Mason Hawkins

Mason Hawkins

Last Update: 2014-07-10

Number of Stocks: 28
Number of New Stocks: 0

Total Value: $18,402 Mil
Q/Q Turnover: 3%

Countries: USA
Details: Top Buys | Top Sales | Top Holdings  Embed:

Mason Hawkins Watch

  • Longleaf Partners Funds 2014 Semi Annual Shareholder Letter

    Limited New Qualifiers


    In concert with the geographic performance differences over the quarter, investment opportunities also diverged by region. Ongoing pessimism about slower economic growth in China continued to weigh on stocks tied to Chinese demand, including those linked to natural resources. By contrast, European markets benefitted from the combination of low European Union interest rates spurring private equity activity and U.S. companies re-domiciling through offshore acquisitions to secure lower tax rates (“inversion”). The U.S. reflected a more extreme version of Europe with few discounted opportunities. Multiple factors contributed to the lack of qualifying U.S. investments – a five-year bull market, the lowest volatility since 2007, heightened activism, and the substitution of investor complacency for healthy fear. The largest driver of what we see as market overvaluation has been the rise in merger and acquisition activity encouraged by the Federal Reserve’s (Fed) commitment to historically low interest rates combined with the strength of corporate balance sheets, plus the aforementioned inversion driven by the world’s highest corporate tax rate.

      


  • Southeastern Asset Management Increases Stake in TW Telecom by 40 Percent

    Southeastern Asset Management, where Mason Hawkins (Trades, Portfolio) is chairman of the board and CEO, enlarged its position in TW Telecom Inc. (TWTC) for the first time after selling it down quarterly since the second quarter of 2011, according to GuruFocus Real Time Picks. The firm holds 15,201,344 shares after making the 40.3% increase on July 10.  


  • Longleaf Partners Comments on DirecTV

    During the quarter we exited DIRECTV (DTV), a highly successful core holding in our U.S. and Global accounts for over a decade. We discuss our DTV experience not to showcase one winner, but because the investment illustrates the process and approach we follow for holdings across all mandates and highlights some of Southeastern's unique research strengths.


    History of DTV Investment (based on Longleaf Partners Fund) Sometimes we can own a company in indirect ways that create part of the discount to intrinsic worth. In the case of DTV, we owned the underlying business via three different stocks over our thirteen-year holding period as shown on the chart that follows. Initially, in 2001 we bought GMH, the tracking stock that General Motors created for the Hughes division that included all of its satellite businesses. By early 2004, the company had been spun fully out of GM and renamed DIRECTV Group. Over the following four years, we opportunistically added to and trimmed our position.

      


  • Longleaf Partners Q1 2014 Shareholder Letter



  • Mason Hawkins Comments on Level 3 Communications

    Level 3 Communications (LVLT) was a key contributor in the fourth quarter, adding 24% and boosting 2013 gains to 44%. The company reported strong results following the appointment of Jeff Storey as CEO in April. Revenue growth and significant cost reductions improved margins. The company also refinanced $2.6 billion in debt. Large internet-based companies looking to control their customer connections highlighted the value of Level 3's dark fiber, which is not reflected in revenues. As management continues to execute, value growth should be meaningful. Growing revenues will especially benefit Level 3 given its fixed-cost asset base, lower-than-average maintenance capital spending, and minimal tax liability.

    From Mason Hawkins (Trades, Portfolio)' 2013 Longleaf Partners Fund management discussion.  


  • Mason Hawkins Comments on Aon

    For Aon (AON), the world's largest insurance broker and a leading benefits manager, increasing cash flow and healthy share repurchases helped our position gain 53% for the year. As noted in our third quarter commentary, higher interest rates should improve fiduciary income and help close thepensiongap.Aon'sprivatehealthcare exchange for corporate employees gained critical mass with the addition of Walgreens to the client base. CEO Greg Case and his management team have built value per share through their customer- focused, shareholder-oriented leadership.

    From Mason Hawkins (Trades, Portfolio)' 2013 Longleaf Partners Fund management discussion.  


  • Mason Hawkins Comments on Dell

    The shareholder approval of Dell (DELL)'s management buyout generated a positive return of 31% for 2013 in spite of the disappointing investment outcome. Philips gained 44% during the year. CEO Frans Van Houten and CFO Ron Wirahadiraksa completed a €2bn stock buyback at discounted prices, as well as delivered higher margins as planned. Philips' management team is pursuing additional cost reductions and believes the company has strong revenue and margin potential over the next two to three years in all three primary businesses: medical, lighting, and consumer lifestyle. They signaled their confidence in the future value growth of the business by announcing another €1.5bn share buyback.

    From Mason Hawkins (Trades, Portfolio)' 2013 Longleaf Partners Fund management discussion.  


