Tweedy, Browne are investors who seek investments at 40 percent to 50 percent discount to their intrinsic value. Once an investment approaches their estimate of intrinsic value, they sell to reinvest the proceeds into stocks trading at greater discounts.
The firm nearly doubled their holding of Akzo Nobel Nv (AKZOY), in the first quarter of 2012 after its price dropped to an average of $18 a share in the first quarter from an average of $35 in the previous quarter. They bought 283,941 shares. Prior to this recent purchase, Tweedy Browne had been reducing its holding of Akzo almost every quarter from at least the second of 2007.
Akzo Nobel, headquartered in the Netherlands, operates in selected areas of healthcare products, coatings, chemical and fibers, and is the No. 1 paints and coatings company worldwide. Akzo Nobel Nv has a market cap of $12.61 billion; its shares were traded at around $16.55 with a P/E ratio of 16 and P/S ratio of 0.6. The dividend yield of Akzo Nobel Nv stocks is 5.4%. Akzo Nobel Nv had an annual average earnings growth of 2.7% over the past 10 years.
Akzo’s stock price dropped from $50 to $16.55 in early January 2012 due to a 3:1 stock split on its ADR.
Tweedy Browne’s second-largest move was to add 237,185 shares to its Berkshire Hathaway (NYSE:BRK.B) holding at an average price of $79 a share. At the end of the quarter, the firm held a total of 424,868 shares of the company, a 1.2 percent weighting in their portfolio.
Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in a number of diverse business activities. Berkshire Hathaway has a market cap of $199.1 billion; its shares were traded at around $81.59 with a P/E ratio of 14.5 and P/S ratio of 1.8. Berkshire had an annual average earnings growth of 17.5% over the past 10 years.
In the last year, Berkshire Hathaway’s stock has held approximately flat, increasing 0.87 percent. Year to date it has increased almost 7 percent.
On May 4, Berkshire announced strong financial results for the first quarter 2012. Operating earnings jumped from $1.6 billion the previous year to $2.7 billion. Earnings doubled from $1.5 billion to $3.25 billion. The results were helped by a return to profitability for its insurance-underwriting business, which suffered massively amid the multiple natural disasters of 2011. In this segment in 2011 Berkshire had a net loss of $821 billion; in 2012, it had net income of $54 million.
Tweedy Browne increased its holding of Total S.A. (NYSE:TOT) 62 percent in the first quarter, adding 136,698 shares at an average price of $54 a share, for a total holding at quarter-end of 355,608 shares. Tweedy Browne opened the position in the second quarter of 2011 at an average price of $58.
Total S.A. engages in worldwide oil and gas production, other upstream, RM&T and an expanding multi-national specialty chemicals business. Total S.A. has a market cap of $114.34 billion; its shares were traded at around $44.65 with a P/E ratio of 6.8 and P/S ratio of 0.5. The dividend yield of Total S.A. stocks is 6.8%. Total S.A. had an annual average earnings growth of 12.1% over the past 10 years. GuruFocus rated Total S.A. the business predictability rank of 4-star.
In their first-quarter investor letter, Tweedy Browne noted that Total was one of the stocks, “We also took advantage of trading opportunities to add to our positions in.” They also said, “As was the case at year-end, very few of our stocks disappointed for the quarter. However, while their underlying businesses continued to make progress, we had negative returns in pharmaceuticals GlaxoSmithKline (GSK) and Novartis (NVS). The same held for a few of our oil stocks including Royal Dutch (RDS) and Total (TOT).” Total S.A.’s ADR sank 25 percent in the last year and 12.6 percent year to date. Total, based in France, is susceptible to tremors from European political events.
In February, Total released its 2011 annual result. Net income increased 11 percent in euros to 12.3 euros compared to the previous year.
“The successful start-up of the Pazflor field in Angola was the crowning achievement of an important year for Total. This start-up and the ones to follow will ensure a return to production growth in 2012 and the years to come. All the segments realized notable advances, including a bolder exploration program that yielded three giant discoveries in 2011, the formation of a new, more competitive structure for the Downstream, and the further strengthening of leading positions in LNG and deep-offshore. Finally, the increased asset sales and acquisition activity in 2011 continued to demonstrate the dynamic rebalancing of the portfolio in favor of Upstream assets with strong growth potential,” said chairman and CEO Christophe de Margerie.
See more of the latest stock buys and sells by Tweedy, Browne here.