Tracking Wallace Weitz's Weitz Investment Management Portfolio - Q4 2015 Update

| About: Weitz Partners (WPVLX)

Summary

Wallace Weitz's 13F portfolio decreased from $3.23B to $2.94B. The number of positions decreased from 68 to 67.

Weitz Investment Management added Colfax Corporation and dropped Valeant Pharmaceuticals during the quarter.

The top-three positions are Berkshire Hathaway, Liberty Global, and Liberty Media and they add up to ~24% of the portfolio.

This article is part of a series that provides an ongoing analysis of the changes made to Wallace Weitz's US stock portfolio on a quarterly basis. It is based on Weitz's regulatory 13F Form filed on 02/16/2016. Please visit our Tracking Wallace Weitz's Weitz Investment Management Portfolio article for an idea on his investment philosophy and the last update for the fund's moves during Q3 2015.

This quarter, Weitz's US long portfolio decreased 8.98% from $3.23B to $2.94B. The number of holdings decreased from 68 to 67. The top three positions are at 24.40% while the top five holdings are close to one-third of the US long assets. The largest stake by far is Berkshire Hathaway at 10.39% of the US long portfolio.

Weitz Investment Management's equity funds are Weitz Partners Value Fund (MUTF:WPVLX), Weitz Value Fund (MUTF:WVALX), Weitz Hickory Fund (MUTF:WEHIX), and Weitz Research Fund (MUTF:WRESX). Over the long-term, the flagship Weitz Partners Value Fund (1983 inception) has generated significant alpha but the fund is behind the S&P 500 index over the last decade. The cash allocation is in the ~18% range: historically, cash goes higher as the market gets richer and vice-versa.

Stake Disposals:

Valeant Pharmaceuticals (NYSE:VRX): VRX was a fairly large 3.48% of the US long portfolio position acquired in 2011 and 2012 with a cost-basis of around $50. Q1 2014 saw a ~14% reduction at prices between $117 and $146 and Q4 2014 saw another ~19% reduction at prices between $113 and $146. Q1 2015 saw a further one-third reduction at prices between $143 and $205 and that was followed with a ~22% selling the following quarter at prices between $197 and $242. Last quarter also saw a further ~12% reduction and the elimination this quarter was at prices between $70 and $182. The stock currently trades at $84.97. Weitz harvested long-term gains from this position.

Angie's List (NASDAQ:ANGI): ANGI was a very small 0.54% stake as of last quarter. It was established in Q3 2014 at prices between $6.58 and $12.31. The position was sold out this quarter at prices between $4.98 and $10.86. The stock currently trades at $9.20.

New Stakes:

Colfax Corporation (NYSE:CFX): CFX is a small 1.55% of the 13F portfolio stake established this quarter at prices between $22 and $32. The stock currently trades at $25.30.

Stake Decreases:

Accenture PLC (NYSE:ACN): The very small 0.75% of the US long portfolio ACN position was first purchased in 2009. 2010 saw a huge ~1.4M share stake increase in the low 40s but the bulk of that position was sold the following year in the high 50s. Since then, the remaining stake has been kept relatively steady. The stock currently trades at $98.95. This quarter saw a ~9% trimming.

Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B): Berkshire Hathaway is a very long-term stake and the largest holding in the portfolio at 10.39%. This quarter saw a marginal reduction.

Note: Wallace Weitz is known to have owned Berkshire Hathaway stock continuously since 1976 riding it from around $30 per share to the current price of $197,310.

Discovery Communications (NASDAQ:DISCA): DISCA is a medium-sized 2.72% of the US long portfolio stake established in Q3 2014 at prices between $38 and $45. The position was increased by ~300% in the following quarter at prices between $31.86 and $37.24. Q1 2015 saw a further one-third increase at prices between $28.99 and $34.48. This quarter saw an about-turn: ~14% reduction at prices between $25.36 and $31.12. The stock currently trades at $25.35.

Endo International PLC (NASDAQ:ENDP): ENDP is a 1.43% stake established in Q4 2013 at prices between $43.73 and $67.25. Q2 2015 saw another ~29% increase at prices between $78.39 and $95.92. It now trades at $50.26. This quarter saw a ~30% reduction at prices between $51.46 and $71.06.

Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) previously Google: GOOG was a minutely small position first purchased in 2008. The current 2.78% of the US long portfolio stake was built in 2010 and 2011 in the mid-250s price-range. The position size has fluctuated since. Q4 2014 saw a ~30% increase at prices between $495 and $577. Q2 2015 saw a ~11% further increase at prices between $524 and $565. This quarter saw a ~40% reduction at prices between $608 and $777. The stock currently trades at $701. Weitz is harvesting long-term gains from this position.

Iconix Brand (NASDAQ:ICON): ICON was first purchased in 2010 with the bulk of the current stake established in 2011 and 2012 at a high-teens cost-basis. It was increased by ~18% in Q2 2015 at prices between $25 and $35. Last quarter saw a ~11% further increase at prices between $12.05 and $25.61. This quarter saw an about turn: ~29% sold at prices between $5.67 and $16.31. The stock is now at $7.90.

