Wallace Weitz

Wallace Weitz

Last Update: 05-13-2016

Number of Stocks: 63
Number of New Stocks: 5

Total Value: $2,807 Mil
Q/Q Turnover: 10%

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

Wallace Weitz Watch

  • Wally Weitz Drops Falling Drug Stock Endo but Sees 'Upside Potential'

    Wally Weitz, founder and chief investment officer of Weitz Investment Management, informed clients via a one-off note Thursday that his firm exited it entire position in pharmaceutical company Endo International, whose stock has dwindled to a quarter of its market value year to date.


    Weitz’s statement regarding Endo in its entirety: “Typically, Weitz Funds discloses portfolio holdings and portfolio information on a quarterly basis (or, for the Government Money Market Fund, on a monthly basis as required by law). On May 25, 2016, Weitz Funds publically disclosed additional portfolio information by announcing that Endo International plc (NASDAQ:ENDP) was sold entirely from Weitz Value Fund and Weitz Partners Value Fund after the most recent quarter end dated March 31, 2016.”

      


  • Wide Margin of Safety for Fossil and NeuStar

    The following stocks are trading with a wide margin of safety according to the DCF calculator, and some of them have very low P/E ratioa. GuruFocus' All-in-One Screener can be used to find similar stocks.


    Alliance Holdings GP LP (AHGP) has a market cap of $1.03 billion and a GuruFocus business predictability of 4.5 stars. The stock had a price of $16.28 on Wednesday with a P/E ratio of 5.84 and according to the DCF calculator is trading with a margin of safety of 79% since its fair value is $84.27. During the last 12 months the price of the stock has dropped by 85% and is now 65.78% below its 52-week high.

      


  • 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.   


  • Wallace Weitz Comments on Liberty Global

    Liberty Global (NASDAQ:LBTYA) is the largest international cable company, with operations in 14 countries providing video, broadband Internet, fixed-line telephone and mobile services to its customers. Liberty Global’s portfolio of businesses produced mixed results during the fiscal year. Continued strong results in the UK and Belgium were partially offset by continued competitive pressures and merger integration missteps in Holland, and a poorly received price increase in Germany. Furthermore, the continued strengthening of the US Dollar put a damper on Liberty’s results (reported in US Dollars). We believe the company is restoring investor confidence by learning from these missteps, taking actions within the portfolio as needed (e.g., moving the Dutch business into a joint venture with Vodafone-See Quarterly Detractors) and outlining an achievable three-year growth plan.

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


  • Wallace Weitz Comments on Valeant Pharmaceuticals

    Valeant Pharmaceuticals (NYSE:VRX) is a multi-national, specialty pharmaceutical and medical device company that develops, manufactures and markets a broad range of brand name, generic and over-the-counter products in over 100 countries. We closed our position in Valeant toward the end of October last year. The stock came under heavy selling pressure as a result of increased political scrutiny around drug pricing and possible wrongdoing at one of its “alternative fulfillment” pharmacy partners. Our decision to sell was ultimately based on a combination of important questions we had difficulty answering regarding potential long-term reputational damage to Valeant’s business, the likelihood of difficult payer negotiations, future business model uncertainty and financial leverage. While our investment in Valeant ended on a disappointing note, it was a healthy multi-year contributor to Fund performance.

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


  • Wallace Weitz Comments on Endo International

    Endo International (NASDAQ:ENDP) is a specialty healthcare company engaged in developing, manufacturing, marketing and distributing branded and generic pharmaceutical products and medical devices. Several developments contributed to a difficult 12-month period for Endo’s stock. Growth in the company’s branded drug division has been disappointing, owing in part to poor results from several drugs Endo inherited from its acquisition of Auxilium Pharmaceuticals roughly ayear ago. In addition, pricing pressure in the company’s legacy Qualitest generics business increased, muting the segment’s near-term (and potentially long-term) growth trajectory. Finally, liabilities relating to the company’s legacy vaginal mesh products increased, following an influx of claims late in 2015. While our business value estimate for Endo has come down, the stock price has declined far more significantly. Using conservative assumptions for the company’s business over the next several years, we believe Endo has significant upside potential if management can execute on its growth plans for XIAFLEX (attractive injectible franchise) and BELBUCA (pain patch).

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


  • Wallace Weitz Comments on Motorola Solutions

    Motorola Solutions (NYSE:MSI) is a global leader in commercial radio systems and public safety communication infrastructure products and services. Motorola Solutions’ shares benefited from board membership and capital infusion by respected technology private equity firm SilverLake Partners, and reduced fears that the company’s core public safety radio products were becoming obsolete. Furthermore, Motorola’s aggressive share repurchase throughout the last 12 months increased per share value. We believe Motorola Solutions will continue to repurchase shares as long as the stock price remains at attractive levels.

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


  • Wallace Weitz Comments on Martin Marietta Materials

    Martin Marietta Materials (NYSE:MLM) is a producer of sand, gravel, aggregates and cement (products for the construction industry). During the trailing twelve months, Martin’s aggregates volumes, pricing, and incremental margins exceeded investor expectations, as non-residential and public construction showed broad-based strength. The outlook for public volumes over the next several years improved with the passing of the 5-year federal highway bill, dubbed Fixing America’s Surface Transportation (FAST) Act, and with state Department of Transportation budgets expanding. Martin also increased, for the third time, its synergy cost-savings target for the 2014 Texas Industries acquisition from the original $70 million to $120 million. They sold their California Oro Grande cement operation for $420 million the proceeds of which will be used towards their 20 million share repurchase program. The culmination of these positive events pushed Martin Marietta’s stock price above our estimate of intrinsic value, and we exited our position during the third quarter of 2015.

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


  • Wallace Weitz Comments on Alphabet

    Alphabet (NASDAQ:GOOGL) is a multinational technology company generally specializing in Internet related services and products. Alphabet’s core search business (Google) delivered strong operating results which eased investor fears that the company’s primary search advertising products would not be as relevant on mobile phones as on desktops. Alphabet’s shares rose, as investors priced in a higher rate of long-term growth, renewed operating expense discipline and the announcement of the company’s first capital return program. We opportunistically trimmed our position, as the stock price approached our estimate of business value.

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


  • Weitz Partners Value Fund 1st Quarter 2016 Commentary

    Martin Marietta Materials is a producer of sand, gravel, aggregates and cement (products for the construction industry). During the trailing twelve months, Martin’s aggregates volumes, pricing, and incremental margins exceeded investor expectations, as non-residential and public construction showed broad-based strength. The outlook for public volumes over the next several years improved with the passing of the 5-year federal highway bill, dubbed Fixing America’s Surface Transportation (FAST) Act, and with state Department of Transportation budgets expanding. Martin also increased, for the third time, its synergy cost-savings target for the 2014 Texas Industries acquisition from the original $70 million to $120 million. They sold their California Oro Grande cement operation for $420 million the proceeds of which will be used towards their 20 million share repurchase program. The culmination of these positive events pushed Martin Marietta’s stock price above our estimate of intrinsic value, and we exited our position during the third quarter of 2015.