  • Mason Hawkins Comments on FedEx

    FedEx (FDX) was a leading performer for the fourth quarter and the year, gaining 26% and 57%, respectively. Major cost initiatives gained traction as the company's Express unit grew margins by 1.4% in its most recent quarter. The Ground unit delivered strong growth with volume increases from e-commerce and higher pricing. FedEx repurchased 7.2 million shares, a 10% annualized pace. The stock's increase in the fourth quarter followed news that the company would begin a new 32 million share repurchase program. Management's operating success and capital allocation combined to build the company's worth through the year.

      


  • Mason Hawkins Comments on Chesapeake Energy

    Chesapeake Energy (CHK) was the largest contributor in 2013, up 59%. Together with new CEO Doug Lawler, the board that we helped seat in 2012 is instilling financial and operating discipline into the company. Over the last 19 months, the company reduced SG&A, sold a number of non- core assets, decreased capex, and committed to living within its cash flow in 2014. The company is focusing on its strong assets in the Eagle Ford, Marcellus, and Utica plays in order to grow production profitably. Even after the stock's gains, Chesapeake's oil and gas reserves sell for a discount to our appraisal. That appraisal would grow significantly in the long-term bull case for low cost natural gas replacing coal for power generation, fostering manufacturing renewal in the U.S., displacing some oil as a transportation fuel, and becoming a major export.

      


  • Longleaf Partners Fund Management Discussion for Fourth Quarter 2013

    Chesapeake Energy (CHK) was the largest contributor in 2013, up 59%. Together with new CEO Doug Lawler, the board that we helped seat in 2012 is instilling financial and operating discipline into the company. Over the last 19 months, the company reduced SG&A, sold a number of non- core assets, decreased capex, and committed to living within its cash flow in 2014. The company is focusing on its strong assets in the Eagle Ford, Marcellus, and Utica plays in order to grow production profitably. Even after the stock's gains, Chesapeake's oil and gas reserves sell for a discount to our appraisal. That appraisal would grow significantly in the long-term bull case for low cost natural gas replacing coal for power generation, fostering manufacturing renewal in the U.S., displacing some oil as a transportation fuel, and becoming a major export.


    FedEx (FDX) was a leading performer for the fourth quarter and the year, gaining 26% and 57%, respectively. Major cost initiatives gained traction as the company's Express unit grew margins by 1.4% in its most recent quarter. The Ground unit delivered strong growth with volume increases from e-commerce and higher pricing. FedEx repurchased 7.2 million shares, a 10% annualized pace. The stock's increase in the fourth quarter followed news that the company would begin a new 32 million share repurchase program. Management's operating success and capital allocation combined to build the company's worth through the year.

      


  • Mason Hawkins Raises Stake in 3 Stocks

    In 2013, Mason Hawkins (Trades, Portfolio)’ Longleaf Partners Funds kept pace with the S&P 500’s buoyant return of over 32%. As disciplined investors, his team prefers to wait for more discounted stocks than investing in over-priced situations just for the sake of being invested. Hawkins wrote in his 2014 shareholder letter:

    “A broad market pullback could provide our next qualifiers. We are not market prognosticators, but few markets around the globe can claim undervaluation, and many have pockets of overvaluation. In the event of a correction, short-term performance is likely to decline. Our long-term results, however, will benefit from a lower P/V as we are armed with a vetted wish list of businesses and ample cash to be liquidity providers when new opportunities or existing names are offered at less than 60% of our appraisals. Additionally, lower prices will allow management teams at our current holdings to use their balance sheet strength to execute repurchases at deeper discounts that build values per share more rapidly.”  


  • Longleaf Partners Funds 2013 Annual Shareholder Letter

    Almost every investment positively contributed to performance in 2013, and the importance of good partners and strong businesses was evident. New leaders quickly improved operations and sold non-core assets to strengthen the balance sheets at Chesapeake, Hochtief , and Level 3. At Philips and Wendy's, managements focused on the most profitable parts of their businesses while implementing successful programs to increase revenues and margins. We had major asset sales at premiums to our appraisals at Vodafone (VOD) (Verizon Wireless stake) and Graham Holdings (GHC) (The Washington Post).


    Competitively advantaged holdings continued to demonstrate the value of moats at FedEx (FDX), Melco, and Texas Industries (TXI). These holdings were among our largest contributors to performance, and they exemplify activity prevalent across most of our holdings throughout the year.

      


  • Quality and High Conviction - Mason Hawkins in Review

    As of Sept. 30, 2013, the Longleaf Partners Fund, advised by Mason Hawkins’s Southeastern Asset Management, averaged an annual return of 24.13% over one year.

