Mason Hawkins

Mason Hawkins

Last Update: 06-10-2015

Number of Stocks: 30
Number of New Stocks: 6

Total Value: $15,932 Mil
Q/Q Turnover: 12%

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

Mason Hawkins Watch

  • Mason Hawkins Comments on FedEx

    FedEx (FDX), the largest contributor for the quarter and a major contributor YTD, rose 7% and 13% respectively. The company reported strong operating results led by Ground, where revenue grew 8% year-over-year and operating margins expanded toward 20%. Express had healthy U.S. volumes, and Freight saw both volume and revenue increases. While Ground remains the majority of our appraisal, Freight’s results were notable with 70% operating income growth and double-digit margins. Sustained operating performance in this division would drive future value growth. During the quarter, the company continued to demonstrate its pricing power. The company repurchased 5.3 million shares, an annualized rate of 7%, and authorized an additional 15 million shares.

    From Mason Hawkins (Trades, Portfolio)’ Longleaf Partners Q3 2014 Management Discussion.  

  • Longleaf Partners Q3 2014 Management Discussion

  • Mason Hawkins Comments on OCI

    OCI (XAMS:OCI), owned by Longleaf Small-Cap, International, and Global, consists of a legacy construction business and the much larger nitrogen fertilizer business. Natural gas is the primary component in nitrogen fertilizer production, and during the quarter, gas supply interruptions impacted production at OCI’s two Egyptian plants. Although the stock declined, our appraisal held steady, as it already incorporated 50% Egyptian utilization for 2014, and because OCI’s other plants around the world are operating at or near full capacity with low cost gas and higher prices for Ammonia and Urea, two primary outputs. The long-term case for OCI remains compelling as the company is the low cost industry leader in nitrogen fertilizer, essential for world food production. In the next 12–18 months the company will have higher production and lower capex with the opening of a greenfield plant in Iowa and the completion of the Beaumont, Texas extension. The company is also building the largest methanol plant in the country in Texas. CEO Nassef Sawiris has built and monetized substantial value historically; specifically, he has added enormous value for Southeastern’s clients and our partners in the Longleaf Funds through his work at Texas Industries and Lafarge. Most recently, he announced that in early 2015 OCI will separate the fertilizer and construction businesses to remove the conglomerate discount in the stock price.

    From Mason Hawkins (Trades, Portfolio)’ Longleaf Partners Third Quarter 2014 Commentary.  

  • Mason Hawkins Comments on Melco International

    Melco International (HKSE:00200), the Macau gaming company held in the International and Global Funds, fell alongside all Macau gaming stocks. A meaningful drop in VIP visitors has led to lower revenues. The causes include China’s crackdown on corruption causing wealthier people to keep a lower profile away from Macau, slower Chinese economic growth hurting property sales that boosted gambler credit, and liquidity challenges faced by junket operators who organize VIP visits and extend credit to them. Other pressures impacting the stocks are difficult to quantify, such as tighter transit visa requirements, wage inflation and labor unrest, UnionPay credit card restrictions, and a smoking ban starting in October. The negative news flow did not impact our conviction in Melco. Our appraisal already incorporated lower growth in both VIP and mass revenues than most sell-side analysts had previously assumed for the year. Over 80% of Melco’s EBITDA (earnings before interest, taxes, depreciation and amortization) comes from the non-VIP segment that is still growing gross gaming revenue at 15%. This important mass market has margins several times higher than the margins on VIPs whose revenues are split with junket operators. 100% hotel occupancy also has limited growth this year, but planned new hotels should increase visitation over the next few years as should the new Hong Kong–Macau bridge that will allow passengers at the Hong Kong airport to arrive in Macau in half an hour. Melco has a near-term supply advantage with its Studio City casino and hotel opening in Q3 2015. Despite analyst downgrades on Macau gaming stocks, Melco is estimated to have high EBITDA growth in 2015 and 2016. The company began repurchasing shares in Melco Crown in September, and our partner, CEO Lawrence Ho, has bought more stock personally in the last two quarters.

    From Mason Hawkins (Trades, Portfolio)’ Longleaf Partners Third Quarter 2014 Commentary.  

