Mason Hawkins

Mason Hawkins

Last Update: 10-11-2016

Number of Stocks: 28
Number of New Stocks: 4

Total Value: $9,681 Mil
Q/Q Turnover: 5%

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

Mason Hawkins Watch

  • Southeastern Asset Management Comments on Scripps Networks

    Scripps Networks (NASDAQ:SNI) (+19%; +1.4%), the media company that owns cable channels, including HGTV, The Food Network, DIY Network, Cooking Channel, Travel Channel, and Great American Country, reported a strong quarter with all six networks adding new viewers as millennial growth continued. Advertising revenue grew at a mid-single digit rate. The company’s advertising is better than most competitors, with more exposure to stable categories than others have. Affiliate fee revenue growth is expected to grow at a mid-to-high-single digit rate, and programming cost growth should continue to decelerate. Part of the stock’s discount is related to its international expansion opportunity which has not produced profits yet but has created startup costs and noncash amortization. The company purchased the remaining 35% of The Travel Channel that it did not own and sold its 7.25% stake in Fox Sports South & Southeast.

    From Southeastern Asset Management's Q1 2016 shareholder letter.


  • Southeastern Asset Management Comments on Wynn Resorts

    Wynn Resorts (NASDAQ:WYNN) (+36%; +2.7%), the luxury gaming and hotel operator with prime real estate in Las Vegas, Macau, and Boston, was the largest contributor in the quarter. Wynn preannounced positive results to enable management to buy more stock. CEO Steve Wynn demonstrated his confidence in the business by purchasing nearly one million shares, bringing his total stake in the company to 12%. Wynn Las Vegas reported better-than-expected 4Q results. Although pressure continued in Macau’s lower margin VIP segment, mass gaming revenues in Macau stabilized, and year-over-year gross gaming revenue comps in February were the strongest in almost two years. Wynn remains well below our appraisal and offers a compelling long-term opportunity for significant growth with a proven owner-operator at the helm. The value of properties in the development pipeline is not yet reflected in the stock price. The opening of Wynn Palace in Macau later in 2016 could spark additional stock appreciation as capital expenditures (capex) ends and revenues begin.

    From Southeastern Asset Management's Q1 2016 shareholder letter.


  • Southeastern Asset Management's Longleaf Partners Fund 1st Quarter Letter

    Longleaf Partners Fund posted a formidable 4.34% return in the first quarter, exceeding the S&P 500 Index’s 1.35%. A number of our stocks had double-digit gains, including several of our most undervalued businesses coming out of 2015. Most of our companies generated solid operating results, and management activity helped drive higher appraisals. Our two biggest positions declined slightly, and their portfolio weights made them among the notable detractors to our strong gains. Our investment cases and our high conviction for these companies remain unchanged. Not only were our absolute returns well beyond our goal of inflation plus 10%, but our relative results also benefitted from our lack of exposure to health care, which was among the top performing index sectors in 2015 but was the S&P 500’s worst performing sector in the quarter.

    Stock prices in the first quarter embodied Ben Graham’s description of “Mr. Market,” whose manic short-term swings are driven by investor emotions. The market fell -10.3% at its February 11 low point but then rallied over 13% by the end of March, a 2300 basis point swing. While economic and political uncertainties fostered the volatility, our appraisals proved much more stable, highlighting the importance of anchoring investment decisions to the long-term cash flows and underlying asset values of each company.


  • The Art of Piggybacking

    Piggybacking has been a topic that has been discussed frequently these days. Fellow writer the Science of Hitting’s recent article is quite illuminating and definitely worth reading. Inspired by him, I wrote this article to share my observations and thoughts on this subject.

    When I first started investing, I piggybacked many gurus and very frequently. I remember the days when I saw David Einhorn (Trades, Portfolio) or Mason Hawkins (Trades, Portfolio) initiating a position in a stock, and within a few hours I became an owner that the same stock. When I saw Exco (NYSE:XCO) was bought by Prem Watsa (Trades, Portfolio), Howard Marks (Trades, Portfolio) and Wilbur Ross (Trades, Portfolio), I put a good amount of money in it without even finishing up reading the 10-K.


  • Mason Hawkins Boosts Stake in Consol Energy

    Guru Mason Hawkins (Trades, Portfolio) boosted his stake in Consol Energy Inc. (NYSE:CNX) by nearly 15% with the purchase of 6,827,800 shares on Jan. 4.

    Hawkins now owns 52,835,737 shares of Consol Energy. It is the largest holding in his portfolio.


