Tracking Yacktman Asset Management Portfolio - Q2 2016 Update

| About: AMG Yacktman (YACKX)

Summary

Yacktman's US long equity portfolio decreased ~6% from $12.85B to $12.08B this quarter.

Yacktman Asset Management reduced C R Bard, CH Robinson Worldwide, Exxon Mobil, PepsiCo, Stryker, Sysco, and Wal-Mart 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 Yacktman's US stock portfolio on a quarterly basis. It is based on Yacktman Asset Management's regulatory 13F Form filed on 08/01/2016. Please visit our Tracking Yacktman Asset Management series to get an idea of his investment philosophy and our previous update highlighting the fund's moves during Q1 2016.

This quarter, Yacktman Asset Management's (MUTF:YACKX) (MUTF:YAFFX) (MUTF:YASSX) US long portfolio decreased 5.98% from $12.85B to $12.08B. The number of holdings remained steady at 45. The largest holding is Twenty First Century Fox at 15.28% of the US long portfolio. Largest five individual stock positions are Twenty First Century Fox, Procter & Gamble, PepsiCo Inc., Oracle, and Johnson & Johnson and they together account for 51.28% of the 13F portfolio. The firm currently holds around 17% cash - a far cry compared to zero cash immediately following the financial crisis. The portfolio is concentrated with recent 13F reports showing around 45 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 Increases:

Anthem Inc. (NYSE:ANTM) previously Wellpoint Inc.: ANTM is a 1.15% of the US long portfolio position purchased in 2012 at prices between $55 and $74. Since then, the position has seen some selling over the years. 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 stock currently trades at around $128. Last two quarters have seen marginal increases. Yacktman has a large exposure to the healthcare industry, a group that also includes Johnson & Johnson, C.R. Bard, and Stryker Corporation.

State Street Corporation (NYSE:STT): STT is a small 0.75% of the US long portfolio position. The original stake is from 2010 with the bulk purchased in 2011 in the high-30s price-range. Q4 2015 saw a ~13% reduction at prices between $64.73 and $73.69. The stock currently trades at $65.85. There was a very minor stake increase this quarter.

Wells Fargo (NYSE:WFC) and The Bank of New York Mellon (NYSE:BK): WFC is a small 0.83% 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. 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 $47.57. Last two quarters have seen very minor increases. The 1.92% BK stake was first purchased in 2009 with the bulk of the current position built in 2010 and 2011 in the high-20s price range. The stock is now at $39.22. This quarter saw a marginal increase.

Colgate-Palmolive (NYSE:CL) and Corning Inc. (NYSE:GLW): These are very small positions (less than ~1% of the portfolio each) that saw marginal increases this quarter.

Stake Decreases:

Avon Products (NYSE:AVP): AVP is a ~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 stake 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 his cost basis at $5.08. Last quarter saw a ~20% reduction at prices between $2.38 and $4.81 and that was followed with another ~9% reduction this quarter at prices between $3.53 and $5.01.

Note 1: In March, Avon Products closed a deal with Cerberus Capital whereby the North American business separated in a private equity transaction. Cerberus invested a total of $605M: $170M for 80% interest in the NA division and $435M for 16.6% of the international business in the form of preferred stocks convertible at $5 per share.

Note 2: Yacktman controls ~6% of AVP.

C.R. Bard Inc. (NYSE:BCR): BCR is a 1.57% of the US long portfolio stake. 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 was reduced. 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. This quarter saw another ~37% reduction at prices between $203 and $235. The stock currently trades at $220. Yacktman is harvesting huge gains.

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. 2015 saw a ~50% reduction at prices between $61 and 73. That was followed with another ~50% selling last quarter at prices between $62 and $75. This quarter saw another one-third reduction at prices between $71 and $76. The stock currently trades at $68.79 and the position stands at 0.64% of the US long portfolio. The aggressive selling pattern indicates a clear bearish bias.

Cisco Systems (NASDAQ:CSCO): CSCO is a large 6.69% 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 three years. 2015 saw a combined ~45% reduction at prices between $25.52 and $29.61. Last two quarters have also seen a combined ~10% reduction at prices between $22.51 and $29.22. The stock currently trades at $30.72. Yacktman is harvesting gains from this position.

Coca-Cola Company (NYSE:KO) & PepsiCo Inc. (NYSE:PEP): KO & PEP are very long-term positions that have been in the portfolio for over sixteen 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 size 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 $43.64 and the position stands at 6.33% of the US long portfolio. The even larger 9.31% (top three) PEP stake was similarly built-up over multiple years with the bulk of the buying happening in the 2011-13 timeframe: over 22M shares were purchased during that time at prices between $60 and $86. The stock currently trades at $108. Last five quarters have seen significant reductions in both: KO was sold down by ~56% at prices between $38 and $47 while PEP saw a ~58% reduction at prices between $91 and $106.

