Tracking Yacktman Asset Management Portfolio - Q2 2019 Update

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Includes: ACA, ANTM, AVP, BK, BKNG, BRK.A, BRK.B, CHRW, CL, CLX, CMCSA, COP, CRMT, CSCO, CTSH, DIS, EAF, FOX, FOXA, GLW, GOOG, GS, HSY, INFY, JNJ, KO, M, MO, MSFT, MU, NWSA, ORCL, OTEL, PEP, PG, PM, RDI, SCHW, SPY, STT, SYK, SYY, UHAL, UN, USB, WFC, XOM, YACKX, YAFFX, YASSX
by: John Vincent
Summary

Yacktman's 13F equity portfolio value increased from $8.09B to $8.33B this quarter.

Yacktman Asset Management added Macy’s while reducing Infosys and doubling Cognizant Technology.

Its largest five stakes are at ~46% of the portfolio.

This article is part of a series that provides an ongoing analysis of the changes made to Yacktman's 13F stock portfolio on a quarterly basis. It is based on Yacktman Asset Management's regulatory 13F Form filed on 08/02/2019. Please visit our Tracking Yacktman Asset Management series to get an idea of his investment philosophy and our previous update for the fund's moves during Q1 2019.

This quarter, Yacktman Asset Management's (YACKX) (YAFFX) (YASSX) 13F portfolio value increased ~3% from $8.09B to $8.33B. The number of holdings increased from 44 to 46. The largest holding is Procter & Gamble (NYSE:PG) at ~13% of the 13F portfolio. Largest five individual stock positions are Procter & Gamble, PepsiCo Inc. (NASDAQ:PEP), Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and Walt Disney (NYSE:DIS), and together they account for 46.19% of the 13F portfolio. The firm currently holds around one-third 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 13F portfolio each), and they are the focus of this article.

New Stakes

Macy's Inc. (M): M is a 2.85% of the portfolio stake established this quarter at prices between $20 and $26, and the stock currently trades near the low end of that range at $21.29. For investors attempting to follow, Macy's is a good option to consider for further research.

Stake Disposals

Avon Products (AVP): AVP was a small 0.56% of the portfolio position purchased last quarter at prices between $1.60 and $3.20 and disposed this quarter at prices between $2.60 and $4. The stock is now at $4.34.

Stake Decreases

Procter & Gamble: 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. The four quarters through Q3 2016 saw a 50% reduction at prices between $72 and $90. Last three quarters have seen another ~40% selling at prices between $79 and $112. The stock currently trades at ~$116, and it is its largest position at ~13% of the portfolio.

PepsiCo Inc.: The ~11% (top three) PEP stake was built over multiple years with the bulk purchased in the 2011-13 time frame: over 22M shares were purchased during that time at prices between $60 and $86. The stock currently trades at ~$128. The six quarters through Q3 2016 had seen a roughly two-thirds reduction at prices between $91 and $111. Since then, the activity had been minor. This quarter saw a ~11% trimming.

Coca-Cola Company: KO is a very long-term position that has been in the portfolio for over 20 years. During Yacktman's first 13F filing in Q1 1999, the position consisted of just a few thousand shares. The 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 and 2010 and increased by ~150% each in 2012 and 2013. The huge stake build-up happened at prices between $21 and $30 and $33.50 and $43 in the 2009-10 and 2012-13 periods respectively. The stock currently trades at $52.33 and the position is at ~8% of the portfolio. The six quarters through Q3 2016 had seen a ~57% reduction at prices between $38 and $47. Last few quarters have seen only minor activity.

Johnson & Johnson: JNJ is a large (top five) 7.82% of the 13F portfolio position that has been in the portfolio since its 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 ~$131. 2015-18 had seen a combined ~45% reduction at prices between $91 and $147. There was a marginal trimming this quarter.

