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Stocks Donald Yacktman and Warren Buffett Both Own: KO, WFC, AXP
Posted by: guruhl (IP Logged)
Date: June 5, 2012 05:13PM
Though Warren Buffett runs an insurance conglomerate and Donald Yacktman a mutual fund, they have similar, value-oriented approaches to investing. Both seek profitable, undervalued companies they can hold for a long period of time. In the first quarter of 2012, they held 12 stocks in common. The top three are: Coca-Cola (KO), Wells Fargo (WFC) and American Express (AXP). See stocks two or more gurus have in common at GuruFocus’ Aggregated Portfolio Screener here.
Warren Buffett owns 200,000,000 shares of The Coca-Cola Company (KO), the world's largest beverage company, valued as $14.8 billion as of March 31, 2012, which accounts for 19.7% of his equity portfolio. Donald Yacktman owns 7,017,876 shares of KO, valued as $519 million as of March 31, 2012, which accounts for 3.5% of his equity portfolio.
Coca Cola sells more than 1.7 billion beverages per day in more than 200 countries. It is also continuing to grow worldwide. It introduced its 15th billion-dollar brand in 2011 with the addition of Del Valle, and incremental organic volume sales grew by 1 billion unit cases in 2011. It had growth in developed markets such as North America, Germany and Japan, as well as double-digit growth in emerging markets such as China and India. Even in the uncertain economic environment of Europe, it delivered 4 percent operating income growth and 2 percent unit case volume growth.
The giant company has invested $30 billion over the next five years to support growth in China, India, the Middle East, Russia and elsewhere.
Coca Cola has the long-term record that Buffett and Yacktman look for. Over the last ten years, Coca Cola has grown revenue at an annual rate of 9.2 percent, EBITDA at 8 percent, and free cash flow at 6.5 percent. It also has a relatively strong return on equity which has remained between 24.8 percent and 37.7 percent in the last ten years.
Coca Cola Co has a market cap of $165.52 billion; its shares were traded at around $73.35 with a P/E ratio of 18.8 and P/S ratio of 3.6. The dividend yield of Coca Cola stocks is 2.8%. Coca Cola had an annual average earnings growth of 8% over the past 10 years. GuruFocus rated Coca Cola the business predictability rank of 3.5-star.
Warren Buffett is a far bigger fan of Wells Fargo than Donald Yacktman. He owns 394,334,928 shares of Wells Fargo (WFC), valued as $13.5 billion as of March 31, 2012, which accounts for 17.9% of his equity portfolio. Donald Yacktman owns 19,200 shares of WFC, valued as $1 million as of March 31, 2012, which accounts for 0.0045% of his equity portfolio. That is after selling almost half of his shares in the first quarter of 2012.
Over the last ten years, Wells Fargo has grown revenue at a rate of 9.3 percent and EBITDA at 2.2%. Its 2011 return on equity and return on assets reached their highest point since 2008 at 11.4 percent and 1.2 percent, respectively.
Wells Fargo & Company is a diversified financial services company providing banking, insurance, investments, mortgage and consumer finance services through stores, its Internet site and other distribution channels across North America as well as internationally.
Wells Fargo has a market cap of $159.17 billion; its shares were traded at around $30.54 with a P/E ratio of 10.4 and P/S ratio of 1.8. The dividend yield of Wells Fargo stocks is 2.9%. Wells Fargo had an annual average earnings growth of 2.2% over the past 10 years. GuruFocus rated Wells Fargo the business predictability rank of 2-star.
Buffett also likes American Express (AXP), a financial services company, more than Yacktman. He owns 151,610,700 shares, valued as $8.8 billion as of March 31, 2012, which accounts for 11.6% of his equity portfolio. Donald Yacktman owns 261,500 shares, valued as $15 million as of March 31, 2012, which accounts for 0.1% of his equity portfolio.
American Express has produced an annual rate of revenue growth of 4.5 percent and free cash flow of 6.9 percent over the last 10 years. EBITDA declined at a rate of 1.7 percent over the last 10 years.
In the first quarter of 2012 the company reached record first-quarter earnings and revenues, due largely to 12 percent higher spending by card holders, excellent credit metrics and good management of expenses.
The company was also able to raise its dividend 11 percent after it ranked among the highest financial companies in a Federal Reserve stress test in the first quarter. The Fed approved the dividend hike and shares repurchases. American Express had $18 billion in cash and securities at the end of the first quarter.
American Express has a market cap of $62.42 billion; its shares were traded at around $53.94 with a P/E ratio of 12.7 and P/S ratio of 2.2. The dividend yield of American Express stocks is 1.5%.
Guru Discussed: Donald Yacktman: Current Portfolio, Stock Picks
Warren Buffett: Current Portfolio, Stock Picks
Stocks Discussed: KO, WFC, AXP,