This article is part of a series that provides an ongoing analysis of the changes made to Gardner Russo & Gardner's 13F stock portfolio on a quarterly basis. It is based on Russo's regulatory 13F Form filed on 02/11/2016. Please visit our Tracking Gardner Russo & Gardner Portfolio series to get an idea of their investment philosophy and their moves during Q3 2015.
This quarter, Gardner Russo & Gardner's 13F long stock portfolio increased 5.64% from $11.07B to $11.70B. The top three holdings are at 29.67% of the portfolio while the top five holdings are at $44.83% of the assets: Berkshire Hathaway, Nestle, MasterCard, Philip Morris, and Heineken. Recent 13F reports have shown around 100 positions with around 20 stakes that are significantly large. The focus of this article is on the larger positions.
Note: Russo's portfolio on its own should not be viewed as an overall asset allocation plan as his clients look at his firm to allocate a portion of their assets to his focus area (global equities with consumer orientation).
Altria Group (NYSE:MO): MO is a 3.01% of the portfolio stake. It is a very long-term position. Philip Morris was a fairly large 4.59% position (1.75M shares) during their first 13F filing in Q1 1999. The original position grew over the years: it doubled by 2005 and again doubled by 2008. Since then, only very minor adjustments have been made. The current stake is at 6M shares. The stock is now at $59.99. This quarter saw a ~6% reduction at prices between $54 and $62. Russo is sitting on huge gains on this position.
Brown Forman (NYSE:BF.A) (NYSE:BF.B): BF.B is a medium-sized 2.82% of the 13F portfolio position that has been in the portfolio since their first 13F filing in Q1 1999. The last significant activity was in 2012 when around 1M shares were purchased in the $52 to $70 price-range. There have only been very minor changes since. The position was at ~2.9M shares at EOY 2012 and the current stake is at ~3.05M shares. The stock is now at $95.58. Last two quarters have seen very minor reductions.
Comcast Corp. (NASDAQ:CMCSA): CMCSA is another very long-term position that has been in the 13F portfolio since their first filing in Q1 1999. The last major activity was between 2008 and 2011 when the original position was reduced by half (from ~10M shares to ~5M shares) at around $20. The current position is at 3.91M shares (1.89% of the portfolio) and the stock is at $56.04. This quarter saw a ~4% trimming.
MasterCard Inc. (NYSE:MA): MA is a large (top three) 8.07% of the portfolio position first purchased in 2008. The vast majority of the current stake was purchased in 2010 in the low-20s price-range. 2011 to 2013 also saw significant buying at higher prices. Since then, it has been kept almost steady. The stock is now at $82.11.
SABMiller plc (OTCPK:SBMRY) (OTCPK:SBMRF): SBMRF was a fairly large 6.15% position as of last quarter. It was sold down by ~60% to a 2.50% portfolio stake this quarter at prices between $55 and $62.40. The original position is from 2011 when around 8.5M shares were purchased in the mid-30s. 2013 also saw a significant increase of just over 2M shares at higher prices. The stake is now at ~4.9M shares and the stock trades at $59.40.
Note: In October 2015, Anheuser Busch Inbev agreed to buy SABMiller in an all-cash deal worth ~$106B (44 pounds a share for the London listed shares).
Scripps Networks Interactive (NYSE:SNI): SNI is a very small 0.59% of the 13F portfolio position that has been in the portfolio since its IPO in July 2008. The IPO was the result of the spinoff of E.W. Scripps Company's (NYSE:SSP) cable TV division as Scripps Networks Interactive. Russo had a ~3.2M share position in E.W. Scripps and he received an equivalent number of SNI shares. The SSP position was almost sold out the following year. SNI also saw reductions: 2010 saw a ~1M share reduction in the high-40s price range and the following 4 years also saw selling at higher prices. The stock is now at $53.13. The last several quarters have seen marginal reductions and the position is now at ~1.24M shares.
Anheuser Busch Inbev SA (NYSE:BUD) (OTCPK:AHBIF): BUD is a fairly large 6.92% of the 13F portfolio position. The majority of the current position was purchased in 2010 and 2011 at prices between $45 and $64. The following two years also saw significant buying at higher prices. Since then, the position was kept relatively steady. This quarter saw a ~25% increase at prices between $106 and $130. The stock is now at $115.
Note: Anheuser Busch was a small ~1% of the portfolio position during their first 13F filing in Q1 1999. That stake was eliminated in 2008.
Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B): BRK.B has been consistently maintained as the largest stake in the portfolio since their first 13F filing in Q1 1999. At the time, the sizing was at 5.78% compared to the current allocation of 11.46%. The last major activity was in 2012 when around 400K shares were acquired in the low-80s price range. The following year also saw an increase at higher prices. The stock is now at $125.
British American Tobacco (NYSEMKT:BTI) (OTCPK:BTAFF): A large ~3.75M share position in BTAFF was acquired in 2011 in the high-30s price-range. There were minor purchases in the following years and the current stake is at 5.08M shares (2.42% of the portfolio). The stock is now at $53.68. This quarter saw a marginal increase.