Note: Shares of ICON dropped sharply in August 2015 after they announced the departure of Neil Cole (Founder and CEO). It dropped again in November after announcing that financial results for 2013 to 2015 will have to be revised.

Motorola Solutions (NYSE:MSI): MSI is a 1.95% stake established in Q4 2014 at prices between $58.50 and $67.87. It was reduced by ~19% the following quarter at prices between $62.41 and $70. Q2 2015 saw a ~28% further reduction at prices between $57.14 and $66.67. This quarter saw another ~23% reduction at prices between $65.24 and $72.45. The stock currently trades at $66.

Laboratory Corp of America Holdings (NYSE:LH): LH is a medium-sized 2.95% very long-term stake. The bulk of the position was built-up in the 2008-2010 timeframe at lower prices. This quarter saw a ~5% trimming. The stock currently trades at $109.

Liberty Media Corp. (NASDAQ:LMCA) (NASDAQ:LMCK): LMCK is a long-term holding that has been in the portfolio for more than a decade. This quarter saw a ~14% reduction at prices between $34.46 and $40.34. The stock currently trades at $33.19. The position is a top-three stake at 6.50% of the 13F portfolio.

Oracle Corporation (NYSE:ORCL): ORCL is a 0.53% of the US long portfolio stake. The original position is from Q4 2013 when around 1.75M shares were purchased at prices between $32.90 and $37.98. It was reduced by around one-third in Q4 2014 at prices between $37.56 and $46.23. This quarter saw another ~70% reduction at prices between $36 and $41. The stock currently trades at $36.78.

Precision Castparts (BATS:PCP): PCP is a 3.39% of the US long portfolio position established in Q3 2014 at prices between $228 and $260. Q4 2014 saw a ~90% increase at prices between $218 and $239 and the following quarter saw a further ~57% increase at prices between $200 and $241. This quarter saw a marginal reduction.

Note: An August 10th 2015, Berkshire Hathaway agreed to buy PCP for $235 per share cash and the transaction closed last month.

Pioneer Natural Resources (NYSE:PXD): PXD is a 1.85% of the US long portfolio established in Q4 2014 at prices between $131 and $197. Last three quarters have seen a combined ~20% reduction at prices between $107 and $180. The stock currently trades at $123.

Texas Instruments (NASDAQ:TXN): TXN is a 1.87% of the US long portfolio stake first purchased in 2010 in the mid-20s price-range. The majority of that position was eliminated in 2011 in the low-30s price range. In 2012, the stake was built back up in the high-20s price-range and had since been kept relatively steady. Q4 2014 & Q1 2015 had seen a combined ~58% reduction at prices between $51.78 and $59.94. Last two quarters saw minor increases while this quarter saw a marginal reduction. The stock is now at $52.76.

Wells Fargo (NYSE:WFC): WFC was first established in Q2 2011 when around 3.5M shares were purchased in the high-20s price-range. The position was reduced by one-third by early 2013. In Q4 2014, the stake was reduced by ~16% at prices between $47.85 and $55.71. Q2 2015 saw a further one-third reduction at prices between $53.94 and $57.89. The stock currently trades at $48.08 and the remaining stake is at 2.20% of the US long portfolio. This quarter saw a ~9% trimming.

Wesco Aircraft (NYSE:WAIR): WAIR is a 1.32% of the US long portfolio position built up over the last three quarters of 2014 at prices between $13.53 and $21.74. Last quarter saw a ~21% increase at prices between $12.21 and $15.54. The stock currently trades near the low end of his purchase price ranges at $12.23. This quarter saw a ~6% trimming.

XO Group (NYSE:XOXO): XOXO is a small 0.78% of the US long portfolio position. It was reduced by ~11% in Q4 2014 at prices between $11.11 and $18.37 and another ~15% the following quarter at prices between $14.65 and $18.21. Q2 2015 saw another ~12% selling at prices between $15.95 and $17.78. This quarter saw a ~24% further reduction at prices between $14 and $17. The stock currently trades at $14.03. The original stake is from Q2 2011 when around 2.3M shares were purchased at a cost-basis of around $10. Weitz controls 5.43% of XO Group.

Express Scripts (NASDAQ:ESRX), Liberty Interactive (NASDAQ:QVCA), and Transdigm Group (NYSE:TDG): These three fairly large positions were reduced significantly over the last several quarters. The activity indicates a bearish bias toward these businesses.

Allison Transmission Holdings (NYSE:ALSN), The ADT Corporation (NYSE:ADT), Avon Products (NYSE:AVP), Brown & Brown (NYSE:BRO), Core Laboratories (NYSE:CLB), Equity Commonwealth (NYSE:EQC), Monsanto Company (NYSE:MON), National Cinemedia (NASDAQ:NCMI), Praxair Inc. (NYSE:PX), Omnicom Group (NYSE:OMC), United Parcel Service (NYSE:UPS), and Willis Group Holdings (WSH): These very small (less than ~1% of the portfolio each) positions saw reductions this quarter.

