Wallace Weitz

Wallace Weitz

Last Update: 02-16-2016

Number of Stocks: 66
Number of New Stocks: 3

Total Value: $2,906 Mil
Q/Q Turnover: 3%

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

Wallace Weitz Watch

  • Weitz Funds Comments on MRC Global

    MRC Global (NYSE:MRC) - Conditions in the oil patch have continued to worsen over the past six months, with several oil field service executives describing the downturn as the worst they have seen in over 30 years. Despite a dour forecast for each of MRC’s end markets during 2016, the company’s stock rallied in late February on news that an activist investor had taken significant positions in MRC and competitor Now, Inc. (with hopes of convincing the two companies to merge). Additional diligence led us to believe that the combination was unlikely, so we elected to close our position at a modest discount to our lower business value estimate.


    From Weitz Funds' Research Fund commentary 1st quarter.

      


  • Weitz Funds Comments on MRC Global

    MRC Global (NYSE:MRC) - Conditions in the oil patch have continued to worsen over the past six months, with several oil field service executives describing the downturn as the worst they have seen in over 30 years. Despite a dour forecast for each of MRC’s end markets during 2016, the company’s stock rallied in late February on news that an activist investor had taken significant positions in MRC and competitor Now, Inc. (with hopes of convincing the two companies to merge). Additional diligence led us to believe that the combination was unlikely, so we elected to close our position at a modest discount to our lower business value estimate.


    From Weitz Funds' Research Fund commentary 1st quarter.

      


  • Weitz Funds Comments on Guidewire

    Guidewire (NYSE:GWRE) is a provider of software products for property and casualty insurers. We believe Guidewire, by a wide margin, is the global leader for modern policy, billing and claims system software. Most insurance companies are using outdated software (close to 30 years old), providing ample growth opportunities. Guidewire has excellent management and has focused on adding ancillary products to its core offerings, widening its global franchise.


    From Weitz Funds' Research Fund commentary 1st quarter.

      


  • Weitz Funds Comments on Apple

    Apple (NASDAQ:AAPL), creator of the iPhone, iPad and Mac, makes a return to the Research Fund (previously eliminated in the third quarter of 2014). Investors, in our view, have become too pessimistic about Apple’s ability to grow sales of the iPhone and to globally monetize its large installed base of iOS devices. In addition to its growth prospects, Apple continues to return significant amounts of cash to shareowners.


    From Weitz Funds' Research Fund commentary 1st quarter.

      


  • Weitz Funds Comments on Laboratory Corp. of America Holdings

    Laboratory Corp. of America Holdings (NYSE:LH) is the world’s leading healthcare diagnostics company, providing comprehensive clinical laboratory services and end-to -end drug development support. The company’s strong competitive position, durable excess cash flow and exemplary management have been mainstays of the Laboratory Corp. investment thesis over many years. Various Weitz managed portfolios have been investors in the company over the past 10+ years. We initiated the position, as both the diagnostic lab and drug development market continued to experience healthy demand. A little over one year in, LabCorp’s $6 billion acquisition of Covance appears to be bearing early fruit in the form of new customer wins and central lab market share gains. With revenue and cost synergies on track, financial leverage returning to target levels and stable reimbursement, we believe this stock can compound wealth for years to come.


    From Weitz Funds' Research Fund commentary 1st quarter.

      


  • Weitz Funds Comments on Allergan

    Allergan (NYSE:AGN) is a global specialty pharmaceutical company focused on the development, manufacturing, marketing and distribution of generic, brand name, biosimilar and over-the-counter pharmaceutical products. A combination of factors contributed to the decline in Allergan’s stock during the quarter, including continued discussions of potential drug price regulation, regulatory delays in closing the company’s sale of its generic drug operations to TEVA and uncertainty around the viability of the proposed merger with Pfizer (which, subsequent to quarter end, has officially been called off). We believe the risk of the TEVA transaction falling through is low, and the company’s collection of durable growth assets, management acumen and balance sheet optionality create multiple paths for durable shareholder value creation in the years ahead. We added to our position during the quarter.