      


  • Weitz Value Funds' 1st Quarter 2016 Commentry

    Martin Marietta Materials (NYSE:MLM) is a producer of sand, gravel, aggregates and cement (products for the construction industry). During the trailing twelve months, Martin’s aggregates volumes, pricing, and incremental margins exceeded investor expectations, as non-residential and public construction showed broad-based strength. The outlook for public volumes over the next several years improved with the passing of the 5-year federal highway bill, dubbed Fixing America’s Surface Transportation (FAST) Act, and with state Department of Transportation budgets expanding. Martin also increased, for the third time, its synergy cost-savings target for the 2014 Texas Industries acquisition from the original $70 million to $120 million. They sold their California Oro Grande cement operation for $420 million the proceeds of which will be used towards their 20 million share repurchase program. The culmination of these positive events pushed Martin Marietta’s stock price above our estimate of intrinsic value, and we exited our position during the third quarter of 2015.

      


  • Wallace Weitz Comments on MasterCard

    MasterCard (NYSE:MA) ($95 per share) is basically a royalty on global consumer spending. Regardless of near-term economic growth rates, MasterCard is likely to be able to produce 10-15% annual earnings per share growth over the next several years. Its stock price is also near our appraised value, but if earnings grow at 10-15% per year, they will double in 5-7 years. Even if the P/E paid by investors shrinks a bit, our total return should be very attractive.

    From Wallace Weitz (Trades, Portfolio)'s First Quarter Value Matters.   


  • Wallace Weitz Comments on TransDigm

    TransDigm (NYSE:TDG) ($220 per share) makes (primarily replacement) parts for the aerospace industry. The company is typically one of two or three suppliers (sometimes the sole supplier) of important but relatively low-cost parts for commercial and military aircraft. As such, they enjoy fairly predictable sales volume and strong pricing power. Growth comes through acquisition and from a rising number of aircraft in service. The company is an active, but very disciplined, acquirer. They buy parts producers, squeeze costs out of the manufacturing process and gradually raise prices. Management is very disciplined in adhering to its investment criteria, and when acquisition candidates are not available, they return cash to shareholders through share buybacks and large special dividends. Although the stock price is close to our appraised business value, we think the likelihood of further consistent growth, regardless of economic conditions, will reward us for continuing to own the stock over the years.

    From Wallace Weitz (Trades, Portfolio)'s First Quarter Value Matters.   


  • Wallace Weitz Comments on Wells Fargo

    Wells Fargo (NYSE:WFC) ($49 per share) is one of the country’s largest banks, but it has avoided most of the headaches (and risks) associated with the global “money center” banks. It has a strong, conservative lending culture and it added an enormous quantity of cheap deposits during the financial crisis of 2007-09 by acquiring troubled banks. (It also has Warren Buffett (Trades,Portfolio), as a 10% owner, looking over its shoulder.) Wells has suffered compressed net interest margins (as has Redwood) in this period of artificially low rates, yet its earnings have grown to over $4 per share in fiscal year 2014 and again in 2015. When interest rates rise, Wells Fargo’s margins should widen, earnings should increase and the price investors are willing to pay for those earnings (P/E) may increase.

    From Wallace Weitz (Trades, Portfolio)'s First Quarter Value Matters.   


  • Wallace Weitz Comments on Redwood Trust

    Redwood Trust (NYSE:RWT) ($13 per share) is a “value investor” in mortgages and mortgage securities. It has a culture of prudence, great skills in credit risk assessment and a focus on growth in per share value. The company has struggled to earn good returns in this period of suppressed interest rates yet has continued to pay the dividend that now provides approximately a 9% yield. It has recently made strategic moves that we think position it for more predictable growth going forward. The stock sells at a 14% discount to book value, and we believe it will sell at or above book value again. We think the ingredients are in place for double-digit annual returns over the next few years regardless of what happens to the S&P 500.


    From Wallace Weitz (Trades, Portfolio)'s First Quarter Value Matters.   


  • Wally Weitz's First Quarter Value Matters

    Dear Fellow Investor:

      


  • Liberty Broadband, Hanmi Bank Among Popular Micro-Cap Stocks

    Much like small-cap stocks, micro-caps offer a chance of a high return, but also present more risk and volatility. Micro-caps are generally defined as companies with a capitalization between $50 million and $300 million.


    The All-in-One Screener offers more than 150 filters to sort stocks, including a filter to sort by market cap. The following five stocks were some of the most popular micro-caps purchased by the gurus during the fourth quarter.

      


  • Weitz Funds Annual Overview of the Small/Mid-Cap Strategy

    Financial markets entered a renewed period of volatility, beginning in the second half of 2015. Many (if not most) financial journalists and market pundits refer to the large-company-centric S&P 500® Index as their benchmark for “the market.” While this index finished the rollercoaster-like final six months of the calendar year relatively unchanged from its halfway point (+0.15%), investors were subjected to abrupt declines in the opening weeks of 2016–falling by as much as 10.27% at the February 11 low.



    For investors focused on small -and mid-sized (SMID) companies the experience has been more painful. The Russell 2500™, our strategy’s benchmark, fell 7.36% in the back half of 2015 before dropping an additional 14.55% at the same February 11 market low. The combined decline of 20.84% from June 30, 2015, to the market low meets many investors’ technical definition of a Bear Market (a decline of 20% or more).
      


  • Wallace Weitz Reduces Stake in Oracle

    The number of stakes Wallace Weitz (Trades, Portfolio), portfolio manager of Weitz Value Fund, Weitz Hickory Fund and Weitz Partners Value Fund, reduced in the fourth quarter far outnumbered his new buys, exited positions and adds to existing stakes.


    Weitz’s most significant reduction was his sale of nearly 70% of his stake in Oracle Corp. (NYSE:ORCL), a Redwood City, California-based computer technology company. Weitz sold 994,384 shares for an average price of $38.22 per share. The deal had a -1.13% impact on Weitz’s portfolio.

      


  • Wally Weitz Discusses Red Flag That Preceded His Valeant Sale

    Investing guru Wally Weitz will appear on Consuelo Mack's WealthTrack Feb. 26 to talk about the offhand dinner comment by Valeant Pharmaceuticals' CEO Michael Pearson that made him cautious about the company, which he ultimately sold. Other gurus, such as Bill Ackman (Trades, Portfolio) and Sequoia Fund, continued to hold Valeant (NYSE:VRX) stock as controvery caused its price to plunge last year.


      


  • Wallace Weitz Exits Stake in Alphabet, Cuts Oracle

    Wallace Weitz (Trades, Portfolio) established Weitz Investment Management in 1983. During the fourth quarter, he sold out many of his holdings.