  • Longleaf Partners Third Quarter Commentary

    Not only did those companies under the most price pressure meet our operating expectations, but their upside prospects increased due in large part to the actions of our CEO partners. To provide insight into these positions and why we continue to have long-term conviction in their potential to outperform, we discuss them below.

    In the U.S.


  • I Will Follow Bruce Berkowitz and Move Away From Chesapeake

    In this article, let´s consider Chesapeake Energy Corporation (CHK), a $15.74 billion market cap, which has a trailing P/E ratio that indicates that the stock is relatively undervalued (a PE relatively small when compared to the industry median).

    So in this article, let's take a look at a model that is applicable to stable, mature, dividend-paying firms and try to find the intrinsic value of the stock. Although the model has a number of characteristics that make it useful and appropriate for many applications, it is by no means the be-all and end-all for valuation. The purpose is to force investors to evaluate different assumptions about growth and future prospects.


  • Longleaf Partners Fund Comments on Loews

    Although Loews (L) was flat in the second quarter, it remained a detractor YTD, down 9%. The first quarter price fell after underlying holdings Diamond Offshore (DO) and Boardwalk Pipeline (BWP) disappointed. In April, DO’s results improved, and the company announced its first share buyback since 2004. After being punished for cutting its dividend in February, BWP outlined several attractive potential projects going forward and recovered in the second quarter. Loews’ other major holding, CNA Financial Corp. had a solid quarter. Loews ramped up its own share repurchases given the discount in the stock and the lack of high-return alternatives for the company’s large net cash of over $8.50/share.

    From Mason Hawkins (Trades, Portfolio)’ Longleaf Partners Fund Semi Annual 2014 Management Discussion.  

  • Longleaf Partners Fund Comments on Royal Philips NV

    Philips (XAMS:PHIA, PHG) declined 7% in the second quarter and 11% YTD. Foreign currency headwinds impacted reported sales, although comparable revenue was flat. Net debt increased as free cash flow (FCF, excess cash from operations) went to a one-time pension payment and share buybacks. A temporary suspension of production at a U.S. healthcare plant also impacted FCF. Management reaffirmed expectations for a “challenging” 2014, comprised of improved results at Consumer and Lighting but a continued drag from Healthcare. Management previously delivered on every aspect of 2013 targets and remains committed to 100-200 additional basis points (1 to 2%) of margin improvement by 2016. At quarter-end, the company announced plans to merge the LED and automotive lighting units into a standalone company with €1.4 billion in revenue and will explore strategic options for outside investment. This advances management’s “Accelerate” plan to concentrate Philips around Health and Wellness and fundamentally increase shareholder value.

    From Mason Hawkins (Trades, Portfolio)’ Longleaf Partners Fund Semi Annual 2014 Management Discussion.  

  • Longleaf Partners Fund Comments on FedEx

    In the first quarter, terrible winter weather hurt FedEx (FDX) results, but the stock rebounded 14% over the last three months. When the price was weak, management repurchased almost 10 million shares at a discount, equating to a 13% annualized pace. The stock rose following strong revenue growth and profits in the Ground segment and higher package volume in Express. Management also set expectations for higher margins following the completed cost restructuring over the last two years. Our appraisal grew as the much more profitable Ground business outpaced the larger Express segment that receives most of analysts’ attention.

    From Mason Hawkins (Trades, Portfolio)’ Longleaf Partners Fund Semi Annual 2014 Management Discussion.  

  • Longleaf Partners Fund Comments on Level 3 Communications

    Fiber and networking company Level 3 Communications (LVLT) announced a deal to acquire tw telecom and returned 12% in the quarter and 32% for the first half. With the deal, Level 3 gets increased tax benefits for its historic NOLs (net operating losses) due to the company’s increased equity capitalization. The transaction also affords an identified $200 million in synergies, roughly half of which come from the straightforward traffic switch onto Level 3’s backbone. The deal is expected to close in the fourth quarter. Beyond the merger, in his first year as CEO, Jeff Storey and his team have delivered solid revenue growth, margin improvements, and higher cash flow guidance.

    From Mason Hawkins (Trades, Portfolio)’ Longleaf Partners Fund Semi Annual 2014 Management Discussion.  