    From Weitz Funds' Research Fund commentary 1st quarter.

      


  • Weitz Funds Comments on Summit Materials

    Summit Materials (NYSE:SUM) is a US based construction materials company with cement, aggregates and downstream operations (ready-mix concrete, asphalt, paving) in the Midwest, South and Mid-Atlantic regions. During the quarter, Summit reported strong fourth quarter volumes and strong pricing in aggregates and cement, which calmed investor fears of a slowdown in residential and non-residential construction. Additionally, given the drop in energy prices, investors feared that Summit’s largest market, Texas, would contract during 2016. However, the company reported solid growth in Texas (including Houston), and industry data points throughout the quarter alleviated fears of a Texas recession. Finally, strong 2016 guidance from Summit and peers led to a rebound for the entire group during the quarter.


    From Weitz Funds' Research Fund commentary 1st quarter.

      


  • Weitz Funds Comments on Fossil Group

    Fossil Group (NASDAQ:FOSL) is the fourth-largest producer of watches and the largest global licenser of watches and jewelry. Over the trailing 12 months, Fossil’s stock was weighed down by concerns surrounding watch category global growth. In the US this is being driven by sluggish foot traffic in malls and department stores coupled with broad based de-stocking by Fossil’s partners, as they remain cautious on the wearables category and on consumer sentiment in general. Additionally, Fossil’s largest licensed brand, Michael Kors, slowed and experienced declines in same- store-sales in North America to start the year; however, the brand rebounded later in the year with management presenting a better than expected outlook for 2016. Fossil Group will have less exposure to individual brands as they add licensed brands to their portfolio, including recent additions Kate Spade, Tory Burch and Ralph Lauren’s Chaps. Finally, management postponed share repurchase for 12 months in conjunction with their acquisition of Misfit, a wearable products developer. While we would have preferred a joint venture with Misfit and continued share repurchase at extremely attractive prices, the stock fell substantially more than the decline of our valuation creating an even more compelling investment opportunity.


    From Weitz Funds' Research Fund commentary 1st quarter.

      


  • Weitz Funds Comments on Post Holdings

    POST (NYSE:POST) is a consumer packaged goods holding company whose products are sold through a range of channels, such as grocery, drug stores, foodservice and the Internet. While Post has been transforming itself from a branded cereal manufacturer into a food holding company with a more growth-oriented portfolio, fiscal year appreciation was due to the acquisition of Malt-O-Meal brands, which strengthened the company’s cereal business. In addition, a strong performance of the Michael Food’s segment and improvements in the company’s protein-focused brands contributed to good results. Post also benefited from a capital raise of equity and debt, which decreased its financial leverage, putting the company in a better position to take advantage of future value-enhancing mergers and acquisitions. We eliminated the position in the fourth quarter of 2015 when the stock traded above our business value estimate.


    From Weitz Funds' Research Fund commentary 1st quarter.

      


  • Weitz Funds Comments on Angie's List

    Angie’s List (NASDAQ:ANGI) is a nationally-based, local services review provider and marketplace. The business, which began as a consumer pay subscription service, has been progressively lightening the load on subscribers and shifting the cost of the model to advertising service providers. This transition has caused a flattening of top-line growth. The stock appreciated in the fourth quarter of 2015 when IAC/InterActiveCorp (a company we have owned in the past) made an opportunistic cash offer to buy Angie’s List for slightly less than $9 per share. We felt the offer undervalued Angie’s business and precluded any opportunity to participate in the upside of the combined entity. The Market apparently agreed, and Angie’s stock price traded through the offer price to about $11 per share. We sold our position, as the stock price exceeded our revised estimate of business value.


    From Weitz Funds' Research Fund commentary 1st quarter.