Walt Disney: The position came about as a result of the merger transaction between Walt Disney and Twenty First Century Fox. Yacktman had a huge position in Twenty First Century Fox. The deal closed in March and the terms were ~$38 per share in cash or Disney stock subject to collar and one-third of one-share of new Fox for each share of Twenty First Century Fox. The stock currently trades at ~$142, and it is a large (top five) stake at 7.35%. There was minor trimming during the quarter.

Oracle Corporation (ORCL): The large 5.79% ORCL position was first purchased in Q2 2013. Over 20M shares were acquired at prices between $30 and $35. H1 2015 saw a ~23% reduction at prices between $40 and $45. The five quarters through Q3 2016 saw another one-third reduction at prices between $34 and $42. The two years through Q3 2018 had also seen another one-third selling at prices between $38 and $53. That was followed with yet another one-third reduction last quarter at prices between $45 and $55. The stock currently trades at $55.84. This quarter also saw a ~11% trimming.

Microsoft Corporation (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 5.16% of the portfolio stake was established in 2011 when ~20M shares were added at prices between $24 and $28.50. Last five years saw the position reduced by ~88% at prices between $36 and $115. The stock currently trades at ~$137. There was another ~15% trimming last quarter. Yacktman is harvesting long-term gains from this position. This quarter saw minor trimming.

Sysco Corporation (SYY): SYY is a 3.48% of the 13F portfolio position. It was established in 2010 with the bulk purchased in 2011 and 2012 in the high-20s price-range. H2 2015 saw a ~40% reduction at prices between $36 and $42. The three years through Q4 2018 had seen another ~80% selling at prices between $40 and $68. The stock currently trades at $68.90. There was marginal trimming in the last two quarters.

Cisco Systems (CSCO): CSCO is a ~3% of the 13F 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 since been sold down. 2015 saw a ~45% reduction at prices between $25.52 and $29.61 while the following year saw a ~20% reduction at prices between $23 and $32. There was a further ~82% selling over the last 10 quarters at prices between $30 and $57. The stock currently trades at $53.25. Yacktman is harvesting gains from this position.

Anthem Inc. (ANTM) previously Wellpoint Inc.: ANTM is a 2.51% of the 13F portfolio position purchased in 2012 at prices between $55 and $74. The stake 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 ~60% reduction in the following quarter at prices between $151 and $171. Q4 2017 saw a ~18% selling at prices between $184 and $235. The stock currently trades at ~$291. Last few quarters have seen minor trimming.

The Bank of New York Mellon (BK): 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 $46.03. The position was reduced by ~30% in Q4 2016 at prices between $39 and $49. Since then, the activity has been minor.

ConocoPhillips (COP): COP is a long-term 1.64% position first purchased in 2007. It saw marginal trimming this quarter.

Wells Fargo (WFC): WFC is a 1.15% of the 13F 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 and 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. Since then, the activity has been minor. The stock currently trades at $47.44.

Comcast Corporation (CMCSA): CMCSA is a 0.94% of the 13F portfolio position first purchased in 2008. The bulk of the original stake was purchased in 2009 at a cost-basis around $7.50. 2014 saw a ~40% reduction at prices between $26.50 and $30.50. Next year saw a further two-thirds reduction at prices between $26.50 and $32. The three quarters through Q2 2017 also saw a combined ~50% selling at prices between $30 and $42. The stock currently trades at $42.65. Last few quarters have seen only minor activity.

Note: The prices quoted above are adjusted for the 2-for-1 stock-split in Q1 2017.

Amerco (UHAL): The small ~0.80% UHAL position saw a ~25% increase in Q4 2018 at prices between $319 and $355. That was followed with a ~8% stake increase last quarter. The stock is now at $367. This quarter saw a ~2% trimming.

Infosys Ltd. (INFY): The INFY position was established in Q2 2017 at prices between $7.10 and $7.90 and increased by ~60% the following quarter at prices between $7.10 and $8. The six quarters through Q1 2019 had seen a combined ~25% selling at prices between $7 and $11. The position was sold down by ~82% to a minutely small 0.21% stake this quarter at prices between $10 and $11.30. The stock is currently at $11.08.

