Tracking Yacktman Asset Management Portfolio - Q2 2020 Update

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John Vincent
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Summary

  • Yacktman's 13F equity portfolio value increased from $6.03B to $6.27B this quarter.
  • Yacktman Asset Management added Ingredion and FirstCash while reducing Oracle Corporation, Cisco Systems, Qurate Retail, Johnson & Johnson, Macy's, and Booking Holdings.
  • Their largest five stakes are at roughly one-third 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 08/06/2020. Please visit our Tracking Yacktman Asset Management series to get an idea of their investment philosophy and our previous update for the fund’s moves during Q1 2020.

This quarter, Yacktman Asset Management’s (MUTF:YACKX) (YAFFX) (YASSX) 13F portfolio value increased ~4% from $6.03B to $6.27B. The number of holdings increased from 57 to 60. The largest holding is Fox Corp. (FOX) (FOXA) at ~7.5% of the 13F portfolio. Largest five individual stock positions are Fox Corp., PepsiCo, Inc. (PEP), Microsoft (MSFT), Procter & Gamble (PG) and Alphabet (GOOG) (GOOGL) and together they account for around one-third of the 13F portfolio. The firm currently holds around ~19% cash - a far cry compared to zero cash immediately following the financial crisis. The portfolio is concentrated with recent 13F reports showing around 55 individual positions. 35 of their stakes are significantly large (over ~0.5% of the 13F portfolio each) and they are the focus of this article.

Note: The top two holdings in their flagship fund YACKX are not in the 13F report as they are not US listed 13F securities – Samsung Electronics (OTCPK:SSNLF) Preferred and Bollore SA (OTCPK:BOIVF). The fund has generated alpha since their 1992 inception (9.94% annualized compared to 9.82% for the S&P 500 index) but they are lagging in the most recent 10-year period (10.16% annualized vs. 13.84%).

New Stakes:

Ingredion Inc. (INGR) and FirstCash, Inc. (FCFS): These are the two new positions this quarter. The ~1% INGR stake was purchased at prices between $75 and $90 and the stock currently trades at $82.50. The very small 0.54% FCFS position was established at prices between $65 and $78 and it is now at ~$60.

Stake Disposals:

None.

Stake Increases:

Wells Fargo (WFC): WFC is a 1.80% 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. Last quarter saw a ~120% stake increase at prices between $25.25 and $54. There was a marginal increase this quarter. The stock currently trades at $25.32. For investors attempting to follow, WFC is a good option to consider for further research.

Stake Decreases:

Fox Corp.: The 7.47% position is currently Yacktman’s largest 13F position. It came about because of the merger transaction between Walt Disney (DIS) and 21st Century Fox. Yacktman had a huge position in 21st 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 21st Century Fox. Last three quarters of last year had seen a ~42% stake increase at prices between $30 and $39. Last quarter saw another ~55% stake increase at prices between $20 and $38.60. There was a ~10% trimming this quarter. The stock currently trades near the low end of those ranges at $24.94. For investors attempting to follow, Fox is a good option to consider for further research.

PepsiCo, Inc.: The top three 6.89% PEP stake was built over multiple years with the bulk established in the 2011-13 timeframe: over 22M shares were purchased during that time at prices between $60 and $86. The six quarters through Q3 2016 had seen a roughly two-thirds reduction at prices between $91 and $111. Last three quarters of last year had also seen another ~40% selling at prices between $121 and $140. That was followed with a ~25% reduction last quarter at prices between $104 and $147. The stock currently trades at ~$135. Yacktman is harvesting gains. There was a minor ~3% trimming this quarter.

Microsoft Corporation: 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. ~20M shares were added in 2011 at prices between $24 and $28.50. Last six years saw the position reduced by ~95% at prices between $36 and $190. This quarter also saw a ~17% selling at prices between $152 and $204. The stock currently trades at ~$203. Yacktman is harvesting long-term gains from this position.

