Wallace Weitz

Wallace Weitz

Last Update: 01-13-2016

Number of Stocks: 67
Number of New Stocks: 5

Total Value: $3,195 Mil
Q/Q Turnover: 11%

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

Wallace Weitz Watch

  • 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.  


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