    The guru exited his positon in Valeant Pharmaceuticals International Inc. (VRX) and the deal had an impact of -3.52% on the portfolio.

      


  • Weitz Funds Comments on Redwood Trust

    Redwood Trust (NYSE:RWT) invests in mortgage-related and other real estate-related assets and is engaged in residential and commercial mortgage banking activities. A volatile interest rate environment and increased competition in each of Redwood Trust’s business segments (residential and commercial mortgage banking) has resulted in lower than expected volumes and profitability through 2015. Despite difficult market conditions, the company has remained profitable in each of its business segments. Redwood Trust continues to enhance its competitive advantage across its platforms and remains well positioned to take advantage of potential government-sponsored enterprise reform, what we believe will be the eventual revitalization of private-label residential securitization and new commercial investment opportunities. We believe Redwood’s market valuation of less than book value overly discounts Redwood’s future earning capabilities. While we wait for the value to be realized, a dividend yield of nearly 8.5% should enhance future total return.


    From Weitz Funds' Balanced Fund fourth quarter 2015 commentary.

      


  • Weitz Funds Comments on Laboratory Corporation of America Holdings

    Laboratory Corporation of America Holdings (NYSE:LH) offers testing services used by medical professionals in core testing, patient diagnosis and the monitoring and treatment of disease. LabCorp shares rose during the fourth quarter, rebounding after a poor month in September. The company’s most recent financial results showed continued strength in the legacy Diagnostics segment with +5% organic sales growth versus the prior year and a healthy increase in profitability. Results in the still relatively new Covance Drug Development business improved, consistent with management’s expectations earlier in the year. Following a 3-year period of relatively stagnant growth, LabCorp appears poised for a return to healthy, double-digit per share earnings growth over the next several years as the company leverages the commercial strength of its combined operations.


    From Weitz Funds' Balanced Fund fourth quarter 2015 commentary.

      


  • Weitz Funds Comments on EOG Resources

    EOG Resources (NYSE:EOG) is primarily a domestic producer of oil and natural gas with operations focused in most of the productive basins in the United States (the Eagle Ford, Permian and Bakken, among others). Shares of EOG Resources fell largely in sympathy with oil prices during the quarter. While EOG continues to set the standard for cost and capital efficiency among independent domestic oil producers, lower prices continue to weigh on returns and cash generation. The global crude market still has a ways to go before supply and demand come into balance, but when it does, we see oil prices significantly higher than present levels. EOG is likely among the best-positioned producers in a rising-price environment given its large inventory of drilled uncompleted wells (DUCs), high-return drilling opportunities and healthy balance sheet.


    From Weitz Funds' Balanced Fund fourth quarter 2015 commentary.

      


  • Weitz Funds Comments on Amazon

    Amazon (NASDAQ:AMZN) is an e-commerce and cloud computing company. While the company’s retail business is seemingly ubiquitous, we believe that Amazon has built a considerable and globally- competitive advantage that will successfully challenge for significant share of the worldwide retail (not just e-commerce) market. The company has a long runway of growth ahead; Amazon’s strong, customer- obsessed culture is unique among technology and retail firms, and its long-term investment philosophy allows for a continuous flow of new product ideas. In addition to the retail business, the company’s Amazon Web Service business has built significant share and scale within the infrastructure as a service sector of technology. This business is highly profitable and participates in a large and growing market.

      


  • Weitz Funds Comments on Allergan

    Allergan (NYSE:AGN) is a global specialty pharmaceutical company focusing on the development, manufacturing, marketing and distribution of generic, brand name, biosimilar and over-the-counter (OTC) pharmaceutical products. Shares of Allergan were volatile during the quarter, providing us the opportunity to meaningfully increase our position at attractive prices. Following several months of speculation, Pfizer and Allergan announced their intention to combine on November 23rd. Assuming the deal is consummated as presently structured, Allergan shareholders would receive 11.3 shares of the combined Pfizer-Allergan for each existing Allergan share. Potential tax and regulatory hurdles remain, but we are optimistic on Allergan’s business prospects in either scenario - standalone or in combination with Pfizer. We have generally positive impressions from ongoing diligence on Pfizer’s business.


    From the Weitz Funds' Research Fund shareholder letter for fourth quarter 2015.

      


  • Weitz Funds Comments on Research Fund

    Post Holdings (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, 2015 stock appreciation was due to the acquisition of Malt-O-Meal Brands, which strengthened the company’s cereal business. In addition, Post 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.


    From the Weitz Funds' Research Fund shareholder letter for fourth quarter 2015.

      


  • Wallace Weitz Comments on Avon Products

    Avon Products (NYSE:AVP) is a manufacturer and marketer of beauty and related products. Avon’s turnaround has been hampered by the difficulties imposed by an emerging market slowdown and the strength of the US dollar temporarily impairing the company’s operating profits and cash flow. Despite headwinds, Avon continues to make progress in identifying and fixing the challenges involving representative engagement and the company’s supply chain. The recent decision to raise equity and sell Avon’s North American business should help accelerate the growth of revenue and earnings. We trimmed our position during the fourth quarter to harvest a tax loss.


    From the Weitz Funds' Hickory Fund shareholder letter for fourth quarter 2015.

      


  • Wallace Weitz Comments on National CineMedia

    National CineMedia (NASDAQ:NCMI) operates digital, in-theatre media networks through which it sells advertising and promotions. Throughout 2015, National CineMedia consistently reported solid fundamental results, as its strategic shift to participate in the “upfront” advertising market (pre-selling ad inventory for the upcoming year) paid off in higher overall sell-through. National CineMedia was the beneficiary of a strong pricing environment in addition to marketers’ willingness to experiment with sight and sound media beyond the traditional 30-second TV spot. Furthermore, the company was also likely a beneficiary of investors’ enthusiasm for the pending release of the latest installment of the Star Wars franchise.


    From the Weitz Funds' Hickory Fund shareholder letter for fourth quarter 2015.

      


  • Wallace Weitz 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 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 a share. We sold our position as the stock price exceeded our revised estimate of business value.


    From the Weitz Funds' Hickory Fund shareholder letter for fourth quarter 2015.

      


  • Risk and Reward in Avon Products

    Headquartered in New York City, Avon (AVP) is an international manufacturer and direct selling company in the beauty, household and personal care categories. The company is currently paying close to 10% in dividends to investors, pleading with the market to wait for the turnaround. It could be a profitable thing to do, at least in the short term. Just last month, the stock was in the $4.00 range and now at $2.56 (as of 1:53 pm EDT), it looks interesting, especially with faces of the brand like Maria Sharapova, Lucy Hale, Julianne Hough, and Fergie still relevant in today’s hyper socially-connected world.


