Tracking Tweedy Browne Portfolio - Q1 2015 Update

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Includes: AGCO, ANAT, AXP, BAX, BK, BRK.A, BRK.B, BRO, CMCSA, CNQ, COP, CSCO, CTWS, DEO, DNOW, DVN, EMR, FII, GOOG, GOOGL, GSK, HAL, HSBC, ITW, JNJ, JOY, KOF, LMT, MA, MMM, NOV, NVS, NWLI, PM, PSX, RDS.A, SHEN, TMK, TOT, UL, UN, UNF, UNP, USB, VZ, WFC, WMT, XOM
by: John Vincent
Summary

Tweedy Browne’s US long portfolio decreased from $3.91B to $3.71B this quarter.

The largest five individual stock positions are Johnson & Johnson, Berkshire Hathaway, Cisco Systems, Wells Fargo, and Devon Energy and they account for around 41% of the US long portfolio.

A 2.02% position in Joy Global was eliminated this quarter.

This article is part of a series that provides an ongoing analysis of the changes made to Tweedy Browne US stock portfolio on a quarterly basis. It is based on Tweedy Browne's regulatory 13F Form filed on 05/05/2015. Please visit our Tracking Tweedy Browne Portfolio series to get an idea of their investment philosophy and our previous update for the fund's moves during Q4 2014.

This quarter, Tweedy Browne's US long portfolio decreased around 5% from $3.91B to $3.71B. The number of holdings decreased from 49 to 47. The largest holding is Johnson & Johnson at 11.01% of the US long portfolio. Largest five individual stock positions are Johnson & Johnson, Berkshire Hathaway, Cisco Systems, Wells Fargo, and Devon Energy. 33 of the 47 reported stakes are significantly large (over ~0.5% of the US long portfolio each) and they are the focus of this article.

Tweedy Browne has released a number of investment research papers over the years and that is a valuable resource for anyone looking to learn from their investment philosophy. The best known work is "What Has Worked in Investing: Studies of Investment Approaches and Characteristics Associated With Exceptional Returns" that was first released in 1992. Christopher Browne is the author of "The Little Book of Value Investing", a great introduction.

New Stakes:

None.

Stake Disposals:

Joy Global (NYSE:JOY): JOY is a small ~2% position that was first purchased in 2012. The bulk of the stake was purchased in 2013 at higher prices compared to the current trading price of $42.26. Last quarter, the position was reduced by ~48% at prices between $45.91 and $54.87 and this quarter the remaining stake was sold at prices between $38 and $47. The activity indicates a bearish bias.

Stake Increases:

ConocoPhillips (NYSE:COP): COP was a minutely small position in 2007. The majority of the current ~2.8M share position (4.77 %) was purchased in 2009 at prices between $37 and $55. The stock currently trades at $65.11. The last several quarters had seen minor reductions but this quarter saw a minutely small increase.

NOTE: The figures quoted above understate the actual performance of this position as there was a spin-off related price-drop. On May 1, 2012 COP had spun off Phillips 66 whereby COP shareholders received one share of Phillips 66 for every 2 shares of COP.

Halliburton Company (NYSE:HAL): HAL was the second-largest position at 7.92% of the US long portfolio as of Q3 2014. The bulk of the stake was purchased in 2012 at prices between $27.80 and $38.50. The position was marginally increased in the last two quarters. The stock went down about 40% last quarter but has returned ~16% so far this year. The stock currently trades at $45.91 and the stake is at 6.34%.

Stake Decreases:

Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B): Berkshire Hathaway is a very long-term stake that has been in the portfolio since before the financial crisis. It is currently their second-largest position at 8.42% of the US long portfolio. Back in 2009, it was a very small 0.60% of the portfolio position. The bulk of the current stake was purchased in 2010 and 2012 at prices between $65 and $90. The position was marginally reduced in the last four quarters. The stock currently trades at around $145.

Cisco Systems (NASDAQ:CSCO): CSCO was a 2.2% of the US long portfolio position when first established in 2011. It is currently their third-largest stake at 7.67% of the US long portfolio. The bulk of the current position was purchased in 2012 at prices between $15.50 and $21. Since then, the stake was kept relatively steady although the last few quarters have seen minor reductions. The stock currently trades at $29.26.

Devon Energy (NYSE:DVN): DVN is a top-five 6.78% of the US long portfolio position that was reduced marginally in the last four quarters. The bulk of the current stake was purchased in 2012 when around 2.2M shares were acquired at prices between $51 and $75. The stock currently trades at $67.47. The position has been kept relatively steady since.