  • Mason Hawkins Trims Position in Everest Re Group

    Guru Mason Hawkins (Trades, Portfolio) has over 40 years of experience in the investment industry. Hawkins has similar investment philosophies to Benjamin Graham and Philip Fisher. Hawkins looks for businesses with good management, good people and companies that sell for deep discounts significantly less than their intrinsic value that provide a margin of safety.

    Hawkins founded Southeastern Asset Management in 1975 and is the chairman and CEO for the company. Prior to founding Southeastern Asset Management, Hawkins graduated from the University of Florida in 1970 and later went on to attend the University of Georgia where he received his MBA in finance.


  • Mason Hawkins Sells 3 Stakes in Portfolio

    Mason Hawkins (Trades, Portfolio), chairman and CEO of Southeastern Asset Management since 1975, made his largest fourth-quarter transactions in the form of divestitures. The guru sold three existing stakes in his portfolio in the quarter.

    Hawkins sold his 19,933,835-share stake in Loews Corp. (NYSE:L), a New York-based conglomerate involved in insurance, hotels, oil drilling and pipeline transport, for an average price of $37.29 per share. The deal had a -6.08% impact on Hawkins’ portfolio.


  • Longleaf Partners Comments on Mineral Resources

    Mineral Resources (ASX:MIN) returned -51% during 2015 driven largely by the collapse of iron ore prices. The crushing services business maintained steady volumes and strong margins but was not enough to appease market concerns of continued iron ore price declines. The company surprised the market with its ability to reduce costs in the iron ore mining business at a pace that maintained positive cash flow margins. During the fourth quarter, the company announced a A$30million stock buyback, (4% of outstanding shares), higher EBITDA guidance, and a new EPC (engineering, procurement, and construction) contract for a crushing plant for Rio Tinto’s Nammuldi mine. The company continued to take costs out of its mining operations to ensure that every ton of iron ore produced is sold at positive cash flow margins.


  • Longleaf Partners Comments on Genting Berhad

    Genting Berhad (XKLX:3182) was one of the largest detractors for the year, declining 53%. Malaysia macro/FX was a big headwind, and the company’s development of its sizable oil and gas assets is likely to be delayed given the weakness in energy prices. The company’s Singapore duopoly casino, publicly listed Genting Singapore, is led by CEO Hee Teck Tan and was down after reporting four quarters of unusually poor hold (2.0%–2.5%) in its gaming business, as well as some equity investment write-downs. Since opening the casino, the cumulative win rate at Genting Singapore has been close to the theoretical average of 2.85%, and we believe win rates should normalize over time. In the quarter we added Genting Singapore in addition to our Genting Berhad position. The stock’s deep discount was largely due to a slowdown in Chinese VIP visitors as a result of the Chinese anti-corruption campaign. Genting’s core mass market business has been steady and more than justifies our appraisal. The duopoly position in the stable Singapore jurisdiction represents a significant sustainable competitive advantage. The simple P/E multiple misses the sizable cash and investment portfolio on the balance sheet and minimal maintenance capex requirement (capex is much lower than depreciation). The company engaged in a value-accretive share buyback in recent months.


  • Longleaf Partners Comments on LafargeHolcim

    Global cement, aggregates, and ready-mix concrete producer LafargeHolcim (XSWX:LHN) declined 2% in the quarter and over the year. During the quarter, CEO Eric Olsen presented his three year operating plan with an intense focus on free cash flow generation, internal growth, and returning cash to shareholders. The plan should enable debt to return to investment grade and a dividend payout ratio near 50%. With only modest volume and pricing assumptions, combined with realizing synergies from the LafargeHolcim merger, we believe the plan is achievable. We are excited to own a company with a collection of geographically advantaged assets at less than approximately 8x normalized FCF earnings power and strong cash generation that should be allocated to maximize value per share.


  • Longleaf Partners Comments on CEMEX

    Our position in the convertible bonds of CEMEX (NYSE:CX) declined 12% in the quarter and 21% since we bought the position in the third quarter. The price declined due to weak Latin American currencies, challenged trends in some emerging markets, and a general sell-off across the entire non-investment grade bond sector. We believe CEMEX’s assets are worth roughly twice the debt, which provides generous asset coverage. In addition, we receive a yield component and the opportunity of longer-term upside over par value through the convertible feature as EBITDA growth and debt reduction drive the underlying equity value higher.