Note: A minutely small stake in BTAFF was in the portfolio in their first 13F filing in Q1 1999. That position was eliminated in the 2008-2009 time frame.
Compagnie Financiere Richemont (OTCPK:CFRHF) (OTCPK:CFRUY): A large ~6.5M share stake was established in 2011 in the low-50s price range and was increased to the current stake of 10.36M shares through incremental purchases in the following years. Last quarter saw a 5.73% increase at prices between $73 and $86 and that was followed with a ~17% increase this quarter at prices between $71 and $87. The stock is now at $65.15. The stake is at 6.33% of the 13F portfolio.
Note: CFRHF has seen a previous round-trip in the portfolio: A fairly large 6.33% portfolio stake was purchased in 2001 and the position saw consistent buying till 2007. It was eliminated the following year.
Diageo plc (NYSE:DEO) (OTCPK:DGEAF): DEO is another 2.62% of the portfolio very long-term stake that was sold down in 2008 but built back up from Q1 2011. Over 6M shares were acquired that quarter in the high-70s price-range. The following two years also saw significant buying. The current stake is at ~9.8M shares. The stock is now at $102. Last two quarters have seen marginal further buying.
Heineken Holding NV (HINKY) (OTCQX:HKHHF): HKHHF was a fairly large ~5% portfolio stake (~2.5M shares) in their first 13F filing in Q1 1999. That original position was sold out in 2008. It was rebuilt back up to a 10.2M share stake in the 2011-2013 time frame at prices between $37 and $66. The current position is at 10.96M shares and it is a top-five stake at 7.22% of the portfolio. The stock is now at $71.55.
JC Decaux SA (OTCPK:JCDXF) (OTC:JCDXY): JCDXF is a small 1.63% of the portfolio stake that has seen consistent buying since the stake establishment in 2011. 2015 saw a ~240% increase at prices between $33.90 and $43.80. The stock is now at $37.10.
Martin Marietta Materials (NYSE:MLM): MLM is a 2.45% of the 13F portfolio stake that has stayed relatively steady since 2004. At the time, Russo had a ~2M share position and the current stake is at 2.10M shares. Most every quarter has seen minor adjustments and the stock price almost tripled over that period. It currently trades at $129.
Nestle SA (OTCPK:NSRGY) (OTCPK:NSRGF): NSRGY is the second-largest 13F stake at 10.14% of the portfolio. It was a ~3% portfolio stake in Q1 1999. The position size peaked in 2007 at ~4M shares but was sold out the following year. The majority of the current 15.8M shares stake was purchased in 2011 in the mid-50s price-range. The following two years also saw a combined ~45% increase at higher prices. The stock is currently at $73.23. For investors attempting to follow Russo, NSRGY is a good option to consider for further research.
Pernod Ricard (OTCPK:PDRDY) (OTCPK:PDRDF): PDRDF is a fairly large 5.64% of the 13F portfolio position. The stake has seen consistent buying every year since the stake was established in Q1 2011 in the low-90s price range. 2015 saw a ~9% increase at prices between $100 and $128. The stock is now at $107.
Philip Morris International (NYSE:PM): PM is a large (top five) position at 7.94% of the 13F portfolio. It was acquired as a result of the spin-off of Philip Morris International from Philip Morris (now Altria) in 2008. Last major activity was in 2013 when close to 2M shares were acquired in the high-80s price range. The stock currently trades at $88.32. For investors attempting to follow Russo, PM is a good option to consider for further research.
The Swatch Group (OTCPK:SWGAY): SWGAY was a minutely small stake as of last quarter. This quarter saw a ~600% increase to a significant 2.22% of the portfolio position at prices between $16.71 and $20.93. The stock is currently near the low end of that range at $16.27. The significant buying indicates a bullish bias.
Unilever NV (NYSE:UN) (NYSE:UL) (OTCPK:UNLNF): UN is a fairly large 5.32% of the portfolio stake first purchased in 2000. The bulk of the current ~14.38M shares stake was acquired during the 5-year period from 2010 to 2014 at prices in the high-20s to the low-40s. The stock is now at $41.84.
Wells Fargo (NYSE:WFC): WFC is a large 6.84% of the 13F portfolio position. It was already a ~2.5% stake in their first 13F report in Q1 1999. The majority of the current ~14.72M shares position was purchased in the 2011 to 2013 time frame at prices in the low-20s to the low-40s. The stock is currently at $45.14.
As a percentage of the portfolio, the remaining positions are all below 0.5% of the portfolio each and so have limited portfolio performance impact. Below is a list of stakes that are between 0.1% and 0.5% of the portfolio each: Exxon Mobil (NYSE:XOM), Markel Corp. (NYSE:MKL), and Visa Inc. (NYSE:V).
Note: Some of the securities in this report are OTC stocks with very low liquidity in the US markets. As such, it is best to use limit orders and/or use orders in their native markets.
The spreadsheet below highlights changes to Gardner Russo & Gardner's 13F stock holdings in Q4 2015:
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.