Tracking Yacktman Asset Management Portfolio - Q2 2021 Update

Summary

• Yacktman's 13F equity portfolio value increased from $9.57B to $10.31B this quarter.
• Yacktman Asset Management increased Canadian Natural Resources and PepsiCo while reducing Ralph Lauren and Macy’s during the quarter.
• Yacktman’s largest five stakes are at ~26% of the portfolio.

SusanneB/E+ via Getty Images

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 08/03/2021. 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 2021.

This quarter, Yacktman Asset Management's (MUTF:YACKX) (YAFFX) (YASSX) 13F portfolio value increased ~8% from $9.57B to $10.31B. The number of holdings decreased from 66 to 64. The largest holding is PepsiCo at 6.44% of the 13F portfolio. Largest five individual stock positions are PepsiCo Inc., Alphabet, Microsoft, Canadian Natural Resources, and Procter & Gamble. Together they account for ~26% of the 13F portfolio. The firm currently holds around ~16% cash. The portfolio is concentrated with recent 13F reports showing around 65 individual positions. 44 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 three 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, Bollore SA (OTCPK:BOIVF), and Brenntag AG (OTCPK:BNTGY). The fund has generated alpha since their 1992 inception (10.92% annualized compared to 10.59% for the S&P 500 index) but they are lagging in the most recent ten-year period (11.94% annualized vs 14.84%).

New Stakes:

Weatherford International plc (WFRD): WFRD is a 1.27% of the portfolio position. The stock got relisted in Nasdaq this June. Shares started trading at $15.75 and currently goes for $16.16. Weatherford filed for Chapter 11 bankruptcy protection in July 2019 and emerged that December. Yacktman Asset Management had both debt and equity in the business.

Stake Increases:

PepsiCo Inc. (PEP): PEP is currently the largest 13F stake at 6.44% of the portfolio. It 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 thru Q3 2016 had seen a roughly two-thirds reduction at prices between $91 and $111. Last three quarters of 2019 had also seen another ~40% selling at prices between $121 and $140. That was followed with a ~25% reduction in Q1 2020 at prices between $104 and $147. This quarter saw a one-third increase at prices between ~$141 and ~$149. The stock currently trades at ~$154.

Canadian Natural Resources (CNQ): CNQ is a large (top three) 4.50% of the portfolio position purchased last quarter at prices between $22.50 and $32.50 and the stock currently trades at ~$32. There was a ~90% stake increase this quarter at prices between $29.40 and $38.

Procter & Gamble (PG): 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 stake 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 thru Q3 2016 saw a 50% reduction at prices between $72 and $90. The six quarters thru Q1 2020 had seen another ~80% selling at prices between $80 and $128. The stock currently trades at ~$142 and the stake is now at 4.23% of the portfolio. Last five quarters have seen only minor adjustments.

Cognizant Technology (CTSH): The ~3% 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 in Q1 2020 at prices between $42 and $71.50. The stock currently trades at ~$74. Last five quarters have seen only minor adjustments.

AMERCO (UHAL): The 2.56% of the portfolio UHAL position saw a ~75% stake increase this quarter at prices between ~$527 and ~$632 and the stock currently trades at ~$584. Q1 & Q3 2020 had also seen a ~50% stake increase at prices between ~$242 and $384.

Northrop Grumman (NOC) and L3Harris Technologies (LHX): These two stakes established last quarter were increased this quarter. The ~2% NOC stake was established at prices between $287 and $324 and it is now well above that range at ~$357. There was a minor increase this quarter. The 1.46% LHX stake was established at prices between $172 and $203 and the stock currently trades at ~$229. This quarter saw a ~2% increase.

Stake Decreases:

Alphabet Inc. (GOOG): The large (top three) 5.66% stake in GOOG was established in Q1 2019 at prices between $1015 and $1230 and it now goes for ~$2720. Q1 2020 saw a roughly one-third stake increase at prices between ~$1055 and ~$1530. Last five quarters have seen only minor adjustments.

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. ~20M shares were added in 2011 at prices between $24 and $28.50. The six years thru 2019 saw the position reduced by ~95% at prices between $36 and $190. Q2 2020 also saw a ~17% selling at prices between $152 and $204. There was a ~15% stake increase last quarter at prices between $212 and $245. The stock currently trades at ~$287. There was marginal trimming this quarter.

News Corporation (NWSA): The 4.16% portfolio position was built in 2019 at prices between $12.50 and $14.60. Q1 2020 also saw a ~30% stake increase at prices between $8.20 and $15. There was a ~25% selling last quarter at prices between $18 and $27.30. The stock currently trades at $24.33. This quarter also saw minor trimming.

Sysco Corporation (SYY): SYY is a 4.12% 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 thru Q4 2018 had seen another ~80% selling at prices between $40 and $68. Q1 2020 saw a ~60% stake increase at prices between $31 and $85. The stock currently trades at $71.75. Last five quarters have seen only minor adjustments.

Fox Corporation (FOX) (FOXA): The FOX stake came about because 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 a collar and one-third of one-share of new Fox for each share of Twenty First Century Fox. Last three quarters of 2019 had seen a ~42% stake increase at prices between $30 and $39. Q1 2020 saw another ~55% stake increase at prices between $20 and $38.60. There was a ~38% reduction over the last two quarters at prices between ~$25 and ~$41.50. The stock currently trades at $32.64 and the stake is at 3.93%. They are harvesting gains. This quarter saw marginal trimming.