  • Longleaf Partners Comments on EXOR

    Also contributing to performance, Italian holding company EXOR (OTCPK:EXORF) appreciated 5% in the quarter, taking full year returns to 12%. Over the course of the year, Chairman and CEO John Elkann, together with Fiat Chrysler Auto (FCA) CEO Sergio Marchionne, took numerous steps to drive value growth. The company sold or spun assets at a strong price, including an $893 million initial public offering (IPO) of Ferrari—well above expected value, the sale of Cushman and Wakefield to DTX for $2 billion—a more than 30% premium to our carrying value for the business, and the recently announced sale of its 17% stake in Banijay for €60.1 million—a €25 million premium to book value. Management reinvested proceeds into high quality assets at a fair price. In the second half, EXOR announced the acquisition of Bermuda reinsurer PartnerRe to be completed in the first quarter of 2016 and increased its long-held stake in The Economist. At FCA, Sergio Marchionne publicly called for auto industry consolidation, potentially positioning EXOR for discussions to merge FCA with another key player.


  • Longleaf Partners Comments on CK Hutchison

    Another top performer, CK Hutchison (HKSE:00001), a conglomerate comprised of the non-real estate businesses from the June merger between Cheung Kong and its subsidiary, Hutchison Whampoa, returned 22% during 2015 when combined with Cheung Kong Property. The corporate transaction helped remove holding company discounts and clarify business line exposures by splitting the property business (Cheung Kong Property Holdings) from the non-property business (CK Hutchison Holdings). The transaction is likely to be viewed as a seminal event leading to improved governance and structure for other complex conglomerates in Asia. In the fourth quarter, Cheung Kong Property was a modest detractor, down 10%, as poor sentiment towards real estate and China lowered real estate prices in Hong Kong. Hong Kong property stocks remained sharply discounted versus the physical property market. Cheung Kong, among the largest property companies in China and Hong Kong, has a large, low cost land bank in China and a strong balance sheet, positioning the company to exploit short-term market disruptions for the benefit of long-term investors. Chairman Li Ka-shing and his son, Victor Li, have demonstrated a track record of building businesses, compounding NAV at double-digit rates, and buying and selling assets at compelling values.


  • Longleaf Partners Comments on Colt Group

    Colt Group (COLT), the British- based provider of business communications and information technology solutions to companies primarily in Europe, was up 40% for the year, making it among the Fund’s largest contributors. We sold the position when the company was acquired by Fidelity Investments in the third quarter. Our investment in Colt, beginning in the second quarter of 2014, produced a 27% annualized return for the International Fund.


  • Longleaf Partners Comments on Baidu

    Baidu (NASDAQ:BIDU) was added to the portfolio in the second half during the China market panic, and the strong fourth quarter rebound, up 38%, resulted in the stock also being one of the strongest contributors for 2015. Baidu is the dominant internet search provider in China with 71% market share of PC and mobile search page view and revenue share over 80%. Its online search business grows at 30% per year with 50% operating margins and sells at a single-digit FCF (free cash flow) multiple. The company only focuses on Chinese language search, mastering the subtleties of its domestic market. During the fourth quarter, in the large and fast-growing online travel space, Baidu swapped its 45% stake in Qunar for a 25% stake in Ctrip. Together with Ctrip’s 37.6% stake in eLong, Ctrip will control 80% of online domestic travel booking revenues, which should lead to more rational competition and improved economics. Through this transaction, Baidu vastly improved its position to become the largest 020 (online to offline) travel platform in China. Furthermore, Baidu will de-consolidate loss making Qunar and provide more clarity to the underlying economics of the core search business. Separately, Alibaba’s offer to privatize online video company Youku Tudou during the quarter helped validate the conservatism in our appraisal of Baidu’s 80% stake in online video business iQiyi.


  • Longleaf Partners Comments on Adidas

    After announcing another strong quarter of double-digit organic growth for its core adidas (XTER:ADS) brand, German-based global sportswear and equipment brand adidas returned 22% in the quarter and 43% for the full year. The brand’s strong positions in Europe, China, and Latin America drove growth. The company expects 2016 operating income margins to meet or exceed 2015 levels and overall sales to increase at high, single-digit rates in the next year. Despite the stock’s strong performance, we believe adidas remains discounted due to strong value growth and has significant additional upside. As discussed in previous quarters, we have had constructive engagement with management and the supervisory board and have seen many positive developments. In addition to authorizing a 10% share repurchase program, the company made managerial changes in the U.S. business, sold its non-core Rockport brand at a price above our appraisal value, and announced it is exploring strategic options for its golfing brands and hockey division.


