Donald Yacktman had been managing money for 15 years when he took over Selected American Shares in 1983. When he left at the end of 1991, over that time frame it was the 5 th best performing mutual fund in the country. He was named Morningstar manager of the year and in 1992 he opened The Yacktman Fund (YACKX). During the late 90’s he resisted the temptation to jump on the tech band-wagon and thrived in the 2000-2002 bear market and 2003 recovery. At the peak of the market in October 2007, with 30% in cash and low exposure to financials, he was prepared for the market crash – over the last year his Focused Fund (YAFFX) is up 22%, nearly 32% ahead of the S&P 500 which puts his funds in the small category of funds that have actually made money since October 2007. Over any 10-yr. rolling period he has beaten the S&P 500 index. GuruFocus has recently reviewed his top holdings here and top purchases here.
Yacktman Fund performance during the recent years is as follows:
| Year | Return (%) | S&P500 (%) | Excess Gain (%) |
|---|---|---|---|
| 2008 | -26.05 | -37 | 11.0 |
| 2007 | 3.39 | 5.61 | -2.2 |
| 2006 | 15.95 | 15.79 | 0.2 |
| 2005 | -1.3 | 4.91 | -6.2 |
| 2004 | 9.93 | 12 | -2.1 |
| 2003 | 33.03 | 28.7 | 4.3 |
| 2002 | 11.41 | -22.1 | 33.5 |
| 2001 | 19.47 | -11.9 | 31.4 |
| 2000 | 13.46 | -9.1 | 22.6 |
| 1999 | -16.9 | 21 | -37.9 |
Brian Yacktman left Yacktman Asset Management to begin his own new venture, founding Yacktman Capital Group, LLC (YCG), a registered investment advisory firm that manages separate accounts. Brian believed in the time-tested investment philosophy of his father and desired to enhance the process through the use of options and active hedging. He has been managing money for over a decade and since establishing the firm back in December 2007, his separate account strategies have performed very well despite the recent turbulent market – year-to-date (throught August 31, 2009) his concentrated option-enhanced portfolio is 20% ahead of the S&P 500. We wish Brian and his firm continued success in his new venture.
We bring Brian into the discussion so answer the questions about options and active hedging that you always wanted to know but dared not to ask.
GuruFocus is thrilled have the opportunity to bring our users access to the knowledge and insights of this dynamic father-son duo.
Post questions by clicking on "Reply to this message". We will collect and edit the questions and send them to both Donald and Brian, and then we will post their answers once we receive them back.
So fire off your questions to both these investment gurus!
The Q&A is closed on October 3, 2009. We no longer take any questions.
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User Comments:
1. Valueradar says on Sep 18, 2009 at 5:46 AM:
Thank you for the opportunity! A few questions:
1. In a recent interview Don mentioned that the spreads of low quality companies was high in March, now it shrank and you are investing in high quality companies. How do you measure the spread? The spread between price and value?
2. How do you value a low quality companies? How do you measure the quality of companies?
3. You mentioned that P&G is high quality, that is understandable. How do you think about USG? To you is it a high quality or low quality company? how do you value USG?
4. At this level of market valuation, how do you think the market will do in the next few years?
5. What valuation parameter do you use, P/E, P/CF, DCF etc? An example will be greatly appreciated.
6. An advice to a young man without finance background who wants to get into investment business?
Thank you very much!
1. In a recent interview Don mentioned that the spreads of low quality companies was high in March, now it shrank and you are investing in high quality companies. How do you measure the spread? The spread between price and value?
2. How do you value a low quality companies? How do you measure the quality of companies?
3. You mentioned that P&G is high quality, that is understandable. How do you think about USG? To you is it a high quality or low quality company? how do you value USG?
4. At this level of market valuation, how do you think the market will do in the next few years?
5. What valuation parameter do you use, P/E, P/CF, DCF etc? An example will be greatly appreciated.
6. An advice to a young man without finance background who wants to get into investment business?
Thank you very much!
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2. Jonmonsea says on Sep 21, 2009 at 4:51 PM:
What are some typical options strategies you have found profitable over the last year?
