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Waiting for Gold Rain, Wally Weitz Does "Unnaturally Well"

September 23, 2013 | About:
Sally Jones

Sally Jones

49 followers
“Investing is a marathon,” Guru Wallace Weitz told the Weitz Fund shareholders in his second quarter letter, adding: “We face an ongoing series of decisions as to which companies to own, what price to pay, and when to be disciplined about holding out for the right opportunity. The fact that several of our stocks have performed unnaturally well this year gives us a measure of “cover” for our defensive positioning. We feel very confident that our patient, conservative approach will continue to serve us well. Believe me, when stocks become truly cheap again, we will follow Warren Buffett’s advice:

When it’s raining gold, go out with a bucket, not a thimble.

President, founder, CFA and portfolio manager of Weitz Funds, Wallace “Wally” Weitz started the firm in 1983. With a common sense, straight-shooting style, he reminded his investors: “The world is a messy place. We have catalogued the obvious risks in Europe, China and the Middle East in previous letters. It seems that one could close one’s eyes, spin a globe and insert a pin at random and find a place with a crisis of some sort. Levered speculators are clearly vulnerable to the inevitable shift in Fed policy and other investors who feel insulated may find their good stocks declining as others are forced to sell.”

The Wallace Weitz portfolio currently lists 61 stocks, 3 of them new, with a total value of $2.47 billion and a quarter-over-quarter turnover of 3%. The portfolio top three sector weights are consumer cyclical at 17.5%, financial services at 16% and healthcare at 13.6%. Wallace Weitz’s 12-month average return is 23.14%; he’s averaged 12.3% since inception.

Here’s a look at the top four high-impact reductions in the Weitz portfolio as of the second quarter of 2013.



Omnicare Inc. (OCR): Reduced

Impact to Portfolio: - 1.37%

Up 61% over 12 months, Omnicare Inc. has a market cap of $5.64 billion; its shares were traded at around $54.93. The P/B ratio is 1.60.

Founded in 1981, Omnicare Inc.is a healthcare services company that provides complex pharmaceutical care through two primary businesses, Long-Term Care Group and Specialty Care Group.

Historical share pricing, revenue and net income:

1379966096966.png

Guru Action: As of June 30, 2013, Wallace Weitz reduced his position by 52.62%, selling 829,500 shares at an average price of $44.74, for a gain of 21.9%. The current share price is $54.64, with a change from average up 22%. His current shares remaining are 746,920.

Across a five-year history, Weitz has averaged a gain of 121% on 2,608,543 shares bought at an average price of $24.67 per share. On shares sold, he has averaged a gain of 78% on 6,954,298 shares sold at an average price of $30.62 per share.

Check out this remarkable history of gains:

1379964993774.png

Live Nation Entertainment (LYV): Reduced

Impact to Portfolio: - 0.89%

Up 94% over 12 months, Live Nation Entertainment Inc. has a market cap of $3.4 billion; its shares were traded at around $17.07. The P/B ratio is 2.44.

Incorporated in 2005, Live Nation Entertainment Inc. is a producer of live music concerts connecting nearly 49 million fans to 22,000 events for over 2,300 artists in 2012.

Historical share pricing, revenue and net income:

1379966194575.png

Guru Action: As of June 30, 2013, Wallace Weitz reduced his position by 33.13%, selling 1,800,300 shares at an average price of $13.58, for a gain of 26%. The current share price is $17.11, with a change from average up 26%. His current shares remaining are 3,633,500.

In another remarkable five-year history without a loss, Weitz averaged a gain of 66% on 6,285,771 shares bought at an average price of $10.32 per share. On shares sold, he has averaged a gain of 35% on 2,652,271 shares sold at an average price of $12.70 per share.

CVS Caremark Corp. (CVS): Reduced

Impact to Portfolio: - 0.77%

Up 21% over 12 months, CVS Caremark Corp. has a market cap of $71.42 billion; its shares were traded at around $58.22. The P/B ratio is 1.80.

CVS Caremark Corporation is a pharmacy health care provider in the United States with three reportable business segments: pharmacy services, retail pharmacy and corporate.

Historical share pricing, revenue and net income:

1379966711159.png

Guru Action: As of June 30, 2013, Wallace Weitz reduced his position by 63.92%, selling 356,500 shares at an average price of $57.94, for a gain of 0.3%. The current share price is $58.53, with a change from average up 1%. His current shares remaining are 201,200.

In ten quarters of only gains, Weitz has averaged a gain of 68% on 1,163,570 shares bought at an average price of $34.66 per share. On shares sold, he has averaged a gain of 15% on 962,370 shares sold at an average price of $50.64 per share.

Hewlett-Packard Co. (HPQ): Reduced

Impact to Portfolio: - 0.63%

Up 23% over 12 months, Hewlett-Packard Co. has a market cap of $40.78 billion; its shares were traded at around $21.13. The P/B ratio is 1.66.

Incorporated in 1947, Hewlett-Packard Company is a global provider of products, technologies, software, solutions and services to individual consumers, small and medium-sized businesses and large enterprises, including customers in the government, health and education sectors.

Historical share pricing, revenue and net income:

1379966923998.png

Guru Action: As of June 30, 2013, Wallace Weitz reduced his position by 37.2%, selling 644,000 shares at an average price of $22.48, for a loss of 5.6%. The current share price is $21.22, with a change from average down 6%. His current shares remaining are 1,087,130.

In eight quarters of mixed results, Weitz has averaged a loss of 2% on 5,798,570, shares bought at an average price of $21.57 per share. On shares sold, he has averaged a gain of 11% on 4,711,440 shares sold at an average price of $19.13 per share.

Weitz Funds manages nine value funds. President and founder of Weitz Funds, Wallace Weitz manages the Partners III Opportunity Fund, and co-manages Value Fund, Partners Value Fund and Hickory Fund.



Here is the complete portfolio of Wallace Weitz.

Be sure to read:

1. Wallace Weitz's Undervalued Stocks

2. Wallace Weitz's Top Growth Companies

3. Wallace Weitz's High Yield stocks

4. Stocks that Wallace Weitz keeps buying

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GuruFocus Real Time Picks reports the stock purchases and sales that Gurus have made within the prior 2 weeks. The report time lag can be as short as 2 days after the date of the transaction. This feature is for Premium Members only.

Check out the GuruFocus special feature 52-week low screener to find the stocks hitting new lows but are still held by top investor Gurus and Insiders.

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About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

Rating: 3.4/5 (7 votes)

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