  • Longleaf Partners Comments on Melco

    As mentioned above, Macau casino and hotel operator Melco (NASDAQ:MPEL) gained 22% in the fourth quarter but remained among the Fund’s largest detractors for the year, down 31%. The stock benefited from improved sentiment regarding Macau during the quarter among indications that the higher margin mass market is stabilizing. In addition to relaxation of transit visa, the Macau government softened its stance on the smoking ban on the gaming floors. While Beijing will continue its anti-corruption campaign (which has hurt VIP business in Macau), the mass-focused infrastructure spending (high speed trains, ferry terminal, bridge from the HK airport, light rail) continues unabated. More than 90% of Melco Crown’s earnings before interest, taxes, depreciation and amortization (EBITDA) comes from mass business, where margins are 4X that of VIP business. Melco Crown opened its new mass-focused casino Studio City in late October, which helped increase market share in the all-important mass segment. This $3.2 billion project (relative to Melco’s market cap of $9 billion) has just started generating cash flow. We expect Studio City to receive an additional 50 table allocation in early 2016 in addition to its initial 200 table allocation. With a strong balance sheet, increasing EBITDA, and declining capital expenditure profile, the company is well positioned to buy back shares or buy out minority owners of Studio City. Melco International CEO, Lawrence Ho, bought about $25 million worth of shares in the fourth quarter.


  • Longleaf Partners Comments on BP Properties

    BR Properties (BSP:BRPR3) appreciated in local currency, but the weak Brazilian real made the company a substantial detractor in USD. Despite a strong rebound across our Macau gaming companies in the fourth quarter, Melco International remained a top detractor for the year. While we believe these portfolio exposures offer more substantial discounts and greater potential upside than the index, the negative performance masked the positive progress across the majority of our businesses in the year. Weak currencies and stocks that are substantially discounted can change direction quickly, and we believe these investments will ultimately provide solid returns.


  • Longleaf Partners Comments on Empire State Realty Trust

    In the last quarter we exited Empire State Realty Trust (NYSE:ESRT), which owns the Empire State Building as well as other properties in the New York metropolitan area. After making 44% in our two-plus year holding period, the price approached our appraised value. We are grateful to our partner, CEO Tony Malkin, and wish him continued success.

    From Longleaf Partners Small-Cap Fund Commentary for 4th quarter 2015.


  • Longleaf Partners Comments on Scripps Networks

    Another detractor for the year, media company Scripps Networks (NYSE:SNI), which owns cable channels including HGTV, The Food Network, DIY, Cooking, and the Travel Channel, declined to -25% in 2015 despite rising nearly 13% in the fourth quarter. Scripps fell sharply in the third quarter along with the rest of the media industry after Disney acknowledged ongoing challenges in the pay TV landscape, and many peers followed with disappointing ratings. Scripps, unlike most of its media peers, creates and owns valuable content that attracts a specific loyal, upscale audience. For this, Scripps channels receive an advertising premium versus other, less differentiated channels. Scripps also is underpaid by distributors for the ratings points it provides. The final difference versus peers is that Scripps is much earlier in its international expansion and therefore has money-losing yet valuable international properties not credited in a simple earnings multiple. During the year the company acquired TVN, a Polish media asset that has created confusion regarding Scripps’ international expansion plans. The company’s much larger free cash flow than reported earnings makes industry price-to-earnings (P/E) ratio comparisons somewhat meaningless.

    From Longleaf Partners Small-Cap Fund Commentary for 4th quarter 2015.


  • Longleaf Partners Comments on Triangle Petroleum

    Also previously mentioned, Triangle Petroleum (TPLM), a Bakken-focused E&P company with an internally developed oil services business (RockPile) and a joint-ventured pipeline business (Caliber), declined 62% for the year after falling 22% in the fourth quarter. Triangle’s integrated strategy provides a cost advantage in North Dakota where there is little infrastructure. Management has shown discipline in a challenged environment by announcing a 71% cut in capex without an offsetting production cut. Additionally, management bought shares personally and repurchased discounted debt at the company level. Late in the year, we swapped the common stock into bonds that were priced at a substantial discount to par, yielding 33% to maturity as of year end. This transaction provided a better risk-reward profile and offset some of the Fund’s realized gains.

    From Longleaf Partners Small-Cap Fund Commentary for 4th quarter 2015.


  • Longleaf Partners Comments on Graham Holdings

    A large detractor to the Fund’s performance in the fourth quarter, media and education company Graham Holdings’ (NYSE:GHC) 16% decline took its 2015 return to -11%. The stock price was impacted by broader weakness in the media industry and for-profit education where the regulatory and economic environment continued to be challenging. In the quarter, Graham Holdings’ Kaplan business reported worse U.S. student trends, and margins and revenue growth declined.

    From Longleaf Partners Small-Cap Fund Commentary for 4th quarter 2015.


  • Longleaf Partners Comments on HollyFrontier

    In the first quarter, amidst the market selloff of energy companies, we purchased HollyFrontier (NYSE:HFC), the independent petroleum refiner that owns and operates five U.S. refineries. The company owns plants in superior locations that allow for above-average margins. Additionally, management has a history of productive capital allocation. As a refiner, HollyFrontier benefits from the decline in energy prices which lead to more miles driven and increased demand for gasoline. During the year, CEO Mike Jennings bought in undervalued shares and focused on projects with master limited partnership (MLP) potential to cater to investors’ thirst for yield. This strategy, plus takeover speculation, helped the stock rise to our appraisal. HollyFrontier appreciated 55%, was among the year’s largest contributors to performance, and was sold in the third quarter.