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3. Batbeer2 says on Sep 22, 2009 at 12:42 AM:
Thank you for taking our questions.
1) The Yacktman Fund (YACKX) and the Yacktman Focused Fund (YAFFX) both seek long-term capital appreciation and, to a lesser extent, current income.
Over the next decade, which fund do you expect to offer the best rate of return and why ?
2) In your view, does USG have competitive advantages; If so, what are they ?
Thanks in advance.
1) The Yacktman Fund (YACKX) and the Yacktman Focused Fund (YAFFX) both seek long-term capital appreciation and, to a lesser extent, current income.
Over the next decade, which fund do you expect to offer the best rate of return and why ?
2) In your view, does USG have competitive advantages; If so, what are they ?
Thanks in advance.
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4. Gangstarr says on Sep 22, 2009 at 5:37 PM:
What do you find attractive about COP? What do you think COP can do to improve upon its current strategy and execution?
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5. Guruek says on Sep 23, 2009 at 5:24 AM:
1. How do you calculate forward yield?
2. How do you measure the quality of a company's earning?
2. How do you measure the quality of a company's earning?
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6. Sandleking says on Sep 23, 2009 at 1:16 PM:
hopefully these will be interesting to other people:
What do you do to stress test the companies you pick either qualitatively or quanitatively?
Not specifically asking for numbers here but at what level do you reevaluate an investment thesis and what kinds of factors commonly come up that have forced you to reevaluate a stock pick? (ie. valuation miscalculation, not understanding business fully, overweighting wrong factors, etc.)
How long did it take you to hone your investment process?
How hard is it to admit a mistake on a investment thesis and what do you do to not repeat the mistake?
How long does it take you to understand the business of a company (not just what it does) where you become comfortable with the unpredictable but knowable risks?
Although your focus (both) is stock-picking, do you occasionally get caught up with big pictures issues that distract you from your main goal of picking great stocks? How do you deal with it and why do you think it can happen to investors?
What other investors (not buffett and munger of course) do you admire that some of us here may not know of?
Apologies for the large quanitity, lets say i'm overly appreciative of the opportunity :)
What do you do to stress test the companies you pick either qualitatively or quanitatively?
Not specifically asking for numbers here but at what level do you reevaluate an investment thesis and what kinds of factors commonly come up that have forced you to reevaluate a stock pick? (ie. valuation miscalculation, not understanding business fully, overweighting wrong factors, etc.)
How long did it take you to hone your investment process?
How hard is it to admit a mistake on a investment thesis and what do you do to not repeat the mistake?
How long does it take you to understand the business of a company (not just what it does) where you become comfortable with the unpredictable but knowable risks?
Although your focus (both) is stock-picking, do you occasionally get caught up with big pictures issues that distract you from your main goal of picking great stocks? How do you deal with it and why do you think it can happen to investors?
What other investors (not buffett and munger of course) do you admire that some of us here may not know of?
Apologies for the large quanitity, lets say i'm overly appreciative of the opportunity :)
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7. Flameboysk8 says on Sep 24, 2009 at 11:15 AM:
Typical career question for aspiring money manager:
How would recommend a person who is greatly interested in value investing, but is currently working in a completely unrelated field, break into this field? More specifically, is there certain positions that would stand out or completely eliminate a candidate? Your take on this question is much appreciated as Seth Klarman has stated that the trading program at Goldan Sachs is excellent while Andrew Weiss has stated that he would never ever hire someone who has worked at a big investment bank because "they will have learnt the wrong things".
Thank you in advance for the advice!
How would recommend a person who is greatly interested in value investing, but is currently working in a completely unrelated field, break into this field? More specifically, is there certain positions that would stand out or completely eliminate a candidate? Your take on this question is much appreciated as Seth Klarman has stated that the trading program at Goldan Sachs is excellent while Andrew Weiss has stated that he would never ever hire someone who has worked at a big investment bank because "they will have learnt the wrong things".
Thank you in advance for the advice!
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8. Guruek says on Oct 03, 2009 at 8:26 PM:
Thanks for all the questions. The Q&A is now closed, we no longer take any new questions.
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