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 six quarters had seen another ~80% selling at prices between $80 and $128. The stock currently trades at ~$133 and the stake is now at ~6% of the portfolio. There was marginal trimming this quarter.

Note: Their Q3 2019 commentary indicated that the reductions in Consumer Staples stocks (PepsiCo, Coca-Cola (KO), and Procter & Gamble) were due to their high valuations. The selling has continued since.

Alphabet Inc.: The 5.27% stake in GOOG was established in Q1 2019 at prices between $1015 and $1230 and it now goes for ~$1480. Last quarter saw a roughly one-third stake increase at prices between ~$1055 and ~$1530 while this quarter there was marginal trimming.

Walt Disney: The position came about because of the merger transaction between Walt Disney and 21st Century Fox. Yacktman had a huge position in 21st 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 21st Century Fox. The stock currently trades at ~$131 and it is a large stake at 5.19%. Last three quarters of last year had seen a combined ~17% selling at prices between $112 and $152. There was another ~20% selling this quarter at prices between $94 and $127.

Sysco Corporation (SYY): SYY is a ~5% 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. Last quarter saw a ~60% stake increase at prices between $31 and $85 while this quarter there was a ~7% trimming. The stock currently trades at ~$61.

Johnson & Johnson (JNJ): JNJ is a 4.85% of the 13F portfolio position that has been in the portfolio since their first 13F filing in Q1 1999. The bulk of the original position was purchased in 2011 in the low 60s price-range. The stock has doubled and currently trades at around ~$147. 2015-18 had seen a combined ~45% reduction at prices between $91 and $147. Last three quarters have seen another ~50% selling at prices between $111 and $156. They are continuing to harvest gains.

Coca-Cola Company: KO is a very long-term position that has been in the portfolio for over twenty 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 ~$48 and the position is at 4.38% of the portfolio. The six quarters through Q3 2016 saw a ~57% reduction at prices between $38 and $47. Last three quarters saw another ~50% selling at prices between $37.50 and $60. There was marginal trimming this quarter.

Booking Holdings (BKNG): BKNG is a large 4.32% of the portfolio position purchased in Q1 2019 at prices between $1650 and $1935. This quarter saw a ~20% reduction at prices between $1231 and $1841. The stock currently trades at $1805.

News Corp. (NWSA): The ~4% portfolio position was built last year at prices between $12.50 and $14.60. Last quarter also saw a ~30% stake increase at prices between $8.20 and $15. There was a minor ~3% selling this quarter. The stock currently trades at $14.89.

Cognizant Technology (CTSH): The 3.84% portfolio stake in CTSH saw a stake doubling in Q2 2019 at prices between $56.75 and $74.60. There was a ~60% stake increase last quarter at prices between $42 and $71.50. The stock currently trades at $66.53. This quarter saw marginal trimming.

Macy’s, Inc. (M): M is a 3.72% of the portfolio stake established in Q2 2019 at prices between $20 and $26 and more than doubled next quarter at prices between $14.30 and $23.25. Last quarter saw another ~85% stake increase at prices between $4.50 and $18.10. There was a ~25% selling this quarter at prices between $4.45 and $9.55. The stock currently trades at ~$7.

Note: Yacktman controls ~6% of the business.

State Street Corporation (STT): The 3.45% STT stake saw a ~150% increase in Q4 2018 at prices between $60 and $87. Q3 2019 saw another ~63% stake increase at prices between $49 and $61. The stock currently trades at $70.35. There was a ~20% selling over the last three quarters.

U.S. Bancorp (USB): The 2.62% USB position has been in the portfolio for over 15 years. Majority of the original stake was purchased in 2011 in the low-20s price-range. The stock currently trades at $38.27. 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.

Cisco Systems (CSCO): CSCO is a 2.28% of the 13F portfolio position first purchased in 2010. The bulk of the original position was purchased in 2011 and 2012 at prices between $15 and $22. The stake has since been sold down. 2015-2016 time frame saw a two-thirds reduction at prices between $25.52 and $32. There was a further ~88% selling since at prices between $30 and $58. The stock currently trades at $47.19. Yacktman is continuing to harvest gains from this position.

