Tracking Southeastern Asset Management Portfolio - Q1 2022 Update

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John Vincent
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Summary

  • Southeastern’s 13F portfolio value decreased from $5.96B to $5.66B this quarter. The number of positions increased from 33 to 35.
  • Southeastern Asset Management increased IAC/InterActiveCorp and Affiliated Managers Group while decreasing Williams Companies.
  • The top three positions are Lumen Technologies, CNX Resources, and Mattel Inc., and they add up to ~27% of the portfolio.

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This article is part of a series that provides an ongoing analysis of the changes made to Southeastern Asset Management's 13F portfolio on a quarterly basis. It is based on Southeastern's regulatory 13F Form filed on 5/16/2022. Please visit our Tracking Mason Hawkins' Southeastern Asset Management Portfolio series to get an idea of their investment philosophy and our previous update for the fund's moves during Q4 2021.

This quarter, Southeastern's 13F portfolio value decreased ~5% from $5.96B to $5.66B. The number of holdings increased from 33 to 35. The top three holdings are at ~27% while the top five are at ~38% of the 13F assets: Lumen Technologies, CNX Resources, Mattel Inc., FedEx, and Warner Brothers Discovery.

Southeastern is best known for its investor-friendly attributes. The mutual funds in the Longleaf family are Longleaf Partners Fund (MUTF:LLPFX) incepted in 1987, Longleaf Small-Cap Fund (MUTF:LLSCX) incepted in 1989, Longleaf International Fund (MUTF:LLINX) incepted in 1998, and the Longleaf Global Fund (MUTF:LLGLX) incepted in 2012. The flagship Longleaf Partners Fund returned negative 0.53% for Q1 2022 vs. negative 4.60% for S&P 500 index. Annualized returns since the 1987 inception is 10.01%. Although the fund is focused on US mid-and-large cap businesses, the current allocation has two non-US businesses among the top holdings: Holcim (OTCPK:HCMLY) and CK Hutchison (OTCPK:CKHUY). Cash allocation is ~5%, down from an average of ~15% last year.

Note: Although their mutual funds are well known among retail investors, it should be noted that a sizable portion of Southeastern's AUM is attributable to separately managed accounts.

New Stakes:

Huazhu Group (HTHT), Syneos Health (SYNH), and Paya Holdings (PAYA): These are minutely small (less than 0.10% of the portfolio each) new stakes established this quarter.

Stake Disposals:

Alibaba Group Holding (BABA): The BABA position was established last year at prices between ~$145 and ~$271. Last quarter saw the stake almost sold out at prices between ~$112 and ~$178. The remainder stake was disposed this quarter. The stock is now at ~$120.

Stake Decreases:

Lumen Technologies (LUMN), previously CenturyLink: LUMN is currently the largest 13F position at ~13% of the 13F portfolio. It came about as a result of the acquisition of Level 3 Communications by CenturyLink that closed in October 2017. Southeastern had a huge 28M share stake in Level 3 for which they received ~40M CenturyLink shares in the ratio 1:1.4286. The terms called for $26.50 per share in cash as well. The position was increased by ~75% in Q4 2017 at prices between $13.50 and $20.50. The stock is now at $11.67. Last several quarters have seen only minor activity.

Note: Their cost-basis on the position is ~$16. Southeastern has a ~6% ownership stake in CenturyLink.

CNX Resources (CNX): CNX is a top-three 8.33% of the 13F portfolio stake. The original position was from 2012 when ~25M shares were purchased in the high-20s price range. Q4 2014 & Q1 2015 saw a stake doubling at prices between $24 and $39. There was a ~18% stake increase in Q2 2019 at prices between $6.15 and $10.90. Q2 2020 saw a ~25% selling at prices between $5.50 and $13. Q1 2021 saw another ~17% selling at prices between ~$11 and ~$15.75. This quarter saw a similar reduction at prices between ~$14 and ~$21.65. The stock is now at $23.53.

Note: The prices quoted above are adjusted for the coal spin-off in November 2017. Southeastern has a ~11% ownership stake in CNX Resources.

Mattel, Inc. (MAT): MAT is a large (top three) 6.34% portfolio stake. It was established in Q3 2017 at prices between $14.50 and $21.50 and increased by ~250% the following quarter at prices between $13 and $19. The two quarters through Q1 2021 had seen a ~43% selling at prices between ~$12 and ~$21. There was a ~18% stake increase in Q2 2021 at prices between ~$19 and ~$22. That was followed with a ~10% increase last quarter. This quarter saw a ~20% selling at prices between ~$19.50 and ~$25.60. The stock currently trades at $24.32.