      


  • Weitz Funds' Research Fund Commentary 1st Quarter

    Fiscal Year Contributors


    Angie’s List (NASDAQ:ANGI) is a nationally-based, local services review provider and marketplace. The business, which began as a consumer pay subscription service, has been progressively lightening the load on subscribers and shifting the cost of the model to advertising service providers. This transition has caused a flattening of top-line growth. The stock appreciated in the fourth quarter of 2015 when IAC/InterActiveCorp (a company we have owned in the past) made an opportunistic cash offer to buy Angie’s List for slightly less than $9 per share. We felt the offer undervalued Angie’s business and precluded any opportunity to participate in the upside of the combined entity. The Market apparently agreed, and Angie’s stock price traded through the offer price to about $11 per share. We sold our position, as the stock price exceeded our revised estimate of business value.

      


  • Wallace Weitz Comments on MasterCard

    MasterCard (NYSE:MA) is the world’s second-largest payment network and one of the best known global brands. MasterCard is among the most attractive businesses we own. Its network is well entrenched within the plumbing of payment systems across the global. The transition from cash to digital forms of payment provides growth opportunities over and above underlying economic expansion, and its core business produces healthy doses of excess cash flow with modest reinvestment requirements.

    From Wallace Weitz (Trades, Portfolio)'s Weitz Partners Value Fund 1st quarter 2016 commentary.   


  • Wallace Weitz Comments on Fossil Group

    Fossil Group (NASDAQ:FOSL) is the fourth largest producer of watches and the largest licenser of watches and jewelry globally. Fossil outperformed during the quarter, as the company reported a rebound in same-store-sales, which grew 1% during fourth quarter, including positive growth in watches. This calmed some fears of secular decline in the category, including headwinds from the Apple Watch and other wearables. Moreover, Fossil guided to flat revenue in 2016 excluding foreign currency translation, which was well ahead of consensus forecasts. Management reported good reception of their connected accessories product launch and announced a broad product offering across brands which will incorporate Misfit technology and design, in time for the holidays in 2016.

    From Wallace Weitz (Trades, Portfolio)'s Weitz Partners Value Fund 1st quarter 2016 commentary.   


  • Wallace Weitz Comments on Iconix Brand Group

    Iconix Brand Group (NASDAQ:ICON) is a brand management company and owner of a diversified portfolio of global consumer brands across entertainment, home segments and fashion for men and women. Over the trailing 12 months, Iconix’s share price fell in response to a change in senior management, an accounting restatement, an SEC review and disappointing operating results resulting in a reduction of revenue and cash flow guidance. These events led to additional worries over the ability to refinance near-term debt maturities. As a result, we exited the position.

    From Wallace Weitz (Trades, Portfolio)'s Weitz Partners Value Fund 1st quarter 2016 commentary.   


  • Wallace Weitz Comments on Comcast

    Comcast (NASDAQ:CMCSA) is the largest operator of cable delivered Broadband and Pay-TV service in the United States and, through its NBC Universal subsidiary, is a global entertainment company. After abandoning its bid to acquire Time Warner Cable, Comcast has refocused on execution in its core cable business–investing in higher broadband speeds and introducing a new best-in-class user interface for its Pay-TV customers (dubbed X1). The Company is aggressively rolling out X1 across its footprint, driving higher customer satisfaction and improved customer retention. At NBC Universal, results continue to positively surprise investors thanks to box office hits like Jurassic World, and new attractions like The Wizarding World of Harry Potter driving record attendance at its theme parks. Despite investor concerns over “cord cutters” and “skinny bundles,” we believe the Pay-TV business is more resilient than feared, and thanks to its position in broadband and content, Comcast is well positioned for the future.

    From Wallace Weitz (Trades, Portfolio)'s Weitz Value Fund 1st quarter 2016 commentary.   


  • Wallace Weitz Comments on McKesson

    McKesson (NYSE:MCK) distributes drugs, equipment, and health and beauty products throughout North America and portions of Europe. The company also delivers software solutions and outsourced services to hospitals, pharmacies and other healthcare organizations. Merger-related customer losses (McKesson accounts Omnicare, Target Pharmacy and Rite Aid are moving to competing wholesalers after being acquired), the return of generic drug deflation and concerns of lower future branded drug inflation combined to drive McKesson’s stock down nearly 40% from its high last summer. Having done detailed work on the company roughly nine years prior, we sharpened our pencils again late last year and initiated a position at $150 in January. The drug wholesaling business is an attractive oligopoly characterized by intense but rational competition, stable growth, healthy returns on capital and consistent excess cash generation. While McKesson’s business faces some near-term headwinds, we believe it is an attractive investment over the long term.