      


  • Wallace Weitz Comments on Colfax

    Colfax (NYSE:CFX) is a leading manufacturer of pumps, gas handling products and welding equipment. The company was founded by Mitch and Steve Rales, who also founded the Danaher Corporation. They, along with several Danaher alums, created the Colfax Business System (CBS), which is modeled after the highly successful Danaher Business System. CBS is a both a management philosophy and a set of tools based on the concept of continuous improvement. Colfax believes that it can apply CBS to drive organic sales growth and expand margins at its current businesses in addition to future bolt-on and platform acquisitions. Although the company is experiencing declining sales as several of its primary end markets, including oil & gas, power generation and mining are suffering through an extended downturn, we believe that Colfax will manage through this period and emerge larger and stronger.

    From Wallace Weitz (Trades, Portfolio)'s fourth quarter 2015 Partners Value Fund 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’s stock was weighed down by concerns surrounding watch category growth globally and lowered 2015 guidance, particularly in the watch category. 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 wholesale partners, as they remain cautious around smartwatches and an uncertain consumer environment. We view these as cyclical not secular headwinds. Additionally, Fossil experienced weakness as their largest licensed brand, Michael Kors, reported a material deceleration in their North American business. In the future, Fossil 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. In the most recent quarter, management postponed share repurchase for 12 months in conjunction with their acquisition of Misfit, a wearable products developer.


    Fossil Group Investors view Fossil’s acquisition of Misfit as an action driven out of necessity; conversely, we think management saw an opportunity to participate (and accelerate progress) in a large and rapidly growing, connected accessories space. 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.

      


  • 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 women’s and men’s fashion. Iconix shares declined throughout the year as a litany of items, including a change in senior management, an accounting restatement, an ongoing SEC review and disappointing results from the Peanuts and men’s fashion brands resulted in a reduction of revenue and cash flow guidance for 2015 and 2016. We have talked to management about these issues and their plans to fund a $300 million convertible maturity in June of 2016. Iconix remains a small allocation as we continue to evaluate the newly appointed management team’s progress.

    From Wallace Weitz (Trades, Portfolio)'s fourth quarter 2015 Partners Value Fund commentary.  


  • Wallace Weitz Comments on Liberty Media

    Liberty Media (NASDAQ:LMCA) owns interests in subsidiaries and other companies that are engaged in the media, communications and entertainment industries. Liberty Media’s principal asset, SiriusXM, posted terrific results this year, as the combination of strong new car sales and solid traction with its used car sales channels led to consistently better-than-expected results. In mid-November, Liberty Media announced a plan to recapitalize the company into three tracking stocks: Liberty Sirius Group (tracking LMCK’s 61% ownership of SIRI), Liberty Braves Group (tracking the Atlanta Braves baseball club including the associated real estate developments surrounding the new stadium) and “new” Liberty Media Group (principally Live Nation and assorted smaller investments). We view the creation of these new tracking stocks positively, as it will afford investors greater clarity into Liberty’s collection of assets and, hopefully, help narrow the gap between Liberty Media’s current stock price and our estimate of business value.

    From Wallace Weitz (Trades, Portfolio)'s fourth quarter 2015 Partners Value Fund commentary.  


  • Wallace Weitz Comments on Endo International

    Endo International (NASDAQ:ENDP) is a specialty healthcare company engaged in developing, manufacturing, marketing and distributing branded pharmaceutical and generic products and medical devices. Amid widespread pressure in the pharmaceutical market, news at Endo was mixed during the quarter. The company recorded a significant impairment charge in November relating to its recent acquisition of Auxilium. While management had hinted at some early challenges with Auxilium’s topical testosterone products and STENDRA (a competitor to Viagra in the ED market), CEO Rajiv De Silva formally announced Endo would be de-emphasizing and/or selling these products. This decision increases Endo’s dependence upon its primary growth drivers (recently acquired Par Pharmaceutical, Xiaflex and new pain product BELBUCA), which we believe will drive attractive organic sales growth during the next several years. News of a renewed 8-year commercial agreement with Novartis for Voltaren Gel was a distinct positive. We added to our position below $60 per share during the quarter.

    From Wallace Weitz (Trades, Portfolio)'s fourth quarter 2015 Value Fund commentary.  


  • Wallace Weitz Comments on Valeant Pharmaceuticals

    Valeant Pharmaceuticals (NYSE:VRX) is a multinational, specialty pharmaceutical and medical device company that develops, manufactures and markets a broad range of brand name, generic, branded generic and over-the-counter (OTC) products in over 100 countries. We closed the firm’s position in Valeant toward the end of October. The stock came under heavy selling pressure in September as a result of increased political scrutiny regarding the increasing cost of prescription drugs. We believed pricing risks were (and are) real and growing but navigable. Our base-case business value estimate assumed (and had always assumed) minimal contribution from future price increases. In October, however, questions arose about the possibility of wrongdoing and questionable disclosure regarding Philidor, an “alternative fulfillment” pharmacy Valeant used to distribute portions of its dermatology medications. Our decision to sell was ultimately based on a combination of difficult to answer questions, Valeant’s potential long-term reputational impact, future business model uncertainty, and financial leverage. We also had competing uses for capital in healthcare with more attractive risk-reward profiles. While our investment in Valeant ended on a disappointing note, it was a healthy multi-year contributor to performance.

    From Wallace Weitz (Trades, Portfolio)'s fourth quarter 2015 Value Fund commentary.  


  • Wallace Weitz Comments on Allergan

    Allergan (NYSE:AGN) is a global specialty pharmaceutical company focusing on the development, manufacturing, marketing and distribution of generic, brand name, biosimilar and over-the-counter (OTC) pharmaceutical products. Shares of Allergan were volatile during the quarter, providing us the opportunity to meaningfully increase our position at attractive prices. Following several months of speculation, Pfizer and Allergan announced their intention to combine on November 23rd. Assuming the deal is consummated as presently structured, Allergan shareholders would receive 11.3 shares of the combined Pfizer-Allergan for each existing Allergan share. Potential tax and regulatory hurdles remain, but we are optimistic on Allergan’s business prospects in either scenario - standalone or in combination with Pfizer. We have generally positive impressions from ongoing diligence on Pfizer’s business.

    From Wallace Weitz (Trades, Portfolio)'s fourth quarter 2015 Value Fund commentary.  


  • Wallace Weitz Comments on Monsanto

    Monsanto (NYSE:MON) is a provider of seeds and biotech traits for corn, soybeans and cotton. At the company’s November investor meeting, the company provided a road map for double-digit growth over the next several years. We believe they are capable of making this happen. Despite not yet participating in the latest round of industry consolidation, Monsanto is still the best positioned seed company in the industry due its significant portfolio of intellectual property and cutting edge breeding and testing capabilities.

    From Wallace Weitz (Trades, Portfolio)'s fourth quarter 2015 Value Fund commentary.  


