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Money Managers Tweedy Browne Report New Stocks, Topped by Johnson & Johnson

February 17, 2014 | About:
Monica Wolfe

Monica Wolfe

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Tweedy Browne (Trades, Portfolio) is a 93-year-old fund which focuses on undervalued securities, and which gained its investment approach from the late Benjamin Graham. The fund is owned and managed by William Browne, Thomas Shrager, John Spears and Robert Wyckoff, Jr.

Tweedy Browne (Trades, Portfolio) had a pretty quiet quarter during the fourth quarter. The fund did not buy any new stocks or sell out of any current holdings, and only made slight increases and reductions to their current positions. The Tweedy Browne (Trades, Portfolio) fund holds 49 stocks valued at $4.3 billion.

The following five stocks are Tweedy Browne (Trades, Portfolio)’s top five holdings as of the close of the fourth quarter.

Johnson & Johnson (JNJ)

Tweedy Browne (Trades, Portfolio)’s largest holding is in Johnson & Johnson where the fund holds on to 4,305,931 shares of the company’s stock. This position makes up for 9.2% of their total portfolio as well as 0.15% of the company’s shares outstanding.

Over the duration of the fourth quarter the fund reduced their holdings a slight -0.42% by selling 18,200 shares of the company’s stock. They sold these shares near the estimated average quarterly price of $92.16 per share. Since then the price per share has increased a minor 0.7%.

Tweedy Browne (Trades, Portfolio)’s historical holding history:

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Johnson & Johnson is engaged in the research and development, manufacture and sale of a range of products in the health care field. It is a holding company which has more than 250 operating companies. The company’s operating segments are focused in: consumer, pharmaceutical and medical devices and diagnostics.

Johnson & Johnson’s historical revenue and net income:

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The analysis on Johnson & Johnson reports that the company’s operating margin is expanding, its dividend yield is near a 5-year low and its price is near a 10-year high.

The Peter Lynch Chart suggests that the company is currently overvalued:

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Johnson & Johnson has a market cap of $261.72 billion. Its shares are currently trading at around $92.76 with a P/E ratio of 20.60, a P/S ratio of 3.80 and a P/B ratio of 3.80. The dividend yield of Johnson & Johnson is currently at 2.80%. Johnson & Johnson had an annual average earnings growth of 6.60% over the past ten years.

Banco Santander Brasil SA (BSBR)

The fund’s second largest holding comes from Banco Santander Brasil where they maintain 49,203,606 shares of the company’s stock. This holding takes up 7% of the fund’s total portfolio as well as 1.30% of the company’s shares outstanding.

Tweedy Browne (Trades, Portfolio) upped the fund’s holdings in the company 1.48% over the past quarter by purchasing a total of 716,532 shares of the company’s stock. They purchased these near the average quarterly price of $6.57 per share, and since then the price per share is down approximately -24.4%.

Tweedy Browne (Trades, Portfolio)’s historical holding history:

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Banco Santander Brasil SA/Brazil is a full-service bank in Brazil. The Company has three business segments: Commercial Banking, Global Wholesale Banking and Asset Management and Insurance.

Banco Santander’s historical revenue and net income:

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The analysis on Banco Santander reports that the company’s payout ratio is too high, its dividend yield is near a 1-year high and its price is near a 5-year low. The analysis also reports that the company’s asset growth is faster than its revenue growth.

Banco Santander has a market cap of $18.81 billion. Its shares are currently trading at around $4.97 with a P/B ratio of 0.70. The dividend yield of Banco Santander is 5.30%. The company had an annual average earnings growth of 0.60% over the past five years.

Halliburton Company (HAL)

Tweedy Browne (Trades, Portfolio)’s third largest position is in the Halliburton Company where they hold on to 5,524,307 shares of the company’s stock. This holding represents 6.5% of the fund’s total assets managed as well as 0.60% of the company’s shares outstanding.

Over the past quarter the fund cut their holdings a very minor -0.06% by selling 3,085 shares of Halliburton stock. They sold these shares near the estimated average quarterly price of $51.69 per share. Since then the price per share has gone up about 3.6%.

Tweedy Browne (Trades, Portfolio)’s holding history as of the close of the fourth quarter:

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Halliburton is a provider of services and products to the energy industry related to the exploration, development, and production of oil and natural gas. It operates under two divisions: Completion and Production segment, and Drilling and Evaluation segment.

Halliburton’s historical revenue and net income:

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The analysis on Halliburton reports that the company’s revenue has slowed town over the past year, its asset growth is faster than its revenue growth and its operating and gross margins have been in a 5-year decline.

The Peter Lynch Chart suggests that the company is currently overvalued:

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Halliburton has a market cap of $45.58 billion. Its shares are currently trading at around $53.57 with a P/E ratio of 22.40, a P/S ratio of 1.60 and a P/B ratio of 3.40. The company had an annual average earnings growth of 13.50% over the past ten years.

Devon Energy Corp. (DVN)

The guru’s fourth largest position goes to Devon Energy where they maintain 4,235,655 shares of the company’s stock. This position makes up for 6.1% of the fund’s total holdings as well as 1.04% of Devon’s shares outstanding.

During the fourth quarter the fund increased their holdings 0.15% by purchasing 6,495 shares. The portfolio managers bought these shares near the estimated average quarterly price of $61.31. From this average price the price per share has increased a slight 1.2%.

Tweedy Browne (Trades, Portfolio)’s historical holding history:

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Devon Energy is an independent energy company engaged mainly in the exploration, development and production of oil, natural gas and NGLs. The company's operations are concentrated in various North American onshore areas in the U.S. and Canada.

Devon’s historical revenue and earnings growth:

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The analysis on Devon Energy reports that the company’s price is nearing a 1-year high, its revenue has been in decline for the past five years and it has issued $4.5 billion of debt over the past three years.

As of the fourth quarter there were 22 gurus that held a position in the company’s stock. Check out their holdings here.

Devon Energy has a market cap of $25.19 billion. Its shares are currently trading at around $62.05 with a P/S ratio of 2.40 and a P/B ratio of 1.20. The company has a 1.40% dividend yield.

Cisco Systems (CSCO)

Tweedy Browne (Trades, Portfolio)’s fifth largest position goes to Cisco Systems where they maintain 11,073,179 shares of the company’s stock. This holding takes up 5.8% of their portfolio as well as 0.21% of the company’s shares outstanding.

During the fourth quarter Tweedy Browne (Trades, Portfolio) increased their position 0.39% by purchasing 42,870 shares of the company’s stock. They purchased these shares near the average quarterly price of $22.12 per share, and since then the price per share has increased approximately 2%.

Tweedy Browne (Trades, Portfolio)’s historical holding history:

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Cisco Systems sells networking and communications products and provides related services. The company's two main products are switches and routers, but Cisco essentially touches everything in the networking industry. Cisco is the current leader in the data networking industry.

Cisco Systems’ historical revenue and net income:

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The analysis on Cisco reports that the company has shown predictable revenue and earnings growth, its dividend yield is nearing a 3-year high and the company has issued $939 million of debt over the past three years, but overall its debt level is acceptable.

The Peter Lynch Chart suggests that the company is currently undervalued:

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Cisco Systems has a market cap of $120.62 billion. Its shares are currently trading at around $22.56 with a P/E ratio of 12.30, a P/S ratio of 2.50 and a P/B ratio of 2.10. The company had an annual average earnings growth of 8.70% over the past ten years.

GuruFocus rated Cisco the business predictability rank of 3.5-star.

Check out Tweedy Browne’s complete fourth quarter holdings here. Also see Tweedy Brown Global Fund’s fourth quarter portfolio.

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