This article is part of a series that provides an ongoing analysis of the changes made to Kahn Brothers’ 13F stock portfolio on a quarterly basis. It is based on Kahn Brothers’ regulatory 13F Form filed on 01/27/2020. Please visit our Tracking Kahn Brothers Portfolio series to get an idea of their investment philosophy and our last update for the fund’s moves during Q3 2019.
This quarter, Kahn Brothers’ 13F portfolio value increased ~3% from $798M to $825M. The number of holdings decreased from 48 to 47. The largest individual stock position is Merck which accounts for 11.45% of the portfolio. Largest five positions are Merck Inc., Citigroup Inc., Assured Guaranty, GlaxoSmithKline plc, and Bristol Myers Squibb. Together, they account for 47.52% of the 13F portfolio.
Irving Kahn was a disciple of Benjamin Graham and is the author of "Benjamin Graham The Father of Financial Analysis". He was by far the oldest protégé (died 2/26/2015 at age 109) and one of the closest followers of the original teachings of Benjamin Graham.
Stake Increases:
BlackBerry Ltd. (BB): BB was a very small ~0.50% of the 13F portfolio position established in Q3 2013 at prices between $8 and $10.84. Q2 2014 saw a 270% stake increase at prices between $7.15 and $10.12. The five quarters thru Q1 2016 saw the position more than doubled at prices between $6 and $11. There was another ~40% increase in Q2 2016 at prices between $6.29 and $8.09. Q2 2019 also saw a ~22% stake increase at prices between $7.40 and $9.60. The stock is now well below those ranges at $6.26. It is currently a 4.53% of the portfolio position. For investors attempting to follow, BB is a good option to consider for further research. This quarter saw a minor ~3% stake increase.
Stake Decreases:
Merck Inc. (MRK): MRK is the largest position at 11.45% of the 13F portfolio. It was a very small stake first purchased in 2000. The position had fluctuated over the years, but the bulk of the current stake was purchased in 2009 at prices between $24 and $38. The position had since been sold down by roughly 40% over the last ten years through minor trimming almost every quarter. Q2 2019 saw a ~28% stake increase at prices between $73 and $86. The stock currently trades at $86.10. There was marginal trimming this quarter.
Citigroup Inc. (C): C is Kahn’s second-largest position. It is a very long-term holding and was a small position in Kahn Brothers’ first 13F filing in 1999. By 2006, the position still accounted for less than 0.1% of the portfolio. The 2009-10 timeframe saw a huge stake built at a cost-basis in the 30s. The stock currently trades at $76.71 and it stands at 9.76% of the portfolio. There was a ~20% stake increase in Q2 2019 at prices between $62 and $71. Last two quarters have seen minor trimming.
Assured Guaranty (AGO): AGO is a large (top three) ~9% of the portfolio stake established in Q1 2017 at prices between $36 and $42.50 and doubled the following quarter at prices between $37 and $42. The three quarters thru Q1 2018 had seen a combined ~60% increase at prices between $33 and $45. The stock is now above those ranges at $46.90. Q2 2019 also saw a ~25% stake increase at prices between $41 and $48. This quarter saw minor trimming.
GlaxoSmithKline plc (GSK): GSK is a large (top five) ~9% of the portfolio position. It was a very small 0.41% of the portfolio stake as of Q3 2015. That original position was increased by roughly eighteen-times over the next six quarters at prices between $37.50 and $45. The stock is currently at $46.48. There was a ~20% increase over Q4 2017 & Q1 2018 at prices between $34.50 and $41. Q2 2019 saw another ~25% stake increase at prices between $38.50 and $42. Last two quarters have seen only minor adjustments.
Bristol Myers Squibb (BMY): The 8.20% of the portfolio (top five) BMY stake was built in Q1 2019 at prices between $45 and $54 and doubled next quarter at prices between $44.50 and $49.50. Last quarter also saw a ~5% stake increase. The stock currently trades at $63.70. There was marginal trimming this quarter.
New York Community Bancorp (NYCB): NYCB is a large ~8% of the portfolio stake. It is a very long-term position that was first purchased in 2000. The stake was built to a large ~10% position (over 1.4M shares) by 2003 and in 2004 the position was doubled. Since then, the stake had been kept largely steady although adjustments occurred every year. 2015 thru 2017 saw a ~30% overall reduction at prices between $13.50 and $19. Last year saw an about turn: ~130% stake increase at prices between $9 and $14.50. Q2 2019 saw a ~28% further increase at prices between $9.50 and $12. The stock is now at $11.63. Last two quarters have seen only minor adjustments.
BP plc (BP): BP stake was first purchased in 2010. The position remained minutely small for the next two years. The bulk of the current 7.43% of the portfolio stake was built in 2013 at prices between $40 and $53. Thru Q1 2019, the stake was increased by ~60% at prices between $28.50 and $53. There was another ~22% stake increase next quarter at prices between $40.50 and $45.25. The stock currently trades at $37.44. Last two quarters have seen only minor adjustments.
Seaboard Corporation (SEB): SEB is a very long-term position that was reduced significantly over the last two decades. The position size was ~29K shares in 1999 and accounted for around ~2% of the 13F portfolio. The tremendous share price appreciation in the interim has resulted in the current stake accounting for 6.61% of the portfolio even though the position-size was reduced by more than half to ~12.83K shares: the stock is a twenty-bagger during this period. The last five years had seen a ~36% selling at prices between $2550 and $4700. Q2 2019 saw an about turn: ~80% stake increase at prices between $3955 and $4700. The stock currently trades at ~$4030. For investors attempting to follow, SEB is a good option to consider for further research.