    From Longleaf Partners Small-Cap Fund Commentary for 4th quarter 2015.


  • Longleaf Partners Comments on Vail Resorts

    Vail Resorts (NYSE:MTN), the largest owner of ski resorts in the world, gained 23% in the fourth quarter and 44% for the year, making it the Fund’s top contributor in 2015. So far in the 2015/2016 U.S. ski season, the company has posted strong pass sales (+13%), with price increases of 6% and higher units. With Vail’s strong financial position and positive operating cash flow (OCF), CEO Rob Katz reaffirmed the company’s plan to continue to return capital to shareholders via an increased dividend and share buybacks. The board recently authorized an additional 1.5 million shares for repurchase (roughly 4% of shares outstanding). Our appraisal of the company grew in the quarter and over the year.

    From Longleaf Partners Small-Cap Fund Commentary for 4th quarter 2015.


  • Longleaf Partners Comments on DreamWorks Animation

    A top contributor to the Fund, film studio DreamWorks Animation (NASDAQ:DWA) gained 16% for the year after a substantial 48% rise in the fourth quarter—an example of how quickly payoff patterns can move. The company had a box office success with the late March release of the movie Home, which continued to do well in home video and streaming. In December, DreamWorks announced a co-production deal with DHX Media, demonstrating that the company’s efforts to develop television content has progressed into recurring revenues. The New Media segment, which contains AwesomenessTV, had impressive revenue growth and margins. License renewals helped drive strong revenue and earnings growth in the consumer division. CEO Jeffrey Katzenberg’s push in the Chinese film distribution market via the 45% Oriental DreamWorks JV has potential for meaningful upside.

    From Longleaf Partners Small-Cap Fund Commentary for 4th quarter 2015.


  • Longleaf Partners Small-Cap Fund Commentary 4th Quarter

    The Fund’s six energy-related holdings in 2015 combined to account for the Fund’s negative return and relative underperformance of the year and dampened the otherwise strong absolute and relative performance in the fourth quarter. Although our oil and gas price assumptions have been wrong, we believe that CONSOL Energy (NYSE:CNX) could rapidly rebound with major asset sales and, along with Triangle Petroleum, will benefit when commodity prices correct as supply and demand eventually rebalance. At both companies, our management partners are taking action, including cutting costs, increasing financial flexibility, and selling assets to ensure the companies can withstand the difficult commodity environment. These two companies trade at a substantial discount to our appraisal and, we believe, offer greater potential upside than the index. However, the short-term performance masked the positive progress across the majority of our businesses in the year.


  • Longleaf Partners Comments on Murphy Oil

    In the fourth quarter, we sold Murphy Oil (NYSE:MUR), an E&P company with a portfolio of global offshore and onshore assets, after the stock declined 51% and was among the Fund’s largest detractors for the year. Following several disappointing drilling results and a lack of management plans for near-term ways to go on offense, we redeployed this capital into the high-quality franchise of National Oilwell Varco (NYSE:NOV).

    From Longleaf Partners Fund 4th quarter commentary.


  • Longleaf Partners Comments on CONSOL Energy

    Also previously mentioned, CONSOL Energy (NYSE:CNX), the Appalachian coal and natural gas company, was down 76% in 2015 after falling 19% in the fourth quarter as the company missed operating cash flow (OCF) estimates amidst declining coal and gas prices. Management is adjusting to lower commodity prices and adopted significant cost controls under zero-based budgeting while still growing natural gas production. We filed a 13-D during the third quarter to discuss with third parties as well as management and the board a potential monetization or separation of the valuable Marcellus and Utica gas assets. This has been a constructive process since filing, and we appraise these assets at worth demonstrably more than CONSOL’s total equity capitalization. CONSOL’s exploration and production (E&P) business is unique, with low cost reserves given the company’s fee ownership of many acres. CONSOL announced in the fourth quarter that its thermal coal business, which enjoys a low cost position, had contracted for 93% of production for 2016 at a confirmed price of $50-55 per ton, providing near-term downside coal business risk mitigation. Multiple directors recently purchased shares.

    From Longleaf Partners Fund 4th quarter commentary.


