Tracking David Winters' Wintergreen Advisers Portfolio - Q4 2015 Update

| About: Wintergreen Fund (WGRNX)

Summary

David Winters’ 13F portfolio decreased from $486M to $384M this quarter.

Wintergreen Fund's largest three positions are Reynolds American, British American Tobacco plc, and Consolidated-Tomoka Land.

A large stake in Franklin Resources was eliminated while also reducing several other large positions.

This article is part of a series that provides an ongoing analysis of the changes made to David Winters' 13F stock portfolio on a quarterly basis. It is based on Winters' regulatory 13F Form filed on 02/12/2016. Please visit our Tracking David Winters' Wintergreen Advisers Portfolio series to get an idea of his investment philosophy and our previous update highlighting the fund's moves during Q3 2015.

This quarter, Winters' 13F portfolio decreased 20.83% from $486M to $384M. The number of holdings decreased from 11 to 9. The top five holdings represent ~90% of the assets, making it a heavily concentrated portfolio.

The mutual fund (MUTF:WGRNX) has a global orientation: ~43% US, ~5.5% cash, and the rest outside US. Switzerland, Canada, and United Kingdom together account for 41% of the overall portfolio. AUM is $700M. Performance wise, the fund is down ~7% YTD compared to ~1% down for the MSCI World Index. The three largest investments are Reynolds American, British American Tobacco plc (NYSEMKT:BTI), and Consolidated-Tomoka Land and they together account for ~29% of the overall portfolio. Compagnie Financiere Richemont SA (OTCPK:CFRUY), Nestle SA (OTCPK:NSRGY), and Swatch Group AG (OTCPK:SWGAY) are the other non-US positions in the top-ten.

Note: Wintergreen Fund's tobacco allocation is large at 28%. In the 13F portfolio, the allocation is even larger at 46%.

Stake Disposals:

Franklin Resources (NYSE:BEN): BEN was Wintergreen's fourth-largest US long portfolio position at 11.93% as of last quarter. This quarter, the entire position was sold at prices between $35 and $42. The stake was first purchased in 2008 and saw consistent buying in the following years. Last three quarters had seen selling: roughly one-third reduction at prices between $36.36 and $55.49. The stock currently trades at $32.32.

CSX Corporation (NASDAQ:CSX): CSX was a small 1.62% of the portfolio position established in Q1 2015 at prices between $33.12 and $36.57. This quarter saw the elimination at prices between $24.70 and $30. The stock currently trades at $24.19.

Stake Increases:

Baker Hughes (NYSE:BHI): BHI was a minutely small 0.33% of the 13F portfolio stake established last quarter at prices between $45.76 and $61.70. This quarter saw a substantial increase to a 1.33% portfolio stake at prices between $43.36 and $57.33. The stock currently trades below those ranges at $39.90.

Note: Halliburton (NYSE:HAL) has agreed to buy BHI in a cash-and-stock deal ($19 cash and 1.12 shares of Halliburton stock for each share held). At current prices, the deal values BHI at ~$51.59 per share.

Stake Decreases:

Altria Group (NYSE:MO): MO was first purchased in Q1 2012 at prices between $28 and $31. In Q1 2013, the original position was reduced by 26% at prices between $31.44 and $35.32. Q4 2014 saw a ~11% reduction at prices between $45 and $51.27 and that was followed with a ~16% reduction in Q1 2015 at prices between $48.69 and $56.50. Q2 2015 saw another ~14% reduction at prices between $47.54 and $52.82. There was a further ~15% reduction this quarter at prices between $54.22 and $61.53. The stock currently trades at $59.97 and the remaining stake is at 15.99% (third-largest) of the 13F portfolio. Winters is harvesting long-term gains from this position.

Canadian Natural Resource Ltd. (NYSE:CNQ): CNQ is a very long-term position that has been in the portfolio since 2006. The stake has been built up over several years to a huge 12.79 % (top-five) of the US long portfolio position. Q2 2015 saw a ~11% reduction at prices between $27.16 and $34.15 and that was followed with a ~5% reduction last quarter at prices between $19.05 and $27.16. This quarter saw a further ~17% reduction at prices between $19.36 and $25.60. The stock currently trades at $20.03.

Coca Cola Company (NYSE:KO): KO is a very long-term 4.20% of the portfolio position. The original stake was increased by 50% in Q4 2012 when 670,000 shares were purchased at prices between $35.97 and $38.58. Q4 2013 saw an additional 18% stake increase at prices between $37 and $41.31. Q1 2015 saw an about-turn as the position was reduced by ~69% at prices between $39.91 and $43.78. This quarter saw a ~46% further reduction at prices between $39.80 and $43.84. The stock currently trades at $43.10.

Note: Wintergreen Funds is choosing to move on after an unsuccessful activism attempt: In the KO annual meeting, Wintergreen voted against the company's directors and later disclosed that they did not believe Coca Cola's management and directors served the interests of shareholders. They also voted against the "say on pay" measure. The sparring continued with David Winters accusing KO management of improper bonus disclosure. Interestingly, Warren Buffett made supportive comments on KO and went so far as to state Winters as being like someone in a glass house who throws stones.

Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) previously Google: GOOG is a 10.11% of the portfolio position purchased in 2011 at much lower prices. It had since been kept relatively steady. This quarter saw a ~26% reduction at prices between $608 and $777. Winters is harvesting huge long-term gains from this position. The stock is now at $682.

Reynolds American (NYSE:RAI): RAI is Wintergreen's largest 13F stake at 29.71% of the portfolio. It is a very long-term position that has been in the portfolio since their first 13F filing in Q4 2006. By EOY 2007, the position was aggressively built up to a 12.6% of the portfolio stake. During the market turmoil that followed, the position was substantially reduced and by EOY 2009 the stake was at ~7% of the 13F portfolio. Since then, the position was rebuilt through consistent buying almost every quarter. Last three quarters had seen selling: one-third reduction at prices between $31.72 and $44.27. This quarter saw a further ~11% trimming at prices between $43.63 and $49.49. The stock currently trades at $47.80.

Union Pacific (NYSE:UNP): UNP is a 4.30% of the US long portfolio stake established in Q2 2013 at prices between $67.50 and $80. Q4 2013 saw a ~4% stake increase at prices between $75 and $84 and that was followed by a ~47% increase in Q3 2014 at prices between $97 and $110. There was a ~28% reduction this quarter at prices between $75.03 and $97.05. The stock currently trades at $77.20.

Kept Steady:

Consolidated-Tomoka Land Company (NYSEMKT:CTO): CTO is a very long-term stake. It was the largest position at over 24% in 2006. The stake was increased by over 60% in 2007 as well. Since then, the position has been kept relatively steady. Wintergreen owns over 1.54M shares which translates to an ownership of 26% of the business. As a percentage of the 13F portfolio, the position stands at 21.16% (second-largest). The stock currently trades at $44.91. It returned ~55% in 2014, was flat for 2015, but has dropped ~15% YTD.

Note: Wintergreen has been very critical of CTO management recently. Over the last two months, the fund sent a couple of letters to the directors stating disclosure failings. Among other things, the fund stated CTO's share repurchase program did not reduce shares outstanding as it only helped to offset some of the options granted to management (CEO was granted options for ~5% of shares outstanding). Wintergreen's stance is for management to either sell the business or liquidate the real-estate assets.

Norfolk Southern (NYSE:NSC): NSC was a 1.51% of the US long portfolio position purchased in 2011. In Q4 2013, the position was almost eliminated at prices between $76.27 and $92.87. The stock currently trades at around $72.56 and the remaining stake is insignificantly small at 0.42%.

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

Click to enlarge

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.

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