Stake Increases:

AON plc (NYSE:AON): AON is a 2.08% long-term stake from 2010 established in the high-30s price-range. It now trades at $93.58. Last two quarters have seen marginal increases.

Allergan plc (NYSE:AGN) and EOG Resources (NYSE:EOG): These two stakes were established last quarter and saw minor ~5% increases this quarter. AGN is a 1.58% of the portfolio position established at prices between $252 and $340. The stock currently trades at $275. EOG is a very small 0.65% stake purchased at prices between $68.36 and $87.55 and the stock is now at $69.71.

Note: In November 2015, Pfizer Inc. (NYSE:PFE) announced the acquisition of Allergan plc in a deal valued at $160B. Allergan shareholders will receive 11.3 shares of a new company (the new business will be domiciled in Ireland - tax inversion deal structure) for each share held. The deal is expected to close in H2 2016.

Fossil Group (NASDAQ:FOSL): FOSL is a 1.57% of the 13F portfolio stake established in Q2 2015 at prices between $69.43 and $86.46 and increased by ~39% last quarter at prices between $56 and $71.78. The stock currently trades well below those ranges at $44.33. This quarter saw a ~9% further increase.

Liberty Global PLC (NASDAQ:LBTYK): Liberty Global is a long-term holding that has been in the portfolio for more than a decade. It is currently the second-largest position in the portfolio at 7.51%. This quarter saw a marginal increase.

Liberty Broadband (NASDAQ:LBRDA): LBRDA is a 3.70% of the US long portfolio stake established in Q4 2014 as a result of the spinoff of LBRDA from Liberty Media. Liberty Media shareholders received one share of LBRDA for every four shares of Liberty Media held. Q1 2015 saw a ~60% increase at prices between $44.47 and $56.48. It currently trades at $47.93. This quarter saw a marginal increase.

MasterCard Inc. (NYSE:MA): MA is a small 1.31% stake established in Q4 2014 at prices between $69.78 and $89.08. Last quarter saw a ~17% increase at prices between $86.82 and $98.41. The stock currently trades at $86.80. This quarter saw a ~7% further increase.

Range Resources (NYSE:RRC): RRC was first purchased in 2012 in the low-60s price-range. The bulk of the current 2.72% of the US long portfolio stake was built over the last two quarters of 2014 at prices between $52 and $87. Last quarter saw a ~27% increase at prices between $31.07 and $49.38 and that was followed with a ~18% increase this quarter at prices between $21.17 and $37.41. The stock currently trades near the low end of those ranges at $23.76. For investors attempting to follow Weitz, RRC is a good option to consider for further research.

Note: In a Barron's interview in December 2014, Weitz put the net asset value of RRC at $125 per share.

Twenty First Century Fox (NASDAQ:FOX) (FOXB): FOX is a fairly large 3.52% position established in Q4 2014 at prices between $30.71 and $37.49 and increased by ~53% the following quarter at prices between $31.78 and $36.89. Q2 2015 saw a further ~26% increase at prices between $31.88 and $34.43. Last quarter also saw a ~9% increase at prices between $25.41 and $33.52. The stock currently trades at $26.69. For investors attempting to follow Weitz, FOX is a good option to consider for further research. This quarter saw a marginal increase.

Note: During an interview with Forbes in March 2015, Weitz called FOX significantly undervalued in the low-30s price-range.

FLIR Systems (NASDAQ:FLIR), Interval Leisure Group (NASDAQ:IILG), Liberty Ventures (NASDAQ:LVNTA), and Redwood Trust Inc. (NYSE:RWT): These positions saw minor increases (less than ~10% change) this quarter.

Note: Weitz controls significant ownership stakes in the following businesses: 5.33% of Interval Leisure Group and 7.59% of Redwood Trust.

Other very small (less than 0.5% of the portfolio each) positions in the portfolio include ACI Worldwide (NASDAQ:ACIW), Amazon.com (NASDAQ:AMZN), Anheuser Busch Inbev (NYSE:BUD), Columbia Pipeline Group (NYSE:CPGX), Comcast Corporation (NASDAQ:CMCSA), Diageo PLC (NYSE:DEO), Halliburton Company (NYSE:HAL), Intelligent Systems Corporation (NYSEMKT:INS), iShares Russell 3000 ETF (NYSEARCA:IWV), Live Nation (NYSE:LYV), MRC Global Inc. (NYSE:MRC), Microsoft Corporation (NASDAQ:MSFT), Monmouth Real Estate Investment (NYSE:MNR), and Murphy USA (NYSE:MUSA).

Note: Weitz control 26% of Intelligent Systems Corporation.

The spreadsheet below highlights changes to Weitz's US 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.