  • Longleaf Partners Comments on Chesapeake Energy

    As noted, Chesapeake Energy (NYSE:CHK), the second largest producer of natural gas in the U.S., declined 39% in the quarter and 77% for the year, making it the largest detractor of performance in both periods. Options accounted for 40% of our position and slightly half of our return. Fears related to further declines in energy prices drove the stock lower, despite CEO Doug Lawler’s progress in areas he could control. After reaffirming the company’s untapped $4 billion revolving credit facility and renegotiating a deal with Williams (pipeline operator), in the fourth quarter Chesapeake turned to restructuring its debt. Chesapeake offered to exchange various unsecured debt securities at a discount to par for secured debt with a later maturity. Pushing out due dates coupled with reducing overall debt outstanding should help the company weather a sustained low energy price environment.

    Over the year we adjusted our appraisal of Chesapeake to account for the tumble in oil and natural gas prices. Even with the depressed energy prices of today and little growth in that price as indicated by the futures strip pricing, the company’s non-producing assets have value that is not reflected at all in the stock price. Asset sale transactions in basins where Chesapeake operates helped validate our appraisal. We expect the company will continue to reduce costs while also seeking asset sales at fair prices. We are mindful of the risks associated with commodity companies. Once the debt restructuring was announced, we added to higher parts of the company’s capital structure that became particularly discounted.


  • Longleaf Partners Comments on McDonald’s

    During the quarter, we began exiting our successful investment in global quick service restaurant operator McDonald’s (NYSE:MCD) and completed the sale in the first week of 2016. The stock was a strong contributor for the year, up 31%, and the last three months, up 21%. When we initially purchased the company in late 2014, we believed management could overcome short-term obstacles and turn around same-store sales in certain struggling markets. Additionally, we saw optionality in the value of the company’s real estate assets. Over the course of our investment, McDonald’s hired a new CEO, Steve Easterbrook, a move welcomed by investors. His plan to revive the business both operationally and structurally helped drive the stock price. Although management and the board decided not to monetize the real estate assets, the stock price reached our appraised value in an unexpectedly short period. Over the year plus that we owned the stock, it gained 34% and was among the strongest contributors to performance. We appreciate the board’s and management’s solid execution. We hope that Mr. Market gives us an opportunity to partner with them in the future.

    From Longleaf Partners Fund 4th quarter commentary.


  • Longleaf Partners Comments on CK Hutchison

    CK Hutchison (HKSE:00001), a conglomerate comprised of the non-real estate businesses from the June merger between Cheung Kong and its subsidiary, Hutchison Whampoa, returned 23% during 2015 when combined with Cheung Kong Property. The corporate transaction helped remove holding company discounts and clarify business line exposures by splitting the conglomerate between the property business (Cheung Kong Property Holdings) and the non-property business (CK Hutchison Holdings). The transaction is likely to be viewed as a seminal event leading to improved governance and structure for other complex conglomerates in Asia. Chairman Li Ka-shing and his son, Victor Li, have demonstrated a track record of building businesses and buying and selling assets at compelling values.

    From Longleaf Partners Fund 4th quarter commentary.


  • Longleaf Partners Comments on Wynn Resorts

    Another notable contributor in the quarter, Wynn Resorts (NASDAQ:WYNN), the luxury gaming and hotel company with prime real estate in Las Vegas, Boston, and Macau, was up 31% but down 47% since we first added the position earlier in the year. The stock became deeply discounted as China’s anti-corruption campaign pressured revenues in Macau where Wynn is among six current operators and is scheduled to open the Wynn Palace in Cotai in June 2016. During the recent quarter, Macau sentiment began to turn as revenues stabilized. CEO Steve Wynn demonstrated his commitment and confidence in the business, purchasing over one million shares in early December and bringing his stake in the company to nearly 11%. Year-over-year comparable gross gaming revenues should improve in 2016, and Wynn cash flow will be bolstered with the Cotai property coming online. Longer term, we believe the company can generate impressive returns. Macau revenues from mass and premium mass visitors should grow with added non-gaming attractions, needed hotel room supply, and infrastructure improvements that bolster arrivals. Additionally, the Wynn Everett is in early site preparation with a strategic location just outside of Boston, but its value is not reflected in the stock price because it is several years from opening. Opportunities to partner with proven value creators like Steve Wynn at such a large discount to our appraised value exist over time, but rarely do we see one where the near-term market extrapolations are so distinct from the long-term earnings power of the company.

    From Longleaf Partners Fund 4th quarter commentary.


  • Longleaf Partners Comments on Alphabet

    Alphabet (NASDAQ:GOOGL) (formerly named Google) gained 51% for the year on the back of a 25% rise in the fourth quarter. The company reported strong revenue growth year-over-year across the U.S., U.K., and the rest of the world. The bear case that the move to mobile search would be detrimental to revenues and market share seemed to fade. Mobile queries now outnumber desktop queries in important countries, and mobile revenue per click is improving. Alphabet segment YouTube’s growth remained strong, and the company announced a new pay tier named Red. Disclosure should improve with new reporting of segments in January. During the fourth quarter, a new share buyback program was authorized, further affirming the company’s attention to capital allocation.

