Value investor Mason Hawkins (Trades, Portfolio), founder, chairman and CEO of Southeastern Asset Management, Inc., has said he looks for three things from potential investments: strong businesses with good people at deeply discounted prices.
Hawkins and his partners at Southeastern Asset Management manage the Longleaf Partners Funds, which had a return of 32.12% in 2013. Since its inception, Southeastern has returned 12.5%.
In the third quarter, Hawkins invested deeply in several existing holdings, more than quadrupling his stakes in three companies.
New buys and additions
Hawkins added holdings in five stocks that were new to his portfolio – McDonald’s Corp (MCD, Financial), CNH Industrial NV (CNHI, Financial), Dreamworks Animation SKG Inc (DWA, Financial), Franklin Resources Inc (BEN, Financial) and Deltic Timber Corp (DEL, Financial).
The acquisition of 7,252,618 shares of McDonald’s, the Illinois-based company that has fast-food restaurants around the world, at an average price of $95.22 had a 3.8% impact on Hawkins’ portfolio.
Hawkins also added 29,049,995 shares in CNH Industrial, a London-based company that designs, produces and sells agricultural equipment and construction equipment, trucks, commercial vehicles, buses and special vehicles, to his portfolio. Hawkins purchased the stock for an average price of $8.76. It had a 1.3% impact on his portfolio.
Hawkins added to his existing holdings in seven companies in the quarter – Scripps Networks Interactive Inc (SNI, Financial), Rayonier Inc (RYN, Financial), tw telecom inc (TWTC, Financial), Vodafone Group PLC (VOD, Financial), ViaSat Inc (VSAT, Financial), Royal Phillips NV (PHG, Financial), and Graham Holdings Co (GHC, Financial) on two occasions in the quarter.
The purchase of 5,677,582 additional shares of Scripps Networks Interactive, a Knoxville, Tennessee-based media company, at an average price of $80.53 had an impact of 2.42% on Hawkins’ portfolio.
Hawkins also added 6,384,621 shares in Rayonier, a Jacksonville, Florida-based logging company, to his portfolio at an average price of $33.87. The purchase more than quadrupled his stake in the company and had an impact of 1.07% on his portfolio.
Hawkins bought 5,086,556 shares in London-based Vodafone, a multinational telecommunications company, at an average price of $33.37. That, too, more than quadrupled his stake and had a 0.91% impact on his portfolio.
He also quadrupled his stake in California-based ViaSat, a provider of equipment and services for military and commercial communications, primarily in satellite related technologies. Hawkins purchased 2,414,731 shares of ViaSat at an average price of $57.15. The purchase had a 0.72% impact on his portfolio.
Divestitures and reductions
In the third quarter, Hawkins divested himself of his holdings in two companies – Seventy Seven Energy Inc (SSE) and DineEquity Inc (DIN). He reduced his holdings in 11 others – Bank of New York Mellon Corp (BK), FedEx Corp (FDX), Everest Re Group Ltd (RE), Level 3 Communications Inc (LVLT), Aon PLC (AON), Abbott Laboratories (ABT), Chesapeake Energy Corp (CHK), Mondelez International Inc (MDLZ), Loews Corp (L), Murphy Oil Corp (MUR) and Travelers Companies Inc (TRV).
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