    In his third quarter 2013 letter to Longleaf shareholders, value investor Mason Hawkins offered a condensed summary on the quality of his selected companies: "The businesses we own should be able to deliver higher free cash flow over the next three years, thereby building intrinsic values. First, a number of our holdings that are headquartered in more developed markets such as Abbott, Cheung Kong, DirecTV, Lafarge, Mondelez, Philips, and Vodafone have large portions of their revenues in faster growing geographies. Second, the strength of our companies’ competitive positions and/or brands is enabling many to increase top line via pricing increases including Abbott, Cemex, DirecTV, Everest Re, FedEx, Ferrovial, Lafarge, Loews, Martin Marietta, Melco, Mondelez, News Corp, Scripps Networks, Texas Industries, Travelers, Washington Post, Vail, and Vulcan. Third, a number of our management teams are continuing to extract costs from their businesses to address slower growth and gain increased efficiencies. Material cost reductions are occurring at Abbott, Aon, Bank of New York Mellon, Cemex, Chesapeake, FedEx, Guinness Peat, Hochtief, Lafarge, Legg Mason, Level 3, Mondelez, Nitori, Philips, TNT Express, Washington Post, and Wendy’s. Fourth, in contrast to oft-stated concerns about peak margins, operating margins across our holdings are approximately one-third less than the overall market’s margins, with most of our companies operating closer to their 10-year average margins than their peaks."  


  • Mason Hawkins's Longleaf Partners Comments on DIRECTV

    The Fund had only three detractors in the quarter: Mosaic, Abbott Labs, and DIRECTV (DTV), with only Mosaic negatively impacting YTD results. We bought and exited Mosaic during the third quarter. Our case changed quickly with the potash industry drama that caused prices to drop. Abbott was down 4% in the quarter following FX headwinds, concerns over tougher rules for device approval in Europe, and issues at a dairy supplier leading to a meaningful product recall in the baby formula division in China. DIRECTV slipped 3% on increased subscriber churn amidst a challenged Brazilian economy. DIRECTV Latin America remains well positioned to benefit from rising pay-TV penetration in the region, and the mature U.S. business continues to generate higher ARPU (average revenue per user).

    From Mason Hawkins' Longleaf Partners Fund third quarter 2013 commentary.  


  • Mason Hawkins' Longleaf Partners Comments on Aon

    For the YTD, Aon (AON), the world's largest insurance broker and a leading benefits management firm, was among the Fund's largest contributors as the company's lower tax rate and increasing cash flow helped drive a 35% return. Higher interest rates will increase fiduciary income and help close the gap in the underfunded pension. Although nascent, Aon's healthcare exchange for corporate employees is gaining critical mass, most recently adding Walgreen Co in the third quarter. We applaud Greg Case and his team for their customer- focused, shareholder-oriented leadership.

    From Mason Hawkins' Longleaf Partners Fund third quarter 2013 commentary.  


  • Mason Hawkins's Longleaf Partners Comments on CONSOL Energy

    Other strong performers in the quarter included Level 3, up 27%, and CONSOL Energy (CNX), up 25%. At Level 3, since taking over as CEO in April, Jeff Storey has implemented the necessary steps to grow top line and increase cash flow by reducing costs and focusing on higher margin enterprise customers. Brett Harvey, CEO at CONSOL indicated that management is exploring the sale of assets and could potentially split the company into various parts: natural gas, coal, and infrastructure. Even with meaningful recent stock gains, both companies remain among our most discounted names.

    From Mason Hawkins' Longleaf Partners Fund third quarter 2013 commentary.  


  • Mason Hawkins' Longleaf Partners Comments on FedEx

    FedEx (FDX) gained 25% over the last nine months after delivering 16% in the third quarter. The stock increase reflects some degree of confidence that management will execute planned cost cuts at the Express air delivery segment to adjust to the migration of more traffic onto ships and trucks due to high oil prices. While the stock has been volatile over the past year, our appraisal of the company has steadily grown, driven by the Ground segment. Subsequent to quarter-end, FedEx announced a share repurchase plan of 11% of the company.

    From Mason Hawkins' Longleaf Partners Fund third quarter 2013 commentary.  


  • Mason Hawkins' Longleaf Partners Fund Management Discussion - Third Quarter 2013

    Longleaf Partners Fund delivered a substantial 9.8% in the third quarter, taking the Fund’s year-to-date  


  • Mason Hawkins Discusses Strong Returns in Q3 Shareholder Letter

    Longleaf Partners Chairman and Chief Executive Officer Mason Hawkins and President and Chief Investment Officer Staley Cates discuss holdings Level 3 (LVLT), Chesapeak Energy (CHK), Vodafone (VOD), Washington Post (WPO), Dell (DELL) and others in their third quarter letter to shareholders. The firm delivered one of its strongest quarters for returns in its history in the third quarter. Read the letter here.  


  • Mason Hawkins Buys 12% of News Corp

    While still embroiled in a fraught relationship with Dell (DELL), Mason Hawkins’ Southeastern Management has taken a major position in Rupert Murdoch’s company, News Corp. (NWS), according to GuruFocus Real Time Picks. Hawkins acquired an 11.9% stake in the company, amounting to 23,767,700 shares in aggregate.

    Hawkins first disclosed he was purchasing News Corp. shares in his semi-annual report, released Aug. 14.  


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