Concentrated Portfolio
As of September 30, 2009, Yacktman has $1.73b in 77 US traded stocks. It turns out, his strategy is far more concentrated than this number suggests. In the previous article, we showed that his top holding, News Corp. accounts for 8.54% of the equity portfolio, and even his top sixth holding, Pfizer Inc. has 6.27%. Part of the reason for the concentration is The Yacktman Focused Fund which buys only about 20 stocks.
Yacktman happen to be actually very proud of his Focused fund. In the recent GuruFocus.com interview, Yacktman had the following dialog with GuruFocus:
Question 8. 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?
Don: I feel The Yacktman Focused Fund will do better because it is a concentration of our best ideas. All of my SEP-IRA money is in it.
If you missed the Q&A, now is the opportunity to pick it up here
Portfolio Re-balancing
In the quarterly letter, Yacktman talked about rebalancing the portfolio fill portfolio with high-quality issues. Much of the increase are for the top holdings (see the table below). Yacktman increase 9 out of 10 top holding positions. All should we say, because of the increase, these stocks made into the top holidings:
| Ticker
| Shares
| Value ($1000)
| Weighting as of
3Q09 | Share # Change
from 2Q09 |
| NWS-A
| 12,295,460
| 147,423
| 8.54%
| +43.74%
|
| KO
| 2,595,595
| 139,383
| 8.08%
| +51.13%
|
| PEP
| 2,259,515
| 132,543
| 7.68%
| +74.42%
|
| VIA-B
| 4,617,556
| 129,476
| 7.5%
| +25.38%
|
| MSFT
| 4,655,175
| 120,522
| 6.98%
| +40.64%
|
| PFE
| 6,536,150
| 108,173
| 6.27%
| +55.75%
|
| PG
| 1,550,232
| 89,789
| 5.2%
| +130.02%
|
| ACF
| 5,474,495
| 86,442
| 5.01%
| -12.76%
|
| COP
| 1,879,780
| 84,891
| 4.92%
| +78.63%
|
| CMCSK
| 4,429,490
| 71,226
| 4.13%
| +544.76%
|
| LINTA
| 5,556,411
| 60,954
| 3.53%
| -18.61%
|
| EBAY
| 2,422,600
| 57,198
| 3.31%
| -19.54%
|
Top Holdings No.7-12
It is worth looking at Yacktman’s portfolio further. Here is No 7-12 weighting stock:
No. 7 The Procter & Gamble Company (PG)
The Procter & Gamble Company manufactures and markets a broad range of consumer products in many countries throughout the world. Products fall into five business segments: fabric and home care, paper, beauty care, health care, and food and beverage. Today P&G markets more than 250 products to more than five billion consumers in 130 countries. The Procter & Gamble Company has a market cap of $173.8 billion; its shares were traded at around $59.54 with a P/E ratio of 16.5 and P/S ratio of 2.2. The dividend yield of The Procter & Gamble Company stocks is 3%. The Procter & Gamble Company had an annual average earning growth of 10.8% over the past 10 years. GuruFocus rated The Procter & Gamble Company the business predictability rank of 3-star.
Donald Yacktman owns 1,550,232 shares as of 09/30/2009, an increase of 130.02% from the previous quarter. This position accounts for 5.2% of the $1.73 billion portfolio of Yacktman Asset Management Co..
No. 8 AmeriCredit Corp. (ACF)
AmeriCredit Corp. is a leading independent automobile finance company that provides financing solutions indirectly through auto dealers and directly to consumers in the United States and Canada. Americredit Corp. has a market cap of $2.42 billion; its shares were traded at around $18.13 with a P/E ratio of 302.2 and P/S ratio of 1.2. Americredit Corp. had an annual average earning growth of 13.2% over the past 10 years. GuruFocus rated Americredit Corp. the business predictability rank of 2.5-star.
Donald Yacktman owns 5,474,495 shares as of 09/30/2009, which accounts for 5.01% of the $1.73 billion portfolio of Yacktman Asset Management Co..
