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Tweedy Browne Global Value Fund Buys 3 New Stocks
Posted by: Holly LaFon (IP Logged)
Date: July 30, 2013 04:46PM
The Tweedy Browne Global Value Fund (TBGVX) is a fund within Tweedy Browne Company LLC, a 93-year-old Ben Graham value firm overseeing $17.4 billion. Tweedy, Browne aims with its Global Value Fund to invest primarily in developed, non-U.S. companies, unless others in the U.S. appear more attractive. The fund, founded in 1993, has approximately $6.2 billion in net assets as of June 30, 2013.
The best regions for the fund in the first quarter were Europe and Japan. In the second quarter, it bought stock of three companies: Banco Santander Brasil (BSBR), Pearson PLC (LSE:PSON) and National Oilwell Varco Inc. (NOV).
National Oilwell Varco Inc. (NOV)
Tweedy Browne purchased 63,747 shares of U.S.-based National Oilwell Varco at $68 per share on average. The stock has since gained 2% to trade for $69.53. The tiny position is 0.087% of the Global Value portfolio.
Tweedy Browne commented on National Oilwell Varco in its second quarter commentary:
The other new holding is National Oilwell Varco (NOV), a leading global manufacturer of drilling rig equipment and consumables to the energy industry. It has a leading market position in the segments of the oil & gas industry that are generating the most growth, deepwater drilling and shale drilling. The company has historically generated high returns on capital, has what we believe to be a conservative balance sheet with minimal debt, and at purchase was trading at a significant discount to our estimate of the company's intrinsic value.
National Oilwell Varco Inc. has a market cap of $29.85 billion; its shares were traded at around $69.53 with a P/E ratio of 12.40 and P/S ratio of 1.40. The dividend yield of National Oilwell Varco Inc. stocks is 0.90%. National Oilwell Varco Inc. had an annual average earnings growth of 28.4% over the past 10 years. GuruFocus rated National Oilwell Varco Inc. the business predictability rank of 2.5-star.
National Oilwell is also trading at a discount according to the Peter Lynch chart:
Pearson PLC (LSE:PSON)
Tweedy Browne bought 370,900 shares of Pearson PLC for £12 per share on average, a 0.13% portfolio weighting. It has since gained 11% to trade for £13.12.
Pearson PLC is an education company producing curriculum materials, multimedia and testing programs, and owns the Financial Times Group and Penguin Random House.
Pearson has a £10.24 billion market cap, P/E of 30.30, which is close to a 10-year high. Its P/S ratio of 2.01 is near a 10-year high. Its P/B ratio of 1.81 is near a two-year low. The dividend yield is 3.43 and earnings growth rate over the past 10 years is 6.9%.
The stock is overvalued according to the Peter Lynch chart:
Banco Santander Brasil (BSBR)
Tweedy Browne bought 14,719,275 shares of Banco Santander Brasil at an average price of $7 per share, equal to 1.8% of the portfolio. Since then, the price declined 13% to $6.17 per share, near a five-year low.
Tweedy Browne commented on Banco Santander in its second quarter letter:
“Although Banco Santander Spain (SAN) is a significant shareholder of Banco Santander Brasil, the Brazilian bank is an independently listed subsidiary with its own management team, board of directors, and capital base. At purchase, Banco Santander Brasil was trading at a discount from book value, below 10 times 2013 estimated earnings, and had a dividend yield of approximately 5%. It has a strong capital position (underleveraged), high net interest margins, and among its three local competitors, it has the highest consumer exposure to the rapidly growing middle class in Brazil. While the company has traded down since our initial purchase, we think largely due to the general sell-off in the emerging markets and the demonstrations in Brazil, we are very positive about the longer term prospects for the company.”
Banco Santander Brasil SA has a market cap of $23.93 billion; its shares were traded at around $6.17 with a P/E ratio of 5.30 and P/S ratio of 0.70. The dividend yield of Banco Santander Brasil SA stocks is 3.20%.
The stock is undervalued according to the Peter Lynch chart:
See Tweedy Browne’s Global Value Fund portfolio here. Also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of Tweedy Browne Global Value.
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Guru Discussed: Tweedy Browne Global Value: Current Portfolio, Stock Picks
Stocks Discussed: BSBR, LSE:PSON, NOV, TBGVX,