  • Wallace Weitz Comments on Twenty-First Century Fox

    Twenty-First Century Fox (NASDAQ:FOXA) is a diversified media and entertainment company. Shares of Twenty-First Century Fox suffered for many of the same reasons as Discovery’s did: overall industry concerns over the fraying of the pay-TV bundle in addition to muted growth from its otherwise healthy stable of international properties. Fox broadcast network ratings (with the exception of sports broadcasts) have also been more challenged than an already tough industry comparison. Despite these challenges, we are encouraged by the opportunity for continued improvement at both Fox’s domestic channels (where underperforming networks have been rebranded and ratings have been improving; e.g., Fox Sports 1 and FXX) and continued growth opportunities for international properties, like Star India.

    From Wallace Weitz (Trades, Portfolio)'s fourth quarter 2015 Value Fund commentary.  


  • Wallace Weitz Comments on Discovery Communications

    Discovery Communications (NASDAQ:DISCA) is a leading provider of pay-TV programming with an emphasis on lower-cost, fully-owned, nonfiction content that appeals to global audiences. Despite positive business developments through 2015, shares of Discovery and other media stocks generally suffered as investors became more skeptical of traditional pay-TV’s staying power. Modest subscriber declines reported by cable and satellite TV providers in addition to falling ratings through 2015 led many to conclude that the whole pay-TV ecosystem was unravelling in an accelerating fashion. Exacerbating the perception problem for Discovery was the strength of the US dollar, which muted continued strong growth in the company’s strategic portfolio of international channels. Although the traditional video bundle may get “skinnier,” we believe that the traditional cable system will continue to persist and that Discovery’s content remains a “must have” for subscribers. The company’s ownership of its content also affords it the flexibility to begin offering it directly (via mobile apps), a recent industry trend. From today’s price, we believe the stock has above average return potential.

    From Wallace Weitz (Trades, Portfolio)'s fourth quarter 2015 Value Fund 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. Natural gas producers’ end markets went from bad to worse during the fourth quarter. Domestic oversupply worsened thanks to extremely mild winter weather. Per consultancy RBN Energy, heating demand (as measured by heating degree days) was 25% below its 30-year average through the first nine full weeks of winter. This lack of demand pushed local natural gas prices to roughly $1.00 throughout much of the Northeast. The near-term pain will negatively impact Range’s 2016 cash flows but should help accelerate the decline in drilling activity across the Marcellus Shale. Range successfully executed the sale of its Nora assets for $876 million just before year end, providing the company with some additional cushion to navigate what looks like another tough couple of quarters ahead. Longer-term, we continue to like Range’s asset quality and management, and believe both natural gas and oil prices are well below equilibrium price levels. We purchased additional shares over the past quarter on price weakness.

    From Wallace Weitz (Trades, Portfolio)'s fourth quarter 2015 Value Fund commentary.  


  • Wallace Weitz Comments on Catamaran Corp

    Catamaran Corporation (NASDAQ:CTRX) is a provider of pharmacy benefit management services and healthcare IT solutions to the healthcare benefit management industry. UnitedHealth Group completed its purchase of Catamaran this past summer for $61.50 per share in cash. While we were disappointed to lose a potential “compounder” early on in our investment, we believe we received full and fair value for our shares. We continue to have exposure to the attractive pharmacy benefit management (PBM) segment through a position in Express Scripts.

    From Wallace Weitz (Trades, Portfolio)'s fourth quarter 2015 Value Fund commentary.  


  • Wallace Weitz Comments on Alphabet

    Alphabet (NASDAQ:GOOGL) is a multinational technology company generally specializing in internet related services and products. Alphabet’s core search business delivered strong operating results which eased investor fears that the company’s primary search advertising products would not be as relevant on mobile phones as on desktops. Additionally, the share price also rose due to the company’s decision to provide more financial information on individual operating units beginning in 2016. We believe this is a positive move, as it may entail further disclosures of both the highly profitable Google Internet Services business and the company’s other venture investments. We trimmed our position during the fourth quarter as the stock price approached our estimate of business value.


    From Wallace Weitz (Trades, Portfolio)'s fourth quarter 2015 Value Fund commentary.

      


  • Wallace Weitz Comments on Martin Marietta Materials

    Martin Marietta Materials (NYSE:MLM) is a producer of sand, gravel, aggregates and cement (products for the construction industry). During the year, Martin’s aggregates volumes, pricing and incremental margins exceeded investor expectations as non-residential and public construction showed broad-based strength. The outlook for public volumes over the next several years improved with the passing of the 5-year federal highway bill, dubbed Fixing America’s Surface Transportation (FAST) Act, and state Department of Transportation budgets expanded. Martin also increased its synergy cost-savings target for the Texas Industries acquisition for the third time from the original $70 million to $120 million and sold their California Oro Grande cement operation for $ 420 million. The proceeds will be used towards their 20 million share repurchase program. A culmination of these positive events pushed Martin Marietta’s stock price above our estimate of intrinsic value, and we exited our position during the third quarter.

    From Wallace Weitz (Trades, Portfolio)'s fourth quarter 2015 Value Fund commentary.  


  • Weitz Partners Value Fund 4th Quarter Commentary

    Calendar Year Contributors

      


  • Weitz Value Fund 4th Quarter Commentary

    Calendar Year Contributors


    Martin Marietta Materials (NYSE:MLM) is a producer of sand, gravel, aggregates and cement (products for the construction industry). During the year, Martin’s aggregates volumes, pricing and incremental margins exceeded investor expectations as non-residential and public construction showed broad-based strength. The outlook for public volumes over the next several years improved with the passing of the 5-year federal highway bill, dubbed Fixing America’s Surface Transportation (FAST) Act, and state Department of Transportation budgets expanded. Martin also increased its synergy cost-savings target for the Texas Industries acquisition for the third time from the original $70 million to $120 million and sold their California Oro Grande cement operation for $ 420 million. The proceeds will be used towards their 20 million share repurchase program. A culmination of these positive events pushed Martin Marietta’s stock price above our estimate of intrinsic value, and we exited our position during the third quarter.

      


  • Weitz Analyst Corner - A Perspective on Twenty-First Century Fox

    Twenty-First Century Fox (“Fox”)(NASDAQ:FOXA) is a global, diversified media company. Its primary operations are film and television production; a collection of global entertainment; sports and news cable networks; the Fox broadcast network and local TV broadcast stations.

      


  • 5 Stocks Reach 5-Year Lows

    According to GuruFocus list of five-year lows, these guru stocks have reached their five-year lows: Iron Mountain Inc. (NYSE:IRM), FMC Corp. (NYSE:FMC), Liberty Property Trust (NYSE:LPT), Range Resources Corp. (NYSE:RRC), BOK Financial Corp. (NASDAQ:BOKF).