    From Longleaf Partners Fund 4th quarter commentary.


  • Longleaf Partners Comments on Level 3 Communications

    After being a top contributor in the fourth quarter and adding 25%, Level 3 Communications (NYSE:LVLT) gained 10% for the full year. Over the course of the year, operating metrics continued to improve. During the fourth quarter, company segment Core Network Services’ (CNS) organic revenue grew 6% year-over-year. Within CNS, Enterprise revenue grew 8%. This revenue growth, combined with the synergies created by the merger with tw telecom, resulted in margin expansion. The high contribution margins, which are currently over 60%, have been one of the focal points of our Level 3 investment case and are one of the primary drivers of high growth in both EBITDA (earnings before interest, taxes, depreciation and amortization) and FCF (free cash flow) growth. In 2016, we believe the company will generate approximately $5.00/ share of FCF before discretionary growth capital expenditures, which translates to approximately 10x FCF on current price. The company’s success-based growth capex is tied to new, high margin, revenue-producing contracts. Given management’s excellent execution, we expect leverage ratios to continue to improve from their current 4x debt/EBITDA levels into the 3x’s.

    From Longleaf Partners Fund 4th quarter commentary.


  • Longleaf Partners 4th Quarter Fund Commentary

    Longleaf Partners Fund’s 5.47% advance in the quarter brought the 2015 return to -18.80%. These results fell below the S&P 500’s gains of 7.04% and 1.38% for the same periods. The Fund’s energy-related holdings were the leading detractors for the quarter and the year due to the sharp decline in energy prices. Since its inception, the Fund has outperformed the index.


  • Larry Robbins Exits McDonald's, Paypal, Fossil

    Larry Robbins (TradesPortfolio) of Glenview Capital Management sold out several stakes in the third quarter.

    Glenview Capital Management, founded in 2000 by Larry Robbins (Trades, Portfolio), is a privately held investment management firm. Following are the trades with a high impact on the portfolio.


  • Mason Hawkins' Firm Bets on Cost-Cutting Efforts at Consol Energy

    Following a small sale last month, the Mason Hawkins (Trades, Portfolio)-led Southeastern Asset Management upped its stake in Consol Energy (NYSE:CNX) by about 15% Monday, picking up more shares as energy stocks continue to lower.


  • Microsoft, Intel and National Oilwell Varco Have High Dividend Yields in Bill Nygren's Portfolio

    Bill Nygren (Trades, Portfolio) is portfolio manager of The Oakmark Fund, The Oakmark Select Fund and the Oakmark Global Select Fund. Nygren and his partners invest in companies they believe trade at a substantial discount to what they consider to be the true business value.

    National Oilwell Varco Inc. (NOV)


  • Mason Hawkins Increases FedEx Stake by 25%

    Mason Hawkins is primarily a value investor similar to Benjamin Graham and Philip Fisher. These legendary gurus look for businesses with good management, good people, and companies that sell for deep discounts significantly less than their intrinsic value.

    Hawkins founded Southeastern Asset Management in 1975 and is the chairman and CEO for the company. Hawkins and his team of long-term value investors look to build portfolios primarily focusing on 18 to 22 stocks at any given time, looking at a wide range of industries. Hawkins believes that concentrating allows for adequate diversification, while providing some of the best opportunities to maximize returns, and minimize loss of principal.


  • Loews, Scripps Networks Among Mason Hawkins' Attractive Holdings

    Mason Hawkins (Trades, Portfolio) has been the chairman and CEO of Southeastern Asset Management since 1975. The firm is a value investment firm and looks for three things in a business: good business, good people and a good price. He seeks to invest in businesses that are easily understandable, have strong balance sheets, are run by capable and shareholder friendly management, and trading at less than intrinsic value. The company will ascertain the intrinsic value of the business by looking at the asset value of the business or calculating the present value of future free cash flow. He is a very concentrated investor, normally holding less than 25 stocks in a portfolio at any given time.

    Here are three companies from the portfolio that we find interesting at current levels:


  • Longleaf Partners' Semiannual Investor Meeting Slide Presentation

  • Longleaf Partners' Semiannual Investor Webcast Transcript

  • Mason Hawkins Reduces Portfolio in 3 Holdings

    Legendary investment guru Mason Hawkins sold 51,700,581 shares from his portfolio in Triangle Petroleum Corp. (TPLM), Level 3 Communications Inc. (NYSE:LVLT) and Loews Corp. (NYSE:L).

