolio since 2003 and it became a significantly large position in 2006 when around 2.2M shares were purchased at prices between $22 and $29.50. The bulk of the current 5.43% of the US long portfolio stake was established in 2011 when ~20M shares were added at prices between $24 and $28.50. Q3 2014 saw a 14.29% reduction at prices between $41.50 and $45.50 and that was followed with a ~22% reduction the following quarter at prices between $42.74 and $49.61. Q2 2015 saw a further ~16% reduction at prices between $40.29 and $49.15 and that was followed with a ~25% selling this quarter at prices between $44 and $57. The stock currently trades at $50.16. Yacktman is harvesting long-term gains from this position.

Oracle Corporation (NYSE:ORCL): The fairly large 6.32% ORCL position was first purchased in Q2 2013. Over 20M shares were purchased at prices between $30 and $35. Q1 2015 saw an ~8% reduction at prices between $41.47 and $45 and that was followed with a ~14% reduction in the following quarter at prices between $40.30 and $44.91. The pattern continued in the last two quarters with a ~25% overall reduction at prices between $35 and $41. The stock currently trades at $35.70.

Procter & Gamble: PG is a very long-term position that has been in the portfolio since Yacktman's first 13F filing in 1999. The position size remained insignificantly small until 2007 when about 520K shares were purchased at prices between $61 and $74. The position was cut in half in 2008 but the following four years saw a 100-fold stake increase at prices between $47 and $70. This quarter saw a ~22% reduction at prices between $72 and $81. The stock currently trades at $81.19. PG is Yacktman's second-largest position at 13.14% of the portfolio.

State Street Corporation (NYSE:STT): STT is a small 0.84% of the US long portfolio position. The original stake is from 2010 with the bulk purchased in 2011 in the high-30s price range. This quarter saw a ~13% reduction at prices between $64.73 and $73.69. The stock currently trades at $54.41.

Stryker Corporation: SYK is 1.45% of the US long portfolio position first purchased in 2009. The majority of the current stake was established in 2012 at prices between $50 and $57. Q4 2014 saw a ~24% reduction at prices between $79.20 and $96.61. The pattern continued the following quarter with a ~13% reduction at prices between $90 and $96 and that was followed with another ~23% selling in Q2 2015 at prices between $91.12 and $97.40. The last quarter saw a further ~36% reduction at prices between $92 and $105 and that was followed with another one-third reduction this quarter at prices between $91 and $101. The stock currently trades at $96.91. Yacktman is aggressively harvesting huge long-term gains from this position.

Sysco Corporation: SYY is a fairly large position at 6.39% of the US long portfolio. It was established in 2010 with the bulk purchased in 2011 and 2012 in the high-20s price range. The last quarter saw a ~24% reduction at prices between $35.68 and $41.38 and that was followed with a ~20% reduction this quarter at prices between $38.61 and $41.79. The stock currently trades at $43.07.

Twenty-First Century Fox: Yacktman had a very small position in News Corporation (NASDAQ:NWS) in 2008. The 2009 to 2012 time frame saw a huge stake build up as his share count increased 32 times (2.5M shares to over 80M shares). Since the spinoff and renaming of News Corporation, both positions (News Corp. and Twenty-First Century Fox) had seen selling - the NWS stake was eliminated in Q4 2013 and the FOXA stake was reduced by around 28%. Last quarter saw a ~10% increase while this quarter saw a ~7% reduction. Yacktman's average cost basis on this position is very low. The remaining stake is the largest 13F position at 14.01%.

US Bancorp (NYSE:USB): The 2.28% USB position has been in the portfolio for over 15 years. The majority of the stake was purchased in 2011 in the low-20s price range. The stock currently trades at $40.09. Q2 2015 saw a ~19% reduction at prices between $42.44 and $45.10 and last quarter saw a further ~8% reduction at prices between $39.76 and $46. This quarter, the pattern continued: ~20% reduction at prices between $40.50 and $44.36.

Unilever N V (NYSE:UN): UN is a small 0.79% of the US long portfolio stake established in Q4 2014 at prices between $37.14 and $41.02. In Q1 2015, the position was increased by ~23% at prices between $37.64 and $43.88. The last two quarters had seen marginal reductions. This quarter saw a ~43% reduction at prices between $40.20 and $46.04. The stock currently trades at $42.73.

Wal-Mart Stores (NYSE:WMT): WMT is a long-term position that was first purchased in 2004. The bulk of the current position was purchased in 2011 when around 2M shares were acquired at prices between $50 and $60. The stock currently trades at $66.99. Q1 2015 saw a ~4% trimming at prices between $80.69 and $90.47 and the selling accelerated in the following quarter: around one-third reduction at prices between $70.93 and $82.25. The last quarter saw a further ~7% trimming at prices between $63.10 and $73.79. The position now accounts for 0.87% of the US long portfolio. There was marginal selling this quarter.

Wells Fargo (NYSE:WFC): WFC is a small 0.87% of the US long portfolio position first purchased in Q1 2013. The bulk of the current position was purchased in Q2 2013 when ~4.8M shares were acquired at prices between $36.50 and $44.50. The stake was kept relatively steady until Q1 2014. Q2 & Q3 2014 saw significant selling as the position was reduced to 2.8M shares at prices between $48 and $54. 2015 saw a ~25% further reduction at prices between $51 and $58. The stock currently trades at $47.85.

ConocoPhillips (NYSE:COP), Intel Corporation (NASDAQ:INTC), and Viacom Inc. (NASDAQ:VIAB): These three positions saw significant reductions this quarter. The 1.65% COP stake was reduced by ~19% at prices between $45 and $57. The very small 0.53% INTC position was sold down by ~15% at prices between $30 and $35.44. VIAB stake saw a ~38% reduction at prices between $39 and $53 and the remaining position is at 1.60% of the portfolio.

The Bank of New York Mellon (NYSE:BK) and Colgate-Palmolive (NYSE:CL): These are significant positions (more than ~0.5% of the US long portfolio) that were decreased marginally (less than ~10% change in position size) this quarter. As the activities were very minor, they do not indicate a clear change in bias.

Note 1: Yacktman is known to shy away from investing in banks but has held significant stakes in three banks since the financial crisis. The last four quarters have seen selling in all of them: The Bank of New York Mellon (1.86%), US Bancorp (2.28%), and Wells Fargo (0.87%).

Note 2: Very small (less than 0.5% of the portfolio each) positions account for 2.58% of the overall portfolio. They are Altria Group (NYSE:MO), America's Car-Mart (NASDAQ:CRMT), Apollo Education Group (NASDAQ:APOL), The Bancorp Inc. (NASDAQ:TBBK), Bank of America (NYSE:BAC), Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B), Corning Inc. (NYSE:GLW), Goldman Sachs (NYSE:GS), HP Inc.(NYSE:HPQ), Hewlett Packard Enterprise (NYSE:HPE), Lancaster Colony (NASDAQ:LANC), MOCON Inc. (NASDAQ:MOCO), Philip Morris Intl. (NYSE:PM), Raven Inds. (NASDAQ:RAVN), the S&P 500 SPDR ETF (NYSEARCA:SPY), Staples Inc. (NASDAQ:SPLS), and Valmont Industries (NYSE:VMI). Yacktman controls ~2% of APOL.

The spreadsheet below highlights changes to Yacktman's US stock holdings in Q4 2015:

Click to enlarge

Disclosure: I am/we are long BAC, CSCO, INTC.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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