Note: Infosys had a 2-for-1 stock-split last September. The prices quoted above are adjusted.

Colgate-Palmolive (CL) and Corning Inc. (GLW): These very small (less than ~1% of the portfolio each) stakes saw minor selling this quarter.

Stake Increases

Booking Holdings (BKNG) and Alphabet Inc. (GOOG): BKNG is a fairly large 4.79% of the portfolio position purchased last quarter at prices between $1650 and $1935. The stock currently trades at $1,846. The 2.36% stake in GOOG was established last quarter at prices between $1,015 and $1,230 and it now goes for $1194. Both positions saw marginal increases this quarter.

Fox Corp. (FOX) (FOXA): The ~4% position came about as a result of the merger transaction between Walt Disney and Twenty First Century Fox. Yacktman had a huge position in Twenty First Century Fox. The deal closed in March and the terms were ~$38 per share in cash or Disney stock subject to collar and one-third of one-share of new Fox for each share of Twenty First Century Fox. This quarter saw a ~5% stake increase at prices between $33.50 and $38.75. The stock currently trades at ~$36.50.

U.S. Bancorp (USB): The ~3% 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 $55.43. 2015 saw a ~50% reduction in the low-40s price range while Q4 2016 saw another ~25% selling at prices between $42.50 and $52.50. Since then the activity has been minor.

Exxon Mobil (XOM): XOM is a 2.11% of the 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 well below that range at $71.75. Q4 2015 saw a ~30% reduction at prices between $74 and $87 and that was followed with a ~15% reduction in Q2 2016 at prices between $82 and $94. Q4 2016 also saw another ~20% selling at prices between $83 and $88.50. The six quarters through Q2 2018 had seen a combined ~12% reduction at prices between $72.50 and $91. Since then, the activity has been minor.

Cognizant Technology (CTSH): The ~2% portfolio stake in CTSH saw a stake doubling this quarter at prices between $56.75 and $74.60. The stock currently trades at $63.49.

Note: Similarly sized ~1% portfolio stakes in the Indian outsourcers Cognizant and Infosys were established in Q2 2017 and were kept relatively steady since. This quarter saw the CTSH stake doubled and INFY position reduced. For investors attempting to follow, CTSH is a good option to consider for further research.

State Street Corporation (STT): The 1.77% STT stake saw a ~150% increase in Q4 2018 at prices between $60 and $87. The position saw a ~8% stake increase last quarter and marginal increase this quarter. The stock currently trades at $55.66. For investors attempting to follow, STT is a good option to consider for further research.

Kept Steady

Goldman Sachs (GS): GS is a 0.63% stake that saw a ~150% stake increase in Q4 2018 at prices between $156 and $232. Last quarter saw an about-turn: ~30% selling at prices between $167 and $203. The stock is now at ~$209.

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%), U.S. Bancorp (2.99%), and Wells Fargo (1.15%). Q4 2018 also saw a 1.77% stake build-up in State Street.

Note 2: Very small (less than 0.5% of the portfolio each) positions account for ~2% of the overall portfolio. They are Unilever NV (UN), ARCOSA Inc. (ACA), Altria Group (MO), America's Car-Mart (CRMT), Berkshire Hathaway (BRK.A) (BRK.B), C.H. Robinson Worldwide (CHRW), Charles Schwab (SCHW), Clorox Company (CLX), GrafTech Intl. (EAF), Hershey Co. (HSY), Micron Technology (MU), News Corp. (NWSA), Otelco Inc. (OTEL),Philip Morris Intl. (PM), Reading International (RDI), SPDR S&P 500 ETF (SPY), and Stryker Corp (SYK).

The spreadsheet below highlights changes to Yacktman's 13F stock holdings in Q2 2019:

Donald Yacktman - Yacktman Asset Management Q2 2019 13F Report Q/Q Comparison

Disclosure: I am/we are long BRK.B, PM, WFC. 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.