    Iron Mountain Inc. reached $24.84

      


  • Wally Weitz Gives Rare Early Look at 4th Quarter Portfolio

    Wallace Weitz (Trades, Portfolio), founder and chief investment officer of Weitz Investments, on Friday gave a rare mid-quarter update of some changes he made to a portfolio that he manages, the Partners III Opportunity Fund.


    Weitz, whose investing follows in the footsteps of Benjamin Graham and Warren Buffett (Trades, Portfolio), bought one new position to date in the fourth quarter: Colfax Corp. He also eliminated five positions: Valeant Pharmaceuticals International Inc. (NYSE:VRX), Endo International plc, Equity Commonwealth, Cumulus Media Inc. and Angie’s List Inc. Usually, managers only disclose portfolio changes up to 45 days after the end of the quarter as required by the Securities and Exchange Commission.

      


  • Ruane Cunniff's Top New Buys of 3rd Quarter

    Ruane Cunniff was founded by William Ruane. The Fund’s investment objective is long-term growth of capital. In pursuing this objective the Fund focuses on investing in equity securities that it believes are undervalued at the time of purchase and have the potential for growth.


    In total, the portfolio has a value of $19.485 billion and is composed of 149 stocks; nine stocks got new positions in the portfolio in the third quarter.

      


  • Wallace Weitz Discusses Philosophy on Investing

    Wallace Weitz (Trades, Portfolio) offered his insights at Texas Lutheran University.


      


  • Eric Mindich Sells Stakes in Catamaran and Alphabet in 3rd Quarter

    Eton Park was founded in 2004 by Eric Mindich (Trades, Portfolio). It is a global alternative investment firm that seeks to provide investors with superior, risk-adjusted returns over the long term. Eton Park invests on behalf of charitable organizations, endowments, pension funds, family offices and others worldwide.


    During the third quarter Mindich sold out 11 stakes and reduced another four; the following are his largest sales during the quarter.

      


  • A Look at Most Recent Insider Trades

    The All-In-One Screener can be used to find insider buys and sales over the last week by clicking on the Insiders tab and changing the settings for All Insider Buying/All Insider Selling to “$1,000,000+” and duration to "November 2015."


    According to the above filters, the following are the recent buys from company insiders in the past week.

      


  • Wallace Weitz Sells Stake in Martin Marietta Materials

    Wallace Weitz (Trades, Portfolio) of Weitz Investment Management, where he is portfolio manager for Weitz Value Fund, Weitz Hickory Fund and Weitz Partners Value Fund, has an investing philosophy that is best described as a blend. It combines price sensitivity and margin of safety with a belief in a marketplace version of free will.


    Weitz Partners Fund recorded returns exceeding 30% in 2013.

      


  • Why Wallace Weitz Added to Stake in Redwood Trust

    For the second quarter in a row, Wallace Weitz added to his position in Redwood Trust Inc. (NYSE:RWT), which brings his firm's ownership to 7.4% of Redwood Trust's outstanding shares. Other gurus who own Redwood Trust include NWQ Managers (Trades, Portfolio) and Arnold Schneider (Trades, Portfolio).


    Redwood is a somewhat unique REIT that has both a securities portfolio and a taxable securitization business. The investment portfolio owns a variety of consumer and commercial mortgage securities that generate interest income and may provide price appreciation. The securitization and whole loan platform earn fees from RMBS securitizations and residential and commercial whole loan sales. This business also generates securities that are purchased internally for the securities portfolio. The firm is internally managed and is flexible in the securities they can own, strategies they can initiate and how they want to generate fees through their securitization/whole loan platform.

      


  • Weitz Funds Comments on Praxair

    Praxair (NYSE:PX) is an industrial gas supplier of Oxygen, Argon, Hydrogen and Helium in North and South America, Asia and Europe. These gases are integral to many industrial processes yet are often a tiny fraction of overall production costs. As a result, the industry is consolidated with only four global rational participants, which translates into pricing power for Praxair. Roughly a quarter of the company’s industrial gas production is under “take or pay” arrangements, providing coverage of fixed costs in downturns. Praxair management has proven to be excellent operators and capital allocators. The recent industrial sector downturn provided an opportunity for purchase. Prior to purchase, the company had been on our “On-Deck” list for several years.

      


  • Weitz Funds Comments on MRC Global

    MRC Global (NYSE:MRC) is a distributor of pipes, valves, fittings and related products to the upstream, midstream and downstream energy industries. A glut of global oil supply, growing demand uncertainty and a more discerning credit market have resulted in continued declines in oil field activity levels and fears of delays in larger pipeline and petrochemical projects. In August, MRC management sounded a more cautious tone about the possibility of a pickup in demand during 2016. Despite a challenging near-term outlook, we believe MRC’s competitive position in the industry continues to improve and that its earnings and cash flows will be significantly higher when activity levels return to more normal levels.

      


  • Weitz Funds Comments on MasterCard

    MasterCard (NYSE:MA) is the world’s second largest payment network and one of the best known global brands, needing little introduction. The Fund began building a position below $85 during the broader market swoon in August at a nice discount to our base case estimate of intrinsic value. MasterCard is among the most attractive businesses we own. Its network is well entrenched within the plumbing of payment systems across the globe, 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. We would welcome additional opportunities to add to the Fund’s position.

      


  • Weitz Funds Comments on Redwood Trust

    Redwood Trust (NYSE:RWT) invests in mortgage-related and other real estate-related assets and is engaged in residential and commercial mortgage banking activities. A volatile interest rate environment and increased competition in each of Redwood Trust’s business segments (residential and commercial mortgage banking) has resulted in lower than expected volumes and profitability through the first three quarters of 2015. Despite difficult market conditions, the company has remained profitable in each of its business segments. Additionally, Redwood continues to enhance its competitive advantage across its platforms and remains well positioned to take advantage of potential government-sponsored enterprise reform, the eventual revitalization of private-label residential securitization and new commercial investment opportunities. In hindsight, the market may have been assigning an overly aggressive timeline to Redwood’s earnings progression. We believe, however, that the market valuation of less than book value now overly discounts Redwood’s future earnings capabilities. While we wait for that value to be realized, a dividend yield of nearly 8% should enhance future total return.

    From Wallace Weitz (Trades, Portfolio)'s Balanced Fund commentary for third quarter 2015.   


  • Wallace Weitz Comments on Prestige Murphy USA

    Murphy USA (NYSE:MUSA) is a retail marketing company of motor fuel products and convenience merchandise through a chain of retail stations. Shares of Murphy USA benefited from improving investor sentiment during the third quarter, given its already low valuation, as well as further declines in gas prices. Falling prices at the pump have traditionally led to more favorable margins for Murphy. Furthermore, Murphy continues to make good progress on returning excess capital to shareholders.

    From Wallace Weitz (Trades, Portfolio)'s Hickory Fund commentary for third quarter 2015.   