The Bank of New York Mellon (BK): The ~2.20% 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 $38.14. The position was reduced by ~30% in Q4 2016 at prices between $39 and $49. Since then, the activity has been minor.

Oracle Corporation (ORCL): The 1.95% 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 in Q1 2019 at prices between $45 and $55. Last four quarters had also seen a ~42% selling at prices between $40 and $60. That was followed with a ~60% reduction this quarter at prices between $48.50 and $55. The stock currently trades at $54.27. Yacktman is harvesting gains.

Huntsman Corp. (HUN), Ralph Lauren (RL), First Hawaiian (FHB), and Qurate Retail (QRTEA): These were the new positions last quarter. The 1.91% of the portfolio position in Huntsman Corp was purchased at prices between ~$12.50 and ~$23.50 and the stock currently trades at $20.70. RL is a small 0.86% of the portfolio stake established at prices between $65.50 and $124 and it is now at $70.21. The 0.78% First Hawaiian position was purchased at prices between $15 and $31 and it now goes for $18.48. HUN, RL, and FHB stakes saw minor reductions this quarter. The very small 0.51% QRTEA stake was established at prices between $4.25 and $9.82. This quarter saw a ~42% selling at prices between $5.45 and $9.65. The stock currently trades at $10.68.

Anthem, Inc. (ANTM) previously WellPoint Inc.: ANTM is a 1.61% of the 13F portfolio position purchased in 2012 at prices between $55 and $74. 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 also saw a ~18% selling at prices between $184 and $235. The stock currently trades at ~$280. Last quarter saw a ~40% reduction at prices between $175 and $305. That was followed with a ~6% trimming this quarter.

MSC Industrial Direct (MSM): The 1.44% MSM stake was built last quarter at prices between $46.70 and $79.30 and the stock currently trades at ~$70. There was a ~20% selling this quarter at prices between $54 and $75.

AMERCO (UHAL), Berkshire Hathaway (BRK.A) (BRK.B), Colgate-Palmolive (CL), ConocoPhillips (COP), Comcast Corporation (CMCSA), Exxon Mobil (XOM), Goldman Sachs (GS), and GrafTech Intl (EAF): These very small (less than ~1% of the portfolio each) stakes were reduced during the quarter.

Note 1: Very small (less than 0.5% of the portfolio each) positions account for ~2.5% of the overall portfolio. They are Ambev (ABEV), Infosys (INFY), Spark Networks (LOV), Unilever NV (UN), Altria Group (MO), ARCOSA, Inc. (ACA), Charles Schwab (SCHW), Clorox Company (CLX), Corning (GLW), Hershey Co. (HSY), Legacy Housing Corp. (LEGH), Mastercard (MA), Micron Technology (MU), Otelco Inc. (OTEL), Philip Morris Intl. (PM), Reading International (RDI), SPDR S&P 500 ETF (SPY), Stryker Corp. (SYK), Tilly’s, Inc. (TLYS), Trecora Resources (TREC), Valmont Industries (VMI), and Waddell & Reed Financial (WDR).

Note 2: 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 (2.01%), U.S. Bancorp (2.58%), and Wells Fargo (2.10%). Q4 2018 also saw a 3.45% stake build-up in State Street.

The spreadsheet below highlights changes to Yacktman’s 13F stock holdings in Q2 2020:

Donald Yacktman - Yacktman Asset Management - Q2 2020 13F Report Q/Q Comparison

This article was written by

John Vincent profile picture
21.06K Followers
Focused on cloning strategies by analyzing 13F reports of a curated set of around fifty super-investors and generating Absolute Returns thru exploiting inefficiency, volatility, and momentum.
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Disclosure: I am/we are long BOIVF, BRK.B, GOOGL, PM, WFC, XOM. 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.

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