Tracking Tweedy Browne Portfolio - Q4 2016 Update

| About: Tweedy, Browne (TBGVX)

Summary

Tweedy Browne's US long portfolio decreased from $3.32B to $3.20B this quarter.

The largest five individual stock positions are Cisco Systems, Berkshire Hathaway, Johnson & Johnson, Bank of New York Mellon, and Wells Fargo and they account for ~43% of the portfolio.

Berkshire Hathaway was increased significantly while reducing Johnson & Johnson, Verizon, and IBM during the quarter.

This article is part of a series that provides an ongoing analysis of the changes made to Tweedy Browne's US stock portfolio on a quarterly basis. It is based on Tweedy Browne's regulatory 13F Form filed on 02/07/2017. 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 Q3 2016.

This quarter, Tweedy Browne's US long portfolio decreased ~4% from $3.32B to $3.20B. The number of holdings decreased from 50 to 49. The largest position is Cisco Systems at 10.85% of the US long portfolio. Largest five individual stock positions are Cisco Systems, Berkshire Hathaway, Johnson & Johnson, Bank of New York Mellon, and Wells Fargo. Combined, they are at 42.75% of the portfolio. 32 of the 49 13F stakes are significantly large (over ~0.5% of the US long portfolio each) and they are the focus of this article.

Tweedy Browne (MUTF:TBGVX) (MUTF:TWEBX) (MUTF:TBHDX) (MUTF:TBCUX) has released a number of investment research papers over the years and that is a valuable resource for anyone looking to learn from their value investing philosophy. Also, Christopher Browne authored the book, "The Little Book of Value Investing", a great introduction.

Note: Tweedy Browne's flagship Tweedy Browne Global Value Fund has a global orientation with non-US allocation at ~75% of the portfolio and cash at ~14%. The top five holdings are Safran SA (OTCPK:SAFRF), Nestle SA (OTCPK:NSRGY) (OTCPK:NSRGF), Roche Holding AG (OTCPK:RHHVF), Total SA (NYSE:TOT), Novartis AG (OTCPK:NVSEF) (NYSE:NVS), and GlaxoSmithKline PLC (OTCPK:GLAXF) (NYSE:GSK). Together, they are at ~15% of the fund.

Stake Disposals:

Illinois Tool Works (NYSE:ITW) and Lockheed Martin (NYSE:LMT): These very small positions (less than 1% of the US long portfolio) were disposed this quarter.

Stake Increases:

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 ~10% 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. Last quarter saw a ~42% reduction at prices between $142 and $151 while the pattern reversed this quarter: ~37% increase at prices between $143 and $167. The stock currently trades at $163.

Bank of New York Mellon (NYSE:BK): BK is a large top-five ~7% stake first purchased in 2010 in the mid-20s price range. Q1 2016 saw a ~40% stake increase at prices between $32.50 and $38. There was a ~11% selling last quarter at prices between $37 and $42. The stock currently trades at $45.45. This quarter saw a ~4% increase.

Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL): GOOG is a large 6.38% position first purchased in 2012 at much lower prices compared to the current trading price of $807. Last quarter saw a ~9% trimming at prices between $692 and $787. There was a very minor ~3% increase this quarter.

Devon Energy (NYSE:DVN): DVN is a fairly large ~5% of the US long portfolio position. The bulk of the stake was purchased in 2012 when around 2.2M shares were acquired at prices between $51 and $75. Last quarter saw a ~11% reduction at prices between $36 and $45. The stock currently trades at $44.14. There was a ~5% increase this quarter.

MRC Global (NYSE:MRC): The ~3% MRC stake was purchased in Q3 and Q4 2015 at prices between $11 and $16. Last quarter saw a ~22% selling at prices between $12.50 and $16.50. The stock is now at $20.26. There was a ~8% increase this quarter.

Note: Tweedy Browne controls 5.05% of MRC Global.

Baxter International (NYSE:BAX): BAX is a medium-sized ~3% portfolio stake established in 2010. The position saw a ~10% selling last quarter at prices between $41 and $49. It currently trades at $48.59. There was a marginal increase this quarter.

AGCO Corporation (NYSE:AGCO): AGCO was a minutely small stake as of Q3 2015. The following quarter saw a ~90% increase at prices between $43.50 and $51.50 and that was followed with another ~50% increase in Q1 2016 at prices between $44 and $53.50. Last quarter saw another ~12% increase at prices between $46 and $50. This quarter also saw another ~18% increase at prices between $49 and $61. The stock is currently above those ranges at $63.99 and the position is at 1.84% of the 13F portfolio.

Avnet Inc. (NYSE:AVT): AVT is a small 1.28% of the US long portfolio stake established in Q1 2016 at prices between $37.50 and $45 and increased by ~20% this quarter at prices between $40.50 and $49. The stock currently trades at $46.49.

Unilever (NYSE:UN) (NYSE:UL) and American Express (NYSE:AXP): These are small positions (less than 1.5% of the US long portfolio) that saw significant buying this quarter. The 1.4% portfolio UN stake saw a one-third increase at prices between $38.50 and $46.50 and the stock is now at $41.10. The 0.90% AXP position saw a ~55% increase at prices between $60 and $75 and the stock currently trades at $77.72.

Stake Decreases:

Cisco Systems (NASDAQ:CSCO): CSCO was a 2.2% of the US long portfolio position when first established in 2011. It is currently their largest 13F stake at 10.85% of the US long portfolio. The bulk of the position was purchased in 2012 at prices between $15.50 and $21. Q1 2016 saw a ~45% stake increase at prices between $22.50 and $28.50. The stock currently trades at $31.45. Last three quarters have seen a combined ~16% trimming at prices between $26 and $32.