No. 9 ConocoPhillips (COP)
ConocoPhillips is a major international integrated energy company with operations in some 49 countries. Conocophillips has a market cap of $76.12 billion; its shares were traded at around $51.33 with a P/E ratio of 8.4 and P/S ratio of 0.3. The dividend yield of Conocophillips stocks is 3.7%. Conocophillips had an annual average earning growth of 19% over the past 10 years.
Donald Yacktman owns 1,879,780 shares as of 09/30/2009, an increase of 78.63% from the previous quarter. This position accounts for 4.92% of the $1.73 billion portfolio of Yacktman Asset Management Co..
No. 10 Comcast Corporation (CMCSK)
Comcast Corporation is principally involved in the development management and operation of broadband cable networks and in the provision of electronic commerce and programming content. Comcast's commerce and content businesses include majority ownership of QVC Comcast-Spectacor Comcast SportsNet and The Golf Channel a controlling interest in E! Networks and other programming investments. (Company Press Release) Comcast Corp. Special has a market cap of $42.37 billion; its shares were traded at around $14.52 with and P/S ratio of 1.2. The dividend yield of Comcast Corp. Special stocks is 1.8%. Comcast Corp. Special had an annual average earning growth of 46.5% over the past 5 years.
Donald Yacktman owns 4,429,490 shares as of 09/30/2009, an increase of 544.76% from the previous quarter. This position accounts for 4.13% of the $1.73 billion portfolio of Yacktman Asset Management Co..
No. 11 Liberty Media Corporation (LINTA)
Liberty Media Corporation owns a broad range of electronic retailing media communications and entertainment businesses and investments. Its businesses include some of the world's most recognized and respected brands and companies including QVC Encore Starz IAC/InterActiveCorp Expedia and News Corporation. Liberty Media Corp. Interactive Common S has a market cap of $6.49 billion; its shares were traded at around $11.46 with and P/S ratio of 0.9. Liberty Media Corp. Interactive Common S had an annual average earning growth of 20.8% over the past 5 years.
Donald Yacktman owns 5,556,411 shares as of 09/30/2009, which accounts for 3.53% of the $1.73 billion portfolio of Yacktman Asset Management Co..
No. 12 eBay (EBAY)
eBay is one of the world's largest online trading communities. eBay creates a powerful marketplace for the sale of goods and services by a passionate community of individuals and small businesses. eBay enables trade on a local national and international basis with local sites in numerous markets in the United States and country-specific sites in the United Kingdom Canada Germany Austria France Italy Japan Korea and Australia. (Company Press Release) Ebay Inc. has a market cap of $29.69 billion; its shares were traded at around $23.01 with a P/E ratio of 18 and P/S ratio of 3.4. Ebay Inc. had an annual average earning growth of 29% over the past 5 years.
Donald Yacktman owns 2,422,600 shares as of 09/30/2009, which accounts for 3.31% of the $1.73 billion portfolio of Yacktman Asset Management Co..
Comments
Several of the top 12 holdings (NWS-A, VIA-B, CMCSK, and LINTA) are in the media and broadcasting industries. Yacktman commented in the Quarterly letter:
Media
Media stocks rebounded during the quarter. NewsCorp and Viacom had strong performance, yet we believe both securities offer ample upside from here. Both share prices remain well below early 2008 levels even though their businesses have proven to be fairly durable and the securities were not, in our opinion, overvalued previously. When stocks get ridiculously cheap, like they did in the last year, they can produce spectacular results just rebounding part of the way back to their prior prices.
Comcast
During the quarter, we increased our position in Comcast, as the shares were inexpensive, having lagged the market rally. Comcast is the largest cable provider in the United States, is a significant provider of internet and telephone services, and owns E! network and sports franchises in Philadelphia, among their many assets. The business was built and has been well‐run by the Roberts family and is selling at less than 12 times cash earnings. In the last few years, Comcast and other cable companies have been significant generators of free cash because capital expenditure needs have declined.
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