Google Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL): GOOG is a medium-sized 4.17% position first purchased in 2012 at much lower prices compared to the current trading price of $540. Last few quarters have seen very minor reductions. Browne is sitting on huge long-term gains on this position.

Johnson & Johnson (NYSE:JNJ): JNJ is the largest position in the US long portfolio at 11.01%. It is a long-term stake that has been in the portfolio since before the financial crisis. The position was built up from 400K shares to just over 4.3M shares between 2009 and 2012 at prices between $48 and $72. Since then, the stake has seen marginal reductions and that pattern continued this quarter: ~2% reduction. The share count is still at ~4.06M shares. The stock currently trades at $101. Tweedy Browne is sitting on large long-term gains on this position.

National-Oilwell Varco (NYSE:NOV): NOV is a small 0.50% of the US long portfolio stake established in Q3 2013 at prices between $69 and $79. The original position was increased by ~12% early last year at prices between $73 and $83. Last two quarters saw very minor reductions and the stock currently trades at $50.71.

NOTE: The figures quoted above understate the actual performance of this stake as there was a spin-off related price-drop. On June 2, 2014, NOV shareholders received one share of NOW Inc. (NYSE:DNOW) common stock for every four shares of NOV held.

Verizon Communications (NYSE:VZ): VZ is a small 1.76% of the US long portfolio position established in Q3 2014 at prices between $48.40 and $52. Last quarter, the stake was increased by ~38% at prices between $45.42 and $51.50. This quarter saw a ~4% reduction at prices between $45.71 and $49.81. The stock currently trades at $49.61.

Wells Fargo (NYSE:WFC): WFC is a top-five position that was marginally reduced this quarter to a 7.49% of the US long portfolio stake. The initial position was established in 2010 with the bulk of the current stake purchased in 2011 at prices between $25 and $34. The stock currently trades at $56.

3M Company (NYSE:MMM), Bank of New York Mellon (NYSE:BK), Baxter International (NYSE:BAX), and Emerson Electric (NYSE:EMR): These are medium-sized (less than ~5% of the US long portfolio) long-term stakes in the portfolio. MMM and EMR positions were first purchased in 2008 while BK and BAX stakes were established in 2010. The positions have seen very minor reductions in recent quarters. The long-term nature of these stakes indicates a bullish bias toward these businesses.

American Express (NYSE:AXP), American National Insurance (NASDAQ:ANAT), Coca Cola FEMSA (NYSE:KOF), Comcast Corporation (NASDAQ:CMCSA), Diageo plc (NYSE:DEO), MasterCard Inc. (NYSE:MA), National Western Life (NASDAQ:NWLI), Novartis AG (NYSE:NVS), Phillips 66 (NYSE:PSX), Torchmark Corporation (NYSE:TMK), Total SA (NYSE:TOT), UniFirst Corporation (NYSE:UNF), Unilever (NYSE:UN) (NYSE:UL), Union Pacific (NYSE:UNP), and Wal-Mart Stores (NYSE:WMT): These are small positions (less than 2% of the US long portfolio) that were reduced marginally this quarter. As the activities were very minor, they do not indicate a clear change in bias.

Lockheed Martin (NYSE:LMT) and Philip Morris (NYSE:PM): These positions were kept steady last quarter but reduced marginally this quarter. LMT is a very small 0.82% stake while PM is a medium-sized 3.77% position.

Kept Steady:

Illinois Tool Works (NYSE:ITW) and US Bancorp (NYSE:USB): These are very small (less than 1% of the US long portfolio each) stakes kept steady this quarter.

Other minutely small (less than 0.5% of the US long portfolio each) positions in the portfolio include GlaxoSmithKline (NYSE:GSK), HSBC Holdings (NYSE:HSBC), Royal Dutch Shell (NYSE:RDS.A), Canadian Natural Resources (NYSE:CNQ), Brown & Brown (NYSE:BRO), Connecticut Water Service (NASDAQ:CTWS), Exxon Mobil (NYSE:XOM), Federated Investors (NYSE:FII), NOW Inc. , Shenandoah Tel. (NASDAQ:SHEN), and AGCO Corp. (NYSE:AGCO).

The spreadsheet below highlights changes to Tweedy Browne's US stock holdings in Q1 2015:

Disclosure: The author is long CSCO. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.