    From Wallace Weitz (Trades, Portfolio)'s Weitz Value Fund 1st quarter 2016 commentary.   


  • Wallace Weitz Comments on Express Scripts

    Express Scripts (NASDAQ:ESRX) is the largest stand-alone pharmacy benefits manager (PBM) in the United States, helping health benefit providers improve access to (and the affordability of) prescription drugs. Negotiations with Anthem, Express Scripts’ largest customer, hit an impasse early in the quarter. Anthem elected to bring the details of the disagreement public at a widely attended industry conference in January, providing the investment community a lens into how far the two companies were apart on the economics of their existing contract. Since then, Anthem has also filed a lawsuit against Express Scripts. While we hope a mutually agreeable solution will eventually be achieved, it remains possible (some believe likely) that Anthem will choose not to renew its contract with Express in 2019. We have run scenarios encompassing a range of different outcomes, and we believe Express Scripts’ shares are undervalued in all but the most dire. We continue to monitor contract-related developments and are otherwise heartened by improved execution across the other 84% of Express Scripts’ enterprise.

    From Wallace Weitz (Trades, Portfolio)'s Weitz Value Fund 1st quarter 2016 commentary.   


  • Wallace Weitz Comments on Berkshire Hathaway

    Berkshire Hathaway (NYSE:BRK.A) is a conglomerate holding company owning subsidiaries engaged in a number of business activities. Berkshire shares were helped by the closing of the Precision Castparts acquisition and improved operating performance at its Burlington Northern railroad subsidiary. Berkshire’s insurance unit continues to show excellent discipline in underwriting, which results in temporary declines in premium, but means the company will have significant capacity when insurance pricing returns.

    From Wallace Weitz (Trades, Portfolio)'s Weitz Value Fund 1st quarter 2016 commentary.   


  • Wallace Weitz Comments on Liberty Broadband

    Liberty Broadband (NASDAQ:LBRDA) holds a 26% ownership interest in Charter Communications in addition to a minority equity interest in Time Warner Cable. Charter shares have risen as continued improvement in operating results, including net subscriber additions in its legacy video business, demonstrate that management’s operating plan is generating positive momentum. Investors are also gaining confidence that the Federal Communications Commission (FCC) is leaning toward approving Charter’s proposed acquisitions of Time Warner Cable and Bright House Networks. We believe Charter’s operating momentum is sustainable and that the proposed deals are likely to be approved, representing additional upside to our business value estimate for Charter on a stand-alone basis.

    From Wallace Weitz (Trades, Portfolio)'s Weitz Value Fund 1st quarter 2016 commentary.   


  • Wallace Weitz Comments on Range Resources

    Range Resources (NYSE:RRC) is an independent producer of natural gas and natural gas liquids (NGLs) based in Fort Worth, Texas. Range shares rallied during the quarter, as the company reduced its debt load by roughly $1.0 billion following the divestiture of two non-core assets (Nora and Bradford County). The company is continuing to pursue a sale of its central-Oklahoma oil properties, which will likely be used to retire additional long-term debt. Other positives included improving natural gas price sentiment (for 2017) and a general thawing in the high yield debt markets. Falling drilling activity in the Marcellus and Utica shales (collective rig counts are down from 170 at peak to 40 at present) and the continued drop in domestic oil production, in time, should bring both oil and natural gas prices up closer to their marginal costs of production. In the interim, Range has 80% of its 2016 gas production hedged at $3.24/MMBtu and is locking in additional 2017 production with the current gas strip close to $2.85. We continue to believe Range will emerge from the downturn a significantly more efficient–and more valuable–company.

    From Wallace Weitz (Trades, Portfolio)'s Weitz Value Fund 1st quarter 2016 commentary.   


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