  • Wallace Weitz Comments on Prestige Brands Holdings

    Prestige Brands Holdings is engaged in the marketing, sales and distribution of brand name, over-the-counter healthcare and household cleaning products to mass merchandisers and drug stores in North America, Australia and other international markets. Prestige’s stock has appreciated due to an improved outlook for their consumer health products and the Company’s recent acquisition of the Monistat brand which appears on track to deliver additional future growth. We eliminated the position in the third quarter when the stock price reached our business value estimate.

    From Wallace Weitz (Trades, Portfolio)'s Hickory Fund commentary for third quarter 2015.   


  • Weitz Funds 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’s stock has been weighed down due to their largest licensed brand, Michael Kors, reporting a material deceleration in their North American business, along with concerns surrounding watch category growth globally. Growth concerns in the U.S. are being driven by sluggish foot traffic in malls and department stores and broad based de-stocking by Fossil’s license partners as they remain cautious ahead of new smartwatch entrants and an uncertain consumer environment. Fossil has added additional licensed brands to their portfolio, including Kate Spade, Tory Burch and Ralph Lauren’s Chaps, which will provide diversification and less exposure to individual brands going forward. We view the headwinds facing the traditional watch industry as cyclical and have taken advantage of investors’ fear of secular decline by adding to our position.


    From Wallace Weitz (Trades, Portfolio)'s Research Fund commentary for third quarter 2015.

      


  • Wallace Weitz Comments on Post Holdings

    Post Holdings (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. The company has been transforming itself from a branded cereal manufacturer into a food holding company with a more growth-oriented portfolio in protein, private label and value cereals. Post’s stock has appreciated due to an improved outlook for Post’s overall businesses and prospects for the recently acquired Malt-O-Meal brands. Prior investor concerns about the impact of Avian Influenza on Post’s Michael Foods unit have become muted as it appeared the outbreak would likely be one-time in nature and the financial impact less than feared. In addition, Post benefited from a capital raise of equity and debt which delivered the business, putting the company in a better position to take advantage of future value-enhancing M&A. We eliminated the position in the third quarter when the stock traded above our business value estimate.

    From Wallace Weitz (Trades, Portfolio)'s Partners Value Fund commentary for third quarter 2015.   


  • Wallace Weitz Comments on Google

    Google (NASDAQ:GOOGL) is a multinational technology company generally specializing in Internet related services and products. Google’s stock price increased as reported earnings exceeded expectations due to better expense controls and accelerated revenue growth in Google’s core search businesses, where mobile search and YouTube showed particular strength. Furthermore, CFO Ruth Porat provided some hope of returning some of Google’s excess cash to shareholders. While we remain unconvinced that controlling shareholders Brin and Paige will return cash to shareholders as Porat’s comments suggest, we would welcome it as it would provide additional upside to our base case valuation. In addition, the stock price was also helped by the announcement of the creation of a holding company called Alphabet, implemented on Oct. 2, which will consist of several subsidiaries the largest of which will be the Google Internet Services (search, apps, android, YouTube etc.). Alphabet will hold several other companies that used to sit inside Google which represent longer term initiatives not directly related to Internet Services such as Nest, Calico Healthcare and Google Fiber. We believe this is a positive move as it may entail further disclosures of both the highly profitable Google Internet Services business and the company’s other venture investments.

    From Wallace Weitz (Trades, Portfolio)'s Partners Value Fund commentary for third quarter 2015.   


  • Wallace Weitz Comments on Berkshire Hathaway

    Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) is a conglomerate holding company owning subsidiaries engaged in a number of business activities. A tepid insurance outlook caused by a general lack of pricing, combined with a dour near-term outlook for Berkshire’s railroad and industrial businesses has caused Berkshire’s stock price to retreat over the calendar year. With respect to insurance, Berkshire in our view, is behaving properly and building value as it holds capital in anticipation of better future pricing. While the industrial businesses of Berkshire are seeing temporary headwinds we believe they continue to grow and build the per share value of the company. The company’s third quarter purchase of Precision Castparts (a business we own) was at a fair price and represents yet another long-term compounder in the Berkshire portfolio. We have been adding to our position over the calendar year on price weakness.

    From Wallace Weitz (Trades, Portfolio)'s Partners Value Fund commentary for third quarter 2015.   


  • 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 women’s and men’s fashion, entertainment and home segments. Iconix has endured a complete change of senior management with the CFO, COO and CEO all leaving in the first half of the fiscal year. In addition, the company has had to adjust earnings expectations down, as continued disappointment in the men’s division and a shift in timing of revenue from the anticipated November launch of The Peanuts feature film made meeting original guidance difficult. We have revisited our key assumptions behind our Iconix investment and are comfortable that the underlying asset-lite, high margin, licensing business model remains intact. While investors have become nervous about the company’s high leverage, Iconix has minimum revenue guarantees from many of its licensees which provides a reliable stream of free cash flow. Our continued due diligence including conversations with interim CEO Peter Cuneo, who has extensive consumer product licensing experience, provides comfort that Iconix is headed in the right direction. We added to our position over the calendar year on price weakness.

    From Wallace Weitz (Trades, Portfolio)'s Partners Value Fund commentary for third quarter 2015.   


  • Wallace Weitz Comments on Avon Products

    Avon Products (NYSE:AVP) is a manufacturer and marketer of beauty and related products. As management guides the company through an operational turnaround in North America and tries to build a more enduring foundation in all of its markets, Avon continues to suffer from the difficulties imposed by an emerging market slowdown. While Avon has demonstrated some progress in its long turnaround, worries over macroeconomic conditions, the continued strength of the dollar and the weakness of the Brazilian Real have made forecasting difficult. Management has been forced to respond to immediate issues at the expense of longer-term challenges involving representative engagement and the company’s supply chain. We believe management is up to the difficult task of balancing out the company’s short- and long-term investments. Avon has an extensive operating history in Latin America and has managed through several currency crises in these countries. While global challenges remain, the turmoil in Latin America may actually help the company in its recovery as women seek to supplement depressed incomes by selling Avon’s products. We have continued to add to the position over the calendar year on price weakness.

    From Wallace Weitz (Trades, Portfolio)'s Partners Value Fund commentary for third quarter 2015.   


  • Wallace Weitz Comments on TransDigm Group

    TransDigm Group (NYSE:TDG) is a designer, producer and supplier of engineered aircraft components for use on commercial and military aircraft. With the PneuDraulics acquisition having closed in August, TransDigm has officially completed its busiest, and perhaps most attractive, year of acquisitions since fiscal 2011. Heavy on commercial aftermarket assets, the 2015 class should provide a nice multi-year runway for growth and operational improvement. CEO Nick Howley and his team have capitalized on low interest rates and an accommodating credit environment over the past several years, growing the company’s underlying business value at an attractive rate. While we continue to see good things ahead for TransDigm over the next several years, we lightened the Fund’s position during the calendar third quarter as its discount to estimated value narrowed.