Comcast Corporation (NASDAQ:CMCSA): CMCSA is a ~1% of the US long portfolio position first purchased in 2008. The bulk of the original stake was purchased in 2009 at a cost-basis around $15. 2014 saw a ~40% reduction at prices between $53 and $61. 2015 saw a further two-thirds reduction at prices between $53 and $64. The stock currently trades at $66.84. Yacktman is harvesting large long-term gains from this position. Last quarter saw a marginal increase while this quarter saw a minor reduction.

Exxon Mobil (NYSE:XOM): XOM is a 2.68% 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 $87.49. Q4 2015 saw a ~28% reduction at prices between $74 and $87 and that was followed with a ~16% reduction this quarter at prices between $82 and $94.

Johnson & Johnson (NYSE:JNJ): JNJ is a large (top-five) 6.70% 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 has doubled and currently trades at around $124. Q2 2015 saw a ~12% reduction at prices between $97 and $104. Last four 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 5.39% of the US long portfolio stake was established in 2011 when ~20M shares were added at prices between $24 and $28.50. 2014 saw a ~30% overall reduction at prices between $42 and $50. Last year also saw another ~40% reduction at prices between $40 and $57. The stock currently trades at $56.97. Yacktman is harvesting long-term gains from this position. Last two quarters have also seen minor trimming.

Oracle Corporation (NASDAQ:ORCL): The large (top-five) 6.83% ORCL position was first purchased in Q2 2013. Over 20M shares were acquired at prices between $30 and $35. Q1 2015 saw a ~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 four quarters with a one-third overall reduction at prices between $34 and $42. The stock currently trades at $40.71.

Procter & Gamble (NYSE:PG): 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. Q4 2015 saw a ~22% reduction at prices between $72 and $81 and that was followed with a ~11% further reduction last quarter at prices between $75 and $84. The stock currently trades at $85.97. PG is still Yacktman's second-largest position at 13.16 % of the portfolio. This quarter saw a marginal reduction.

Stryker Corporation (NYSE:SYK): SYK is a 1.39% 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. That position was reduced by ~25% in Q4 2014 at prices between $79.20 and $96.61. That was followed by a ~70% reduction in 2015 at prices between $90 and $104. Last two quarters have seen another one-third reduction at prices between $88 and $120. The stock currently trades at $115. Yacktman is harvesting huge long-term gains from this position.

Sysco Corporation (NYSE:SYY): SYY is a fairly large position at 6.23% of the US long portfolio. It was established in 2010 with the bulk purchased in 2011 and 2012 in the high-20s price-range. Q3 2015 saw a ~24% reduction at prices between $35.68 and $41.38 and that was followed with a ~20% reduction the following quarter at prices between $38.61 and $41.79. Last two quarters have seen another one-third reduction at prices between $39 and $50. The stock currently trades at $51.33.

Twenty First Century Fox (NASDAQ:FOX) (NASDAQ:FOXA): Yacktman had a very small position in News Corporation (NASDAQ:NWS) in 2008. The 2009 to 2012 timeframe 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) saw selling - the NWS stake was eliminated in Q4 2013 and the FOXA stake was reduced by around 28%. Last four quarters have seen only minor adjustments. Yacktman's cost-basis on this position is very low. The remaining stake is the largest 13F position at 15.28%.

US Bancorp (NYSE:USB): The 2.22% USB position has been in the portfolio for over 15 years. Majority of the current stake was purchased in 2011 in the low-20s price-range. The stock currently trades at $42.13. 2015 saw a ~50% reduction at prices between $40 and $46. Last two quarters have also seen minor reductions.

Unilever N V (NYSE:UN): UN is a small 0.90% 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. Q4 2015 saw a ~43% reduction at prices between $40.20 and $46.04. Last two quarters have also seen minor trimming. The stock currently trades at $44.93.

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 $72.94. 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. Last four quarters saw a combined ~40% further reduction at prices between $56 and $73. The position now accounts for 0.73% of the US long portfolio.

Viacom Inc. (NASDAQ:VIAB): VIAB is a small 1.50% of the portfolio position. The stake saw a ~38% reduction in Q4 2015 at prices between $39 and $53 and that was followed by another ~13% reduction last quarter at prices between $31.38 and $46.05. The stock is currently at $43.99. This quarter saw marginal trimming.

ConocoPhillips (NYSE:COP) and Intel Corporation (NASDAQ:INTC): These two positions were decreased marginally this quarter. The stakes are small at 1.55% and 0.55% of the portfolio respectively.

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 Bank of New York Mellon (1.92%), US Bancorp (2.34%), and Wells Fargo (0.83%).

Note 2: Very small (less than 0.5% of the portfolio each) positions account for 2.50% 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), Clorox Company (NYSE:CLX), 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), 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 Q2 2016:

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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