FedEx Corporation (FDX): FDX is a very long-term position that has been in the portfolio since 2000. Currently, it is a large stake at 5.68% of the portfolio. Recent activity follows: the five quarters thru Q4 2017 saw a combined ~50% reduction at prices between $170 and $250. 2020 saw another ~63% selling at prices between ~$108 and ~$301. There was a one-third increase in Q3 2021 at prices between ~$219 and ~$300. That was followed with a ~25% stake increase last quarter at prices between ~$218 and ~$259. The stock currently trades at ~$217. This quarter saw minor trimming.

Warner Brothers Discovery (WBD) and RenaissanceRe (RNR): The fairly large 5.27% of the portfolio stake in WBD was established in Q3 2021 at prices between ~$24 and ~$29 and the stock currently trades well below that range at $16.67. Last quarter saw a ~20% stake increase at prices between $21.50 and $27. There was a minor ~4% trimming this quarter. The 2.63% RNR stake was established in Q3 2021 at prices between ~$138 and ~$164 and it is now at ~$154. There was a ~17% stake increase last quarter at prices between ~$139 and ~$173. This quarter saw a ~12% trimming.

General Electric (GE): The 4.72% GE position was established in Q4 2017 at prices between ~$136 and $200 and increased by ~185% next quarter at prices between ~$104 and $152. Q3 2018 saw another ~26% increase at prices between ~$90 and ~$114 and that was followed with a ~40% further increase next quarter at prices between ~$54 and ~$108. The six quarters through Q2 2020 had seen a ~47% selling at prices between ~$44 and ~$104. There was another one-third selling in Q1 2021 at prices between ~$84 and ~$112. Last quarter saw a ~23% stake increase at prices between ~$90 and ~$111. The stock is now at ~$77. There was a ~8% trimming this quarter.

Note: the prices quoted above are adjusted for the 1-for-8 reverse stock split last July.

MGM Resorts International (MGM): The 4.23% MGM position was purchased in Q3 2020 at prices between $15 and $24. Next quarter saw a ~40% stake increase at prices between ~$20 and ~$32. There was a ~20% reduction in Q1 2021 at prices between ~$28 and ~$41. The stock currently trades at ~$35.40. Last four quarters have seen only minor adjustments.

Hyatt Hotels (H): Hyatt Hotels is a 4.11% of the portfolio stake established in Q1 2020 at prices between $36.50 and $93. Next quarter saw a ~50% stake increase at prices between $40 and $67.50. That was followed with a ~27% increase in Q3 2020 at prices between ~$48 and ~$61. The two quarters through Q1 2021 had seen a ~23% selling at prices between ~$66 and ~$91. Q3 2021 saw a ~18% stake increase while in the last two quarters there was a ~40% selling at prices between ~$77 and ~$107. The stock now trades at $93.44.

Lazard Ltd (LAZ): The LAZ position was a very small stake first purchased in Q3 2018. Next quarter saw the position built at prices between $34 and $48. 2019 saw a ~50% stake increase at prices between $31 and $40.50. The three quarters through Q1 2021 had seen a ~35% selling at prices between ~$27 and ~$47. Next two quarters had seen a ~25% stake increase at prices between ~$43 and ~$49. The stock currently trades at $35.62, and the stake is at 3.22% of the portfolio. There was marginal trimming in the last two quarters.

Note: They have a ~5% ownership stake in the business.

Biogen (BIIB): The 3.14% of the portfolio position in BIIB was purchased last quarter at prices between ~$224 and ~$288 and the stock currently trades at ~$207. There was marginal trimming this quarter.

Note: Their Q4 2021 letter discussed these stakes. Biogen was bought in December below their previous purchase in Jan 2021. That stake was disposed after a price spike in June.

Douglas Emmett (DEI): DEI is a ~3% of the portfolio stake established in Q4 2020 at prices between ~$23.25 and ~$33.30 and the stock currently trades at $26.62. There was a one-third stake increase in Q2 2021 at prices between ~$31.40 and ~$36.75. Last three quarters have seen only minor adjustments.

Note: the Q4 2020 commentary talks about this investment - they had followed the business since 2011 and they pulled the trigger as the COVID "death of office space" narrative opened up an opportunity to acquire a position at a good price.

Graham Holdings (GHC): GHC is a ~3% of the portfolio stake first purchased in 2013. Q2 & Q3 2014 saw a ~30% increase at prices between $286 and $360. The eleven quarters through Q1 2021 had seen a ~75% selling at prices between ~$278 and ~$620. Last three quarters had seen a ~45% stake increase at prices between ~$560 and ~$677. The stock currently trades at ~$601. This quarter saw a ~5% trimming.

Note 1: They have a ~7.5% ownership stake in the business.

