GuruFocus offers an invaluable resource (at least for me): it aggregates the trades of dozens of the most successful investors in real time in one convenient location. While I don't have time to go through every manager and analyze every trade, there are some managers that I keep a close eye on - and Donald Yacktman is near the top of that list.
Donald Yacktman is the manager of the Yacktman Funds ($17B AUM), which have finished in the top 1% among their peers over the past 5 (9.29% annualized) and 10 year periods. The top five holdings in the Focused Fund are currently Procter & Gamble (PG), News Corp (NWSA), PepsiCo (PEP), Microsoft (MSFT), and Sysco (SYY).
In a CNBC interview Thursday, Yacktman talked about some of his top holdings, many of which have been in the news as of late. In regards to Procter & Gamble, which recently decreased earnings guidance for the upcoming quarter and announced plans to focus on key international country/category combinations (and fell more than 3% on the news), Mr. Yacktman said the following:
“I think Procter & Gamble is a great illustration of the difference between being a short-term investor versus a long-term investor. Most short-term investors would probably shy away from it; long-term investors would probably look and say this is a great bargain long term and a great buying opportunity.”
I’ll continue to point to this until I’m blue in the face: P&G’s yield is twice that of ten year treasuries, and offers the added benefit of protection against inflation. In the past forty years, P&G has fallen by more than 3% roughly three times every year (on average), with people likely pointing out that Procter & Gamble isn’t the company that it used to be on numerous occasions.
Personally, I think that investors would be much better served to ask some basic questions, rather than looking to the stock price for their conclusions: Has anything material happened? Is the company’s sustainable competitive advantage dissipating? In the case of P&G, I would answer with a resounding no; despite the short term volatility, the moat is just as wide as it was three months ago.
About the author:
As it relates to portfolio construction, my goal is to make a small number of meaningful decisions. In the words of Charlie Munger, "Patience followed by pretty aggressive conduct."
I run a concentrated portfolio, with a handful of positions accounting for the majority of my equity holdings (currently two). From the perspective of a businessman, I believe this is adequate diversification.