Walt Disney (DIS): The position came about because 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. Last three quarters of 2019 had seen a combined ~17% selling at prices between $112 and $152. There was another ~20% selling in Q2 2020 at prices between $94 and $127. Q4 2020 saw another similar reduction at prices between ~$118 and ~$181. The stock currently trades at ~$173 and it is a large stake at 3.65%. Last two quarters have also seen minor trimming. They are harvesting gains.

Johnson & Johnson (JNJ): JNJ is a 3.51% 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 ~$173. 2015-18 had seen a combined ~45% reduction at prices between $91 and $147. The three quarters thru Q2 2020 had seen another ~50% selling at prices between $111 and $156. Last four quarters have seen only minor adjustments.

Booking Holdings (BKNG): BKNG is a 3.37% of the portfolio position purchased in Q1 2019 at prices between $1650 and $1935. Q2 2020 saw a ~20% reduction at prices between $1231 and $1841. The stock currently trades at ~$2086. Last four quarters have seen only minor adjustments.

Coca-Cola Company (KO): 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 & 2010 and increased by ~150% each in 2012 & 2013. The huge stake build-up happened at prices between $21 & $30 and $33.50 & $43 in the 2009-10 & 2012-13 periods respectively. The six quarters thru Q3 2016 saw a ~57% reduction at prices between $38 and $47. The three quarters thru Q1 2020 saw another ~50% selling at prices between $37.50 and $60. Last five quarters have seen only minor adjustments. The stock currently trades at ~$56 and the position is at 3.35% of the portfolio.

State Street Corporation (STT): The 2.82% 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. There was a ~20% selling over the three quarters thru Q2 2020. The stock currently trades at ~$87. Last four quarters have seen only minor adjustments.

U.S. Bancorp (USB): The 2.61% 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 ~$55. 2015 saw a ~50% reduction in the low-40s price range. Q4 2016 saw another ~25% selling at prices between $42.50 and $52.50. Since then the activity has been minor.

Charles Schwab (SCHW): Most of the 2.46% of the portfolio stake in SCHW was purchased in Q4 2020 at prices between $37 and $53. The stock is now well above that range at ~$68. Last two quarters have seen only minor adjustments.

Ingredion Inc. (INGR): The 2.31% INGR stake was purchased in Q3 2020 at prices between $75 and $90 and increased by ~170% next quarter at prices between $69 and $82. The stock currently trades at ~$85. Last quarter saw a ~10% further increase while this quarter there was marginal trimming.

Berkshire Hathaway (BRK.A) (BRK.B): Berkshire position saw a huge stake build-up last quarter at prices between $222 and $264. It is now a significant ~2.2% of the portfolio position. The stock currently trades at ~$279. There was a ~10% trimming this quarter.

Tyson Foods (TSN): TSN is a ~2% of the portfolio stake established in Q4 2020 at prices between $56.50 and $70 and the stock currently trades at ~$70. Last two quarters have seen only minor adjustments.

Huntsman Corporation (HUN): The 1.73% of the portfolio position in Huntsman Corp was purchased in Q1 2020 at prices between ~$12.50 and ~$23.50 and the stock currently trades at $25.24. Last five quarters have seen only minor adjustments.

Macy's Inc. (M): Macy's is a 1.52% 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. Q1 2020 saw another ~85% stake increase at prices between $4.50 and $18.10. There was a ~25% selling in Q2 2020 at prices between $4.45 and $9.55. Q4 2020 saw another similar reduction at prices between $5.75 and $12. The position was further reduced by roughly two-thirds last quarter at prices between $11 and $21. The stock currently trades at $16.73. There was a ~10% trimming this quarter.

Lockheed Martin (LMT) and Armstrong World Industries (AWI): These two stakes established last quarter were reduced this quarter. LMT is a 1.31% of the portfolio position purchased at prices between $322 and $373 and it now goes for ~$362. There was a ~5% trimming this quarter. The small ~1% AWI position was purchased at prices between $71 and $96 and it is now at ~$107. There was marginal trimming this quarter.

Anthem Inc. (ANTM), Bank of New York Mellon (BK), Cisco Systems (CSCO), Comcast Corporation (CMCSA), ConocoPhillips (COP), Exxon Mobil (XOM), First Hawaiian (FHB), Goldman Sachs (GS), GrafTech International (EAF), Micron Technology (MU), MSC Industrial Direct (MSM), Oracle Corporation (ORCL), Ralph Lauren (RL), and Wells Fargo (WFC): These small (less than ~2% of the portfolio each) stakes were reduced this quarter.

Kept Steady:

Colgate-Palmolive (CL) and Corning Inc. (GLW): These small (less than ~1% of the portfolio each) positions were kept steady this quarter.

Note: 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 (1.91%), US Bancorp (2.61%), and Wells Fargo (2.01%). Also, a ~3% stake in State Street was added in 2018 and a small 0.77% stake in First Hawaiian was added last year.

The spreadsheet below highlights changes to Yacktman's 13F stock holdings in Q2 2021:

Source: John Vincent. Data constructed from Yacktman Asset Management's 13F filings for Q1 2021 and Q2 2021.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of BOIVF, WFC, XOM either through stock ownership, options, or other derivatives. 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.