MBIA Inc. (MBI): MBI has been in the portfolio since 2007 and it is currently at ~6% of the portfolio. Most of the original position was purchased during the financial crisis in 2008 and 2009 at low prices. Q2 2015 saw a ~75% stake increase at prices between $5 and $9.81 and that was followed with another ~30% increase in the following quarter at prices between $5.50 and $7.70. The stock currently trades at $9.20. The four quarters thru Q1 2019 had seen marginal selling while Q2 2019 saw a ~28% stake increase at prices between $8.75 and $10.25. There was marginal trimming over the last two quarters.
Note: Kahn Brothers controls 6.75% of the business.
Pfizer Inc. (PFE): PFE is a 3.85% of the portfolio position. This was a very small stake first purchased in 2000. Most of the current position was purchased in 2007 at prices between $23 and $28. The seven quarters thru Q1 2016 had seen a one-third reduction at prices between $28 and $36. The next two years had also seen another two-thirds selling at prices between $30 and $39. The pattern reversed in Q2 2019: ~50% stake increase at prices between $39 and $44. The stock currently trades at $40.16.
Patterson-UTI Energy (PTEN): PTEN is a 3.30% of the portfolio position first purchased in 2009. Most of the original stake was purchased in 2010 and 2012 at prices between $13 and $22. The position has wavered. Recent activity follows. Last three quarters had seen a ~45% stake increase at prices between $9.50 and $18 and that was followed with a ~37% increase last quarter at prices between $7.90 and $11.80. The stock currently trades below the low end of those ranges at $7.99.
Nam Tai Property Inc. (NTP): The original NTP position was a ~2% stake established in 2001. The stake saw a ~40% selling in Q4 2016 at prices between $7.15 and $9.50 while Q2 2019 there was a ~20% increase at prices between $9.35 and $10.10. The stock currently trades at $9.14. Last two quarters have seen minor trimming.
Note: Kahn Brothers controls ~6% of the business through their ownership of 2.11M shares of NTP.
VOXX International (VOXX): VOXX has been in the portfolio since 2001 when the company was named Audiovox. The current position stands at 2.04% of the portfolio. Recent activity follows: There was an almost one-third increase in Q2 2017 at prices between $4.65 and $8.90 and that was followed with another ~60% stake increase the following quarter at prices between $6.40 and $8.85. The stock is now below the low end of those ranges at $4.49. Last two quarters had also seen a ~15% stake increase. There was marginal trimming this quarter.
Note: Kahn Brothers owns ~17% of the Class A shares thru the ownership of ~3.85M shares – John J. Shalam has majority control thru ownership of the Class B shares.
Hologic Inc. (HOLX): HOLX is a very long-term position. In 1999, the position size was at 1M shares and by 2003 the stake had increased to ~1.8M shares and accounted for around 6% of the portfolio. Since then, the position has been substantially reduced (after accounting for three 2-for-1 stock splits in 2005, 2008, and 2009). The stock is now at $53.72 and has appreciated over 35-times during the holding period. Last few years have seen large reductions. Kahn Brothers is harvesting gains.
The New York Times Company (NYT): NYT is a 1.21% of the portfolio position. The stake was first purchased in 2006 and the bulk of the current position was built in 2011 and 2012 at prices between $5.75 and $10.75. 2014 to 2017 had seen a combined ~50% selling at prices between $11 and $25. Last seven quarters have seen another 85% reduction at prices between $22 and $36. The stock currently trades at $32.69. Kahn Brothers is harvesting gains.
Sterling Bancorp (STL): STL is now a small ~1% of the portfolio position. The original stake was a very long-term position that was established in 2004 (Provident Bancorp at the time). The six quarters through Q1 2016 had seen a ~25% reduction at prices between $12.50 and $17.75. 2017 saw a combined ~11% trimming at prices between $21 and $26. The three quarters thru Q1 2019 had seen another ~45 % selling at prices between $15.75 and $24.50. The stock is now at $20. There was a ~15% stake increase in Q2 2019 while the last two quarters saw a combined ~28% selling.
Rafael Holding (RFL): RFL is a spinoff from IDT that started trading in March 2018 at ~$7 per share. The stock has more than doubled and currently goes for $20.59. The position saw a ~40% stake increase in Q2 2019 at prices between $18.90 and $27. Last two quarters have seen only minor adjustments.
IDT Corporation (IDT): IDT is a very small 0.61% portfolio position that saw a roughly one-third stake increase in Q2 2017 at prices between $10 and $15. Q4 2017 saw another ~20% increase at prices between $7.75 and $13.25. The stock is now at $7.75. It is a very long-term position that has returned many-fold over the years.
Trinity Place Holdings (TPHS): The very small ~0.58% portfolio stake in TPHS saw marginal trimming this quarter.
Note: Other very small positions (less than 0.5% of the portfolio each) in the portfolio include AT&T (T), Apple (AAPL), Alcon (ALC), Bank of America (BAC), Berkshire Hathaway (BRK.B), Chevron (CVX), Comcast (CMCSA), Crew Energy (OTCPK:CWEGF), Coal Creek (OTCPK:CCRK), Exxon Mobil (XOM), First National Bank Alaska (OTCQX:FBAK), Genie Energy (GNE), Glacier Bancorp (GBCI), Hope Bancorp (HOPE), IDW Media (OTCPK:IDWM), KeyCorp (KEY), Lifeway Foods (LWAY), Navient (NAVI), Novartis (NVS), Orange County Bancorp (OTCQX:OCBI), Pepsico (PEP), Peyto Exploration (OTCPK:PEYUF), SB One Bancorp (SBBX), Verizon (VZ), ViewRay (VRAY), Valhi (VHI), and Zedge Inc. (ZDGE). ZDGE & GNE are spinoffs from IDT.
The spreadsheet below highlights changes to Kahn’s 13F stock holdings in Q4 2019:
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
