Tracking David Winters' Wintergreen Advisers Portfolio - Q4 2018 Update

by: John Vincent

David Winters’ 13F portfolio value decreased from $128M to $93M this quarter.

The largest three positions in the 13F portfolio are Consolidated-Tomoka Land, Altria Group, and Union Pacific Corporation.

British American Tobacco was dropped, and stakes in Union Pacific and Altria Group were substantially reduced during the quarter.

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 02/14/2019. Please visit our Tracking David Winters’ Wintergreen Advisers Portfolio series to get an idea of his investment philosophy and our previous update for the fund’s moves during Q3 2018.

This quarter, Winters’ 13F portfolio value decreased ~27%, from $128M to $93M. The number of holdings decreased from 6 to 5. The top three positions represent ~99% of the 13F assets, making it a heavily concentrated portfolio. The mutual fund (WGRNX, WGRIX) has a global orientation: ~49% US, ~24% cash and short-term investments, and the rest outside the US. Switzerland and the United Kingdom together account for around 18% of the overall portfolio. AUM is ~$200M. Performance-wise, the fund was down 20% in 2018, compared to down 8.71% for the MSCI World Index. The three largest investments are Consolidated-Tomoka Land Company(CTO), British American Tobacco plc (BTI), and Elbit Systems (ESLT), and they together account for ~53% of the overall portfolio. Elbit Systems, Compagnie Financiere Richemont SA (OTCPK:CFRUY), Nestle SA (OTCPK:NSRGY), Heineken Holding NV (OTCQX:HKHHF), Swatch Group (OTCPK:SWGAY), and CK Asset Holdings (OTCPK:CHKGF) are the positions in the top ten not listed in the 13F report.

New Stakes


Stake Disposals

British American Tobacco: The ADR stake listed in the 13F report came about as a result of the merger with Reynolds American. RAI shareholders received 0.526 BTI shares along with $29.44 cash for each share held. The original BTI position was consistent with this ratio: they had ~1.87M shares of RAI for which they received ~985K shares. The last four quarters had seen the position reduced by ~88% at prices between $45 and $70. The stock is now at $40.24. The remaining 4.41% 13F portfolio stake was disposed this quarter at prices between $31.25 and $46.50.

Note: In the Wintergreen mutual fund, British American Tobacco is the second-largest holding at ~6% of the AUM. Most of that is through the London-listed shares, and so, is not in the 13F report.

Stake Decreases

Altria Group (MO): MO was first purchased in Q1 2012 at prices between $28 and $31. In Q1 2013, the original position was reduced by ~25% at prices between $31 and $35.50. The five quarters through Q4 2015 had seen a combined ~55% stake reduction at prices between $45 and $62. 2016 saw another ~55% selling at prices between $57 and $68. There was a one-third further reduction in Q1 2017 at prices between $67.50 and $76.50. Last year also saw an ~80% selling at prices between $46.50 and $72. The stock currently trades at $55.75, and the remaining stake is at ~4% of the 13F portfolio.

Union Pacific (UNP): UNP is an ~8% of the 13F portfolio stake established in Q2 2013 at prices between $67.50 and $80. Q3 2014 saw a ~50% stake increase at prices between $97 and $110. There was a ~30% reduction in Q4 2015 at prices between $75 and $97, and that was followed with another ~25% selling in the following quarter at prices between $68.50 and $84.50. The stock currently trades at ~$165. The last five quarters have seen a two-thirds reduction at prices between $112 and $165.

Kept Steady

Consolidated-Tomoka Land Company: CTO is a very long-term stake. It was the largest 13F 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 1.55M shares, which translates to an ownership of 28% of the business. As a percentage of the 13F portfolio, the position is the largest stake at ~88%. The stock currently trades at $59.80.

Note: Wintergreen had two unsuccessful proxy contests in the 2016-17 time frame. In November 2017, they made a shareholder proposal urging the board to take immediate steps to narrow the NAV discount - hire an independent adviser to evaluate all options for the Company, including a sale or liquidation of assets.

Liberty Media Formula One (FWONA) and Liberty Global LiLAC (LILA): These are minutely small (less than ~0.50% of the 13F portfolio) stakes kept steady this quarter.

The spreadsheet below highlights changes to Wintergreen’s 13F stock holdings in Q4 2018:

David Winters - Wintergreen Advisors - Q4 2018 13F Report Q/Q Comparison

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.