    From Wallace Weitz (Trades, Portfolio)'s Partners Value Fund commentary for third quarter 2015.   


  • Wallace Weitz: A Humble and Intelligent Investor

    With the financial markets dropping more than 10% between July and August, it was appropriate that Wallace Weitz, who embodies calmness and discipline, lecture my Texas Lutheran University students. It was homecoming weekend and amid the excitement, we were fortunate to have the man known as “the other Oracle of Omaha” fly down for a two hour question-and-answer session.


      


  • Wallace Weitz Exits Valeant, Issues Statement

    Wallace Weitz (Trades, Portfolio), founder of $5 billion Weitz Investment Management, told investors yesterday via his website that they had jettisoned their entire position in Valeant Pharmaceuticals (NYSE:VRX).


    “While we don't usually comment on individual portfolio holdings intra-quarter, we have received questions regarding Valeant Pharmaceuticals,” The Weitz Funds statement on Valeant said. “Valeant was a very profitable investment for our funds over the past four years. As of the September quarter-end we had significantly reduced our positions. Recent developments about the company’s pharmacy relationships, pricing policies and business practices led us to sell our remaining shares in late October. We no longer own Valeant in our client portfolios or mutual funds."

      


  • My Indirect Experiences With Valeant Pharmaceuticals

    Valeant Pharmaceuticals International Inc. (NYSE:VRX) has been a hot topic recently with high-profile investors and short sellers both involved in one of the most interesting dramas ever. Valeant's shareholder base includes some of the most admired investors including Bill Ackman (Trades, Portfolio), Jeff Ubben (Trades, Portfolio), the Sequoia Fund, Lou Simpson (Trades, Portfolio) and Wallace Weitz. It is really fascinating to watch on the sideline as the events unfold.


    This is not intended to add any personal thoughts on whether or not Valeant’s business is legitimate or not as I don’t know enough about the business to have useful insights. But over the past year, I’ve been exposed to Valeant in a few incidents, which I think may be worthwhile to share with the readers.

      


  • Wallace Weitz's Lecture at Texas Lutheran University

    Wallace Weitz founder of Weitz Investment gave a lecture at Texas Lutheran University recently.


    Wally Weitz at Texas Lutheran University:

      


  • Weitz Funds' Analyst Corner: A Perspective on Equity Commonwealth

    By Nolan Anderson

      


  • Wallace Weitz Comments on Baker Hughes

    Baker Hughes (NYSE:BHI) – Our purchase of Baker Hughes shares during the second quarter was a means of a gaining exposure to Halliburton at a discount (Halliburton and Baker Hughes agreed to merge last November). During the third quarter, we elected to realize a short-term tax loss on our Baker shares and redeployed the proceeds directly into Halliburton.

      


  • Wallace Weitz Comments on Martin Marietta Materials

    Martin Marietta Materials (NYSE:MLM) – Following a reasonably successful seven-and-a-half year holding period, the Fund closed its position as Martin Marietta’s stock price rose above our base case estimate of intrinsic value. We would happily own the business again at a wider discount.

      


  • Wallace Weitz Comments on EOG Resources

    EOG Resources (NYSE:EOG) is primarily a domestic producer of oil and natural gas with operations focused in most of the productive basins in the United States (the Eagle Ford, Permian and Bakken, among others). EOG is widely regarded as one of the best operators in the oil and gas business. Part of the company’s “secret sauce” is a devout commitment to return on invested capital. Not surprisingly, EOG has outperformed its larger peers in this all important category over time and we expect more of the same in the years to come. With oil and gas prices well below our view of the marginal cost of supply and exploration and production (E&P) stocks generally out of favor, we were able to establish a position in EOG in the low-to-mid-$70s at a healthy discount to intrinsic value.

      


  • Wallace Weitz Comments on Allergan

    Allergan (NYSE:AGN) is a global specialty pharmaceutical company focusing on the development, manufacturing, marketing and distribution of generic, brand name, biosimilar and over-the-counter (OTC) pharmaceutical products. Formerly Actavis, the “new” Allergan is a collection of significant acquisitions over the past 4-5 years, including Watson Pharmaceuticals, Warner Chilcott, Forest Laboratories and legacy Allergan. In late July, Allergan announced the divestiture of its global generics business to Teva for $40.5B, which we believe is a terrific sale price for AGN. Assuming the transaction closes as expected, Allergan should begin calendar 2016 as a pure-play branded pharmaceutical manufacturer with high single digit annual growth prospects and a reloaded balance sheet. We believe the stock is compelling at current prices.

      


  • Wallace Weitz Comments on Valeant Pharmaceuticals International

    Valeant Pharmaceuticals International (NYSE:VRX) – Following a strong calendar second quarter, Valeant shares came under pressure during September as a high-profile presidential hopeful and portions of the popular press called drug industry pricing practices into question. While stocks across the pharmaceutical industry have given back recent gains, Valeant has been hit particularly hard after being mentioned alongside a couple of unscrupulous actors. While Valeant has significantly raised the list prices of several of the drugs it has recently acquired, large price increases have not been the primary driver of the company’s earnings growth. Perhaps more importantly, neither we nor the company believe they are necessary to fuel the company’s future growth. After significantly trimming our position during the third quarter, we began selectively adding to the position in October for the first time in several years below $170/share.

      


  • Wallace Weitz Comments on Liberty Global

    Liberty Global (NASDAQ:LBTYA) is the largest international cable company with operations in 14 countries providing video, broadband Internet, fixed-line telephone and mobile services to its customers. In the second quarter, investors cheered as Liberty Global and Vodafone entered into formal talks over potential business combinations within their European operations. Although no formal details were released, Wall Street analysts began speculating on the potential for very large cost savings, and shares of both companies appreciated nicely. By the end of the third quarter, however, talks between the two broke down without any deals announced. Such a transaction had not been part of our investment thesis. We remain attracted to the organic growth story for Liberty Global as their leading position in broadband should continue to help them win market share across Europe, along with their shareholder-friendly capital allocation philosophy.

      


  • Wallace Weitz Comments on Precision Castparts Corp

    Precision Castparts Corp (NYSE:PCP) is a manufacturer of complex metal components and products that provides investment castings, forgings and fasteners/ fastener systems for critical aerospace and power applications. On August 10th, Berkshire Hathaway announced an agreement to purchase Precision Castparts (NYSE:PCP) for $235/share, or roughly $37.2 billion including debt (Berkshire’s largest ever acquisition). While the transaction provides a boost to the Fund’s near-term performance, Berkshire is buying Precision at a modest discount to our base estimate of intrinsic value. Losing a long-term compounder early on in our investment horizon is disappointing, but the silver lining in this transaction is that we will continue to own PCP indirectly through our position in Berkshire.

      


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