  • Longleaf Partners Fund Comments on CONSOL Energy

    CONSOL Energy (CNX) returned 15% in the quarter and 21% YTD. The company announced better-than-expected earnings due to lower coal costs and stronger gas pricing and guided gas production growth of 30% over the next two years. Management is focusing on building value per share through monetizing non-core assets and moving forward with a MLP of the midstream gas assets in the second half of 2014.

    From Mason Hawkins (Trades, Portfolio)’ Longleaf Partners Fund Semi Annual 2014 Management Discussion.  

  • Longleaf Partners Fund Comments on Cheung Kong Holdings Ltd

    Cheung Kong (HKSE:00001), the Hong Kong based conglomerate with businesses around the world, returned 15% in the second quarter, pushing the YTD return to 21%. Over the first half of 2014, management made value-enhancing asset sales across multiple business lines. In the first quarter, Cheung Kong Infrastructure spun off and listed Hong Kong Electric. Additionally, 50% owned affiliate Hutchison Whampoa sold 25% of A.S. Watson Group, the world’s largest health and beauty retailer. In the second quarter, the company paid a HK$7 special dividend with the proceeds of the Watson sale. Sales of residential property in Hong Kong accelerated after some relaxation in stamp duty regulations. With high land valuations, our partners at Cheung Kong exercised the discipline we have come to expect - not acquiring a single piece of land in Hong Kong or China for over a year.

    From Mason Hawkins (Trades, Portfolio)’ Longleaf Partners Fund Semi Annual 2014 Management Discussion.  

  • Longleaf Partners Fund Comments on Chesapeake

    The biggest performance drivers in the quarter were among the companies that contributed most to YTD gains. Chesapeake (CHK), the U.S. oil and gas exploration and production company, rose 22% in the quarter and was up 15% YTD. During the quarter, the company announced better-than-expected production and realizations and raised yearly guidance on both of these metrics. Management continued to execute on the capital efficiency strategy, highlighted by the spin-off at quarter-end of its oilfield services business into a publicly traded company called Seventy Seven Energy. The spin-off eliminated approximately $1.5 billion of net debt from Chesapeake’s balance sheet. Divestitures of noncore acreage in Oklahoma, Texas, and Pennsylvania were also completed. Our CEO partner, Doug Lawler, is positioning the company to focus on its strong assets in the Eagle Ford, Marcellus and Utica plays, while growing production profitably and keeping capital expenditures within cash flow.

    From Mason Hawkins (Trades, Portfolio)’ Longleaf Partners Fund Semi Annual 2014 Management Discussion.  

  • Longleaf Partners Fund Semi Annual 2014 Management Discussion

    Longleaf Partners Fund returned 6.8% in the second quarter, outpacing the S&P 500’s return of 5.2%. The Fund slightly trailed the Index year-to-date (YTD), with the performance of each rounding to 7.1%. The Partners Fund remained ahead of the Index as well as our absolute return goal of inflation plus 10% in the trailing year, despite our elevated cash position.


  • 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.


  • Recent Real-Time Picks From The Investing Gurus

    Here are some of the most recent Real-Time Picks from the investing gurus:

    TW Telecom Inc (TWTC)


  • Mason Hawkins and John Paulson Top GuruFocus Real Time Picks of the Week

    Guru Real Time Picks of the Week

    The following information is a highlight of the real-time guru activity we saw this week. To view more information on these gurus, check out their guru portfolios. The “Real Time Picks” reports the stock purchases and sells that Gurus have made within the prior two weeks. If a Guru makes a purchase or sell of a company in which they own a greater-than 5% stake, SEC regulations require them to report their transaction within two days. It was a quiet week in guru trades but we did see a couple of trades coming from Mason Hawkins (Trades, Portfolio) and John Paulson (Trades, Portfolio).  

  • 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.  

  • Guru Stocks at 52-Week Lows: VOD, EBAY, DB, CNHI, BBBY

    According to GuruFocus list of 52-week lows, these Guru stocks have reached their 52-week lows.

    Vodafone Group PLC (VOD) Reached the 52-Week Low of $32.88


  • 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.


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