Johnson & Johnson (NYSE:JNJ): JNJ is the third-largest position in the US long portfolio at ~8.59%. 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 had seen minor selling in most quarters. This quarter saw a ~20% reduction at prices between $111 and $120. The share count is now at ~2.4M shares. The stock currently trades at $114. Tweedy Browne is harvesting long-term gains from this position.

Wells Fargo (NYSE:WFC): WFC is a top-five position at 6.52% of the US long portfolio. The initial stake was established in 2010 with the bulk of the current position purchased in 2011 at prices between $25 and $34. Last quarter saw a ~12% reduction at prices between $44 and $51 and that was followed with another ~14% selling this quarter at prices between $43.50 and $57.50. The stock is now at $56.34.

Halliburton Company (NYSE:HAL): HAL is a large ~6% of the portfolio stake. It was established in 2012 at prices between $27.50 and $38.50. There had only been very minor adjustments since. Last quarter saw a ~20% reduction at prices between $41 and $47 and that was followed with another ~13% selling this quarter at prices between $44.50 and $55. The stock currently trades at $54.88. Tweedy Browne is starting to harvest gains.

Philip Morris (NYSE:PM): PM is a fairly large ~3.6% of the portfolio stake established in 2009 at a cost-basis in the high-$30s. The following year also saw a ~50% increase in the low-$50s price range. Around two-thirds of that original stake was disposed of in 2012 in the high-$80s price range. The remaining position had been kept relatively steady since. Last three quarters have seen a combined ~30% reduction at prices between $87 and $104. The stock is now at $102. Tweedy Browne is harvesting long-term gains.

3M Company (NYSE:MMM): MMM is a fairly large ~3.6% long-term stake first purchased in 2008. Last three quarters have seen a combined ~36% reduction at prices between $164 and $181. The stock is now at $176. Tweedy Browne is harvesting huge long-term gains.

ConocoPhillips (NYSE:COP): COP was a minutely small position in 2007. The majority of the current ~2.1M share stake (3.27% of portfolio) was purchased in 2009 at prices between $22 and $40. The stock currently trades at $49.42. Last three quarters had seen minor reductions. This quarter saw a ~14% selling at prices between $40.50 and $53. Tweedy Browne is starting to harvest long-term gains.

Note: The figures quoted above are adjusted for the May 1, 2012 COP spinoff of Phillips 66 whereby COP shareholders received one share of Phillips 66 for every 2 shares of COP.

Emerson Electric (NYSE:EMR): EMR is a long-term 2.42% stake. The position was first purchased in 2008 and doubled the following year at a cost-basis in the low-$30s. Around 40% of that original position was sold in 2010 in the low-$50s price range. It had since been further reduced. This quarter saw a ~19% selling at prices between $49 and $58. The stock currently trades at $62.54.

Comcast Corporation (NASDAQ:CMCSA): CMCSA is a very long-term stake that has been in the portfolio since before the financial crisis. The stake was reduced by ~11% in Q4 2015 at prices between $56 and $63. Last quarter saw another ~16% selling at prices between $65 and $68. The stock is now at $74.86. Tweedy Browne is harvesting gains. There was marginal trimming this quarter.

International Business Machines (NYSE:IBM): IBM is a 1.42% of the 13F portfolio position established in Q3 2015 at prices between $141 and $173. Q1 2016 saw a 22% increase at prices between $118 and $152. This quarter saw a ~30% selling at prices between $150 and $169. The stock currently trades at $178.

Verizon Communications (NYSE:VZ): VZ is a 1.20% of the US long portfolio position established in Q3 2014 at prices between $48.50 and $52. In Q4 2014, the stake was increased by ~38% at prices between $45.50 and $51.50 and that was followed by a ~30% increase in Q2 2015 at prices between $46.50 and $50.50. This quarter saw an about turn: ~55% sold at prices between $46 and $54. The stock currently trades at $48.04.

Diageo plc (NYSE:DEO), General Electric (NYSE:GE), MasterCard Inc. (NYSE:MA), National Western Life (NASDAQ:NWLI), Novartis AG, Phillips 66 (NYSE:PSX), Total SA, UniFirst Corporation (NYSE:UNF), Union Pacific (NYSE:UNP), and Wal-Mart Stores (NYSE:WMT): These are small positions (less than ~1% of the US long portfolio) that were reduced this quarter.

Note: The firm has large stakes in Diageo and Total SA, although the 13F positions are very small - the rest of the shares are held in their native markets which are outside the realm of 13F filings.

Kept Steady:

Coca-Cola FEMSA (NYSE:KOF), 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 13F portfolio include American National Insurance (NASDAQ:ANAT), CKX lands (NYSEMKT:CKX), Connecticut Water Service (NASDAQ:CTWS), GlaxoSmithKline, HSBC Holdings (NYSE:HSBC), Leucadia National (NYSE:LUK), NOW Inc. (NYSE:DNOW), Royal Dutch Shell (NYSE:RDS.A) (NYSE:RDS.B), Shenandoah Tel. (NASDAQ:SHEN), Shire plc (NASDAQ:SHPG), Torchmark Corp. (NYSE:TMK), and Trustmark Corp. (NASDAQ:TRMK).

Note: GlaxoSmithKline, HSBC, and Royal Dutch Shell are top positions in the firm. Shares in these European businesses are primarily held in their native markets and so are outside the realm of US 13F filings.

The spreadsheet below highlights changes to Tweedy Browne's US stock holdings in Q4 2016:

Disclosure: I am/we are long CSCO, IBM.

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 covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

About this article:

Expand
Author payment: $35 + $0.01/page view. Authors of PRO articles receive a minimum guaranteed payment of $150-500.
Want to share your opinion on this article? Add a comment.
Disagree with this article? .
To report a factual error in this article, click here