    Hawkins is primarily a value investor similar to Benjamin Graham and Philip A. Fisher. These legendary gurus looked for businesses with good management, good people and companies that sold for discounts significantly lower than their intrinsic values.


  • Mason Hawkins Buys Stakes in du Pont, Tribune Media in 3rd Quarter

    Value investor Mason Hawkins (Trades, Portfolio), chairman and CEO of Southeastern Asset Management, says he looks for “good business, good people and a good price” when looking for investment opportunities. Using those criteria, he found several options in the third quarter.

    Hawkins’ most noteworthy third-quarter transaction was his purchase of a 7,810,399-share stake in E.I. du Pont de Nemours & Company (NYSE:DD), a Wilmington, Del.-based chemical company, for an average price of $53.37 per share. The deal had a 3.18% impact on Hawkins’ portfolio.


  • Mason Hawkins' Fund Takes 10% Stake in Actuant Corp.

    Mason Hawkins (Trades, Portfolio) has announced a 6,206,894-share stake in Actuant Corp. (NYSE:ATU), taking over 10.4% of the small-cap company that has a business predictability rating from GuruFocus of one star and a P/E ratio near a 10-year high.


  • Investor Day Details Key Initiatives for McDonald’s

    On Tuesday, Nov. 10, McDonald’s (NYSE:MCD) held its Investor Day with a number of significant announcements and initiatives influencing the stock’s price. Already performing strongly among its peers the company’s turnaround plan, discussed in detail on Nov. 11, has the company set up for even further gains over the long term.

    Year to date McDonald’s has gained 20.83%, substantially outperforming its closest competitors Wendy’s (NASDAQ:WEN) and Restaurant Brands International (NYSE:QSR). For the year, Wendy’s is up 5.98% while Restaurant Brands International is down 8.60%.


  • Tom Gayner's Holdings Trading Below the Peter Lynch Value

    Tom Gayner (Trades, Portfolio) is the executive vice president and chief investment officer of Markel Corp. (NYSE:MKL) and president of Markel Gayner Asset Management Inc., Markel's investment subsidiary since December 1990. From the114 stocks in his portfolio, the following are the holdings that are trading with a wider margin of safety, according to the Peter Lynch Value.

    Graham Holdings Co. (GHC) is trading at $575, and the Peter Lynch value gives the stock a fair price of $1,676.4, giving the stock a margin of safety of 66%.


  • Longleaf Partners Comments on Cable ONE

    We sold several of the Fund’s investments in the quarter, including our position in Cable ONE (NYSE:CABO) after Graham Holdings spun it out at the beginning of the quarter. The stock sold for our estimate of fair value. We applaud Graham Holdings’ CEO Don Graham for his ongoing efforts to build and recognize value for shareholders.

    From Longleaf Partners' third quarter 2015 commentary.


  • Longleaf Partners Comments on Tribune Media

    We purchased Tribune Media (NYSE:TRCO) and one other holding during the quarter. We previously invested profitably in Tribune via its distressed bonds when the company went through bankruptcy. After completing the spin-off of its publishing business last year, Tribune is now a diverse mix of television and digital properties spanning news, entertainment, and sports. The company owns or operates 42 broadcast stations, representing the country’s largest combined independent station group. Additionally, Tribune’s spectrum ownership is uniquely valuable given its concentration in large, coastal cities. Management’s capital allocation discipline has beendemonstrated by repurchasing undervalued shares and selling off non-core assets at compelling prices.

    From Longleaf Partners' third quarter 2015 commentary.


  • Longleaf Partners Comments on Level 3 Communications

    Fiber and networking company Level 3 Communications (NYSE:LVLT) declined 17% as concerns about near term top-line growth rates outweighed improvement in margins and free cash flow (FCF) generation. During the quarter, the company reported organic revenue growth across North America and EMEA (Europe, Middle East, and Africa) in-line with expectations, while Latin America, which represents approximately 10% of consolidated revenue, had weaker growth mainly due to currency. The integration of tw telecom remains on track with synergy realizations ahead of schedule. Level 3 already has achieved approximately $115 million of annualized run-rate EBITDA synergies and the company should achieve 70% or $140 million of its annualized synergy target by the end of the first quarter of 2016. FCF growth at Level 3 is ramping up and, we believe, marching toward explosive FCF growth on a per share basis in the next few years as a result of the business’ strong incremental margins, the aforementioned tw telecom synergies, and continued debt reduction and refinancing. During the quarter, major bond rating agencies upgraded approximately $11 billion of the company’s rated debt and credit commitments, further proof of Level 3’s improving business and financial profile.

    From Longleaf Partners' third quarter 2015 commentary.


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