Note 2: The prices quoted above are adjusted for the spinoff of Cable One (CABO) from Graham Holdings that closed on July 1, 2015. Shareholders of GHC received one share of CABO for each share of GHC held. Southeastern controls ~6% of Graham Holdings.

Realogy Holdings (RLGY): RLGY is a ~3% stake purchased in Q4 2017 at prices between $26 and $34 and increased by ~20% next quarter. There was a ~18% increase in Q2 2018 at prices between $23 and $28 and that was followed with a ~24% increase next quarter at prices between $20 and $24. The first three quarters of 2019 had also seen a ~75% stake increase at prices between $4.50 and $18.50. Q2 & Q3 2020 had seen a ~47% reduction at prices between $2.35 and $11.50. There was a ~25% stake increase in Q3 2021 at prices between ~$16 and ~$19. The stock is currently at $12.08. Last quarter saw a ~8% increase while this quarter there was a ~11% trimming.

Note: Southeastern controls ~8.5% of the business.

Madison Square Garden Sports (MSGS): MSGS is a 2.86% of the portfolio position purchased in Q2 2021 at prices between ~$170 and ~$192 and the stock currently trades at ~$162. There was a ~20% stake increase over the last two quarters at prices between ~$154 and ~$201. This quarter saw a ~3% trimming.

Empire State Realty (ESRT): The 2.57% ESRT stake was built in H1 2020 at prices between $6.50 and $14.30 and it currently trades at $7.76. There was a ~20% selling in Q1 2021 at prices between $8.95 and $11.85 while next quarter saw a ~6% stake increase. That was followed with a ~18% stake increase in Q3 2021 at prices between $9.65 and $12.25. Last two quarters have seen minor trimming.

Note: They have a ~8.5% ownership stake in the business.

Williams Companies (WMB): WMB is a 1.28% of the portfolio stake purchased in Q4 2019 at prices between $22 and $24 and increased by roughly two-thirds next quarter at prices between $9.25 and $24. Q2 2020 saw a ~30% selling at prices between $13.30 and $21.60. That was followed with a ~70% reduction this quarter at prices between ~$26.50 and ~$33.50. The stock currently trades at $37.49.

Stake Increases:

IAC/InterActiveCorp (IAC): IAC is a 4.58% of the portfolio position purchased in Q3 2021 at prices between ~$124 and ~$154 and it is now well below that range at $88.36. There was a ~20% stake increase last quarter at around the same price range. That was followed with a ~30% stake increase this quarter at prices between ~$95 and ~$138.

Affiliated Managers Group (AMG): The 4.42% AMG stake was purchased in Q3 2018 at prices between $137 and $160 and increased by ~55% next quarter at prices between $90 and $138. 2019 had seen a ~25% selling at prices between $75 and $116. Q2 2021 saw a ~20% increase at prices between ~$149 and ~$175. That was followed with a ~15% increase this quarter at prices between ~$122 and ~$167. The stock is now at ~$136.

Liberty Broadband (LBRDK), and Fiserv (FISV): The 2.47% of the portfolio LBRDK stake was purchased last quarter at prices between ~$148 and ~$177 and it is now below that range at ~$122. There was a ~17% stake increase this quarter at prices between ~$135 and ~$161. FISV is a ~2% of the portfolio position established last quarter at prices between ~$96 and ~$111 and it now goes for ~$100. There was a ~60% stake increase this quarter at prices between ~$93 and ~$110.

Note: Their Comcast position was disposed and exchanged for Liberty Broadband based on a relative undervaluation thesis. They are in the process of building a stake in Fiserv after following the company for a decade.

CNH Industrial NV (CNHI), JOYY Inc. (OTCPK:YYINZ) (YY), Melco Resorts (MLCO), Oscar Health (OSCR), Vimeo Inc. (VMEO), White Mountains Insurance (WTM), and XPO Logistics (XPO): These small (less than ~2.5% of the portfolio each) stakes were increased during the quarter.

Note: They have a ~6.5% ownership stake in Oscar Health.

Kept Steady:

Comcast Corporation (CMCSA), Ingles Markets (IMKTA), Liberty Braves (BATRK), and Cardinal Health (CAH): These small (less than ~2% of the portfolio each) stakes were kept steady this quarter.

Note: Southeastern has a ~8.4% ownership stake in Liberty Braves.

The spreadsheet below highlights changes to Southeastern's 13F stock holdings in Q1 2022:

Mason Hawkins - LongLeaf - Southeastern Asset Management's Q1 2022 13F Report Q/Q Comparison

Mason Hawkins - LongLeaf - Southeastern Asset Management's Q1 2022 13F Report Q/Q Comparison (John Vincent (author))

This article was written by

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20.98K 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/we have a beneficial long position in the shares of CKHUY, ESRT, LUMN, WBD 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.

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