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Tweedy Browne Continues To Lighten Its Portfolio

August 13, 2014 | About:
Chris Mydlo

Chris Mydlo

40 followers

The investment management firm, Tweedy Browne Company LLC, filed its Form 13F today showing that the company continued to lighten up on its equity portfolio during the second quarter. Looking back at its previous filings, Tweedy Browne (Trades, Portfolio) has been net sellers throughout the past year. The managing directors gave the following comment in their second quarter commentary:

“We think of ourselves as being in the business of chasing value, not performance, and we do know that we have to pay, on average, a whole lot more for a dollar of value today. Our experience has taught us that if we keep looking, and exercise some patience, opportunities will turn up.”

According the filing, Tweedy Browne (Trades, Portfolio)’s biggest reductions were in Sysco (SYY) and Comcast (CMCSK) while its largest increases were in National Oilwell Varco (NOV) and HSBC Holdings (HSBC).

Sysco Corp (SYY)

Tweedy Browne (Trades, Portfolio) reduced its position in Sysco by 86.79 percent by selling 368,331 shares during the second quarter. The stock’s share price averaged $36.71. The position now equates to 0.045 percent of the portfolio.

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Sysco is the largest North American distributor of food and related products primarily to the foodservice or food-away-from-home industry. Its products and related services are provided to approximately 425,000 customers, including restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers. The company has a market cap of $21.94 billion. The stock closed at $37.75 on Tuesday, August 12, with a P/E ratio of 23.20, P/B ratio of 4.28, and P/S ratio of 0.48. The dividend yield is 3.08 percent. The stock is near fair value according to its 5-year median ratios of P/B and P/S at 4 and 0.4. It is overvalued according to its 5-year median P/E ratio of 16.8.

Comcast Corp (CMCSK)

Tweedy Browne (Trades, Portfolio) reduced its position in Comcast by 8.08 percent by selling 111,089 shares during the second quarter. The stock’s share price average $50.75. The position now equates to 1.4 percent of the portfolio.

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Comcast is a global media and technology company with two primary businesses, Comcast Cable and NBCUniversal. Its five reportable business segments are: Cable Communications, Cable Networks, Broadcast Television, Filmed Entertainment, and Theme Parks. The company has a market cap of $139.68 billion. The stock closed at $53.56 on Tuesday, August 12, with a P/E ratio of 19.00, P/B ratio of 2.70, and P/S ratio of 2.10. The dividend yield is 1.60 percent. The stock is now overvalued when compared to the 5-year medians of all three measures with a median P/E ratio of 16.6, P/B ratio of 1.7, and P/S ratio of 1.6.

National Oilwell Varco (NOV)

Tweedy Browne (Trades, Portfolio) increased its position in NOV by 7.16 percent by purchasing 24,850 shares in the second quarter. The stock’s share price averaged $74.33. The position now equates to 0.65 percent of the portfolio.

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National Oilwell Varco is a worldwide leader in the design, manufacture and sale of equipment and components used in oil and gas drilling and production, the provision of oilfield services, and supply chain integration services to the upstream oil and gas industry. The company has a market cap of $35.48 billion. The stock closed at $81.89 on Tuesday, August 12, with a P/E ratio of 14.10, P/B ratio of 1.70 and P/S ratio of 1.47. The dividend yield is 1.51 percent. The stock is near fair value according to its 5-year median P/S ratio of 1.6 but is overvalued according to the 5-year median ratios of P/E and P/B at 12.6 and 1.4.

During the second quarter, NOV spun off its distribution business Now Inc (DNOW). The spinoff created a new position of 86,262 shares in the portfolio valued at $2.69 million based on Tuesday’s closing price of $31.16.

HSBC Holdings (HSBC)

Tweedy Browne (Trades, Portfolio) increased its position in HSBC by 1.49 percent by purchasing 2,507 shares in the second quarter. The stock’s share price averaged $51.73. The position now equates to 0.19 percent of the portfolio.

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HSBC is headquartered in London and one of the largest banking and financial services organizations in the world with 54 million customers served by 254,000 employees across 75 countries and territories. The company has a market cap of $203.34 billion. The stock closed at $53.01 on Tuesday, August 12, with a P/E ratio of 13.77, P/B ratio of 1.06, and P/S ratio of 3.43. The dividend yield is 4.60 percent. The stock is undervalued according to its 5-year median ratios of P/E at 33.2, P/B at 1.2 and P/S at 3.8. P/B ratios are most commonly used when valuing financial institutions.

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