The Yacktman Fund (Trades, Portfolio) managers, known for their aversion to risk, reduced 26 portfolio positions and neither bought nor added to any other positions in the fourth quarter, according to a portfolio update Friday.
The Yacktman Fund (Trades, Portfolio)’s pullback may signal caution regarding the current market environment, as the S&P 500 retreated 11% in August and the prospect of a fourth straight quarter of earnings declines looms in 2016. A letter Yacktman Asset Management sent to clients at third quarter-end compared the market to “near the end of that expensive, long-running bull market” of the late 1990s, in which the fund had underperformed.
At the end of that market in the 2000s, the dot-com bubble burst and the market crashed. Yacktman, which had most of its fund in high-quality stocks rather than the popular and expensive Internet names of the time, then posted double-digit returns for four straight years.
With top holdings in staid companies like Procter & Gamble (PG, Financial), PepsiCo. Inc. (PEP, Financial) and Twenty-First Century Fox (FOXA, Financial), the Yactkman Fund has also underperformed the market in the past several years of bull market. In the third quarter of 2015, it declined 5.2% in the third quarter, compared to the 6.4% drop of the S&P 500. For the first nine months, it declined 9.95%, compared to a 5.3% drop in the S&P 500. The fund beat the index 9.3% to 6.8% over the past 10 years.
In addition to low-priced equities, partner and portfolio manager Donald Yacktman (Trades, Portfolio) uses a forward rate of return metric to value stocks. The formula takes normalized free cash flow yield for the past seven years and adds real growth and inflation. Forward rate of return is used to indicate the return investors buying a stock can expect from it in the future.
Founded by noted investor Donald Yacktman (Trades, Portfolio), the Yacktman Fund (Trades, Portfolio) has two other portfolio managers: his son, Stephen Yacktman, and Jason Subotky.
The portfolio positions they reduced the most in the fourth quarter were: Clorox Co. (CLX, Financial), Bank of America Corp. (BAC, Financial), CH Robinson Worldwide Inc. (CHRW, Financial), Comcast Corp. (CMCSA, Financial) and Exxon Mobil (XOM, Financial).
The Yacktman Fund (Trades, Portfolio) reduced its holding in Clorox Co. by 50% to 250,000 shares. The company’s share price averaged $124 for the quarter, giving them an approximate 56% gain on the holding. The holding equaled 0.43% of the portfolio after the sell.
Clorox Co. was incorporated in Delaware May 3, 1913. Clorox Co. has a market cap of $16.38 billion; its shares were traded at around $126.86 with a P/E ratio of 25.30 and P/S ratio of 2.95. The dividend yield of Clorox Co. stocks is 2.38%. Clorox Co. had an annual average earnings growth of 4.1% over the past 10 years. GuruFocus rated Clorox Co the business predictability rank of 3-star.
Bank of America Corp. (BAC, Financial)
Yactkman Fund sold 34.2% of its position in Bank of America, leaving it with 2.5 million shares. The company traded at $17 per share on average for the quarter. The fund has about a 163% gain on the stock since starting the position, and it equaled 0.57% of the portfolio at quarter-end.
Bank of America Corp. was incorporated on July 31, 1998 in Delaware. Bank of America Corp. has a market cap of $150.56 billion; its shares were traded at around $14.46 with a P/E ratio of 10.7 and P/S ratio of 1.94. The dividend yield of Bank of America Corp. stocks is 1.38%. Bank of America Corp. had an annual average earnings growth of 15.1% over the past five years.
CH Robinson Worldwide Inc. (CHRW, Financial)
Yacktman Fund (Trades, Portfolio) reduced its position in CH Robinson Worldwide by 30.8% to 1.8 million shares, equaling 1.5% of the portfolio. The stock traded for $67 on average for the quarter. Yacktman Fund (Trades, Portfolio) has an approximate gain of 9% on the holding.
CH Robinson Worldwide Inc. is a service company reincorporated in Delaware in 1997 as the successor to a business existing, in various legal forms, since 1905. CH Robinson Worldwide Inc. has a market cap of $9.13 billion; its shares were traded at around $63.56 with a P/E ratio of 18.70 and P/S ratio of 0.68. The dividend yield of CH Robinson Worldwide Inc. stocks is 2.47%. CH Robinson Worldwide Inc. had an annual average earnings growth of 12.5% over the past 10 years. GuruFocus rated CH Robinson Worldwide Inc. the business predictability rank of 4-star.
Comcast Corp. (CMCSA, Financial)
Yacktman Fund (Trades, Portfolio) reduced its position in Comcast Corp. by 29.6% to 1.9 million shares, equating to 1.45% of the portfolio. The stock traded at $60 per share on average for the quarter. Yacktman Fund (Trades, Portfolio) has an approximate loss of 2% on the position.
Comcast Corp. was incorporated under the laws of Pennsylvania in December 2001. Comcast Corp. has a market cap of $133.44 billion; its shares were traded at around $53.89 with a P/E ratio of 16.9 and P/S ratio of 1.88. The dividend yield of Comcast Corp. stocks is 1.86%. Comcast Corp. had an annual average earnings growth of 16.30% over the past 10 years. GuruFocus rated Comcast Corp. the business predictability rank of 4.5-star.
Yacktman Fund (Trades, Portfolio) sold 25.8% of its position in Exxon Mobil to 2.3 million shares, equal to 2.4% of the portfolio. The stock traded around $80 on average for the quarter. Yacktman Fund (Trades, Portfolio) has an estimated loss of 8% on the position.
Exxon Mobil Corp., a New Jersey corporation was incorporated in 1882. Exxon Mobil Corp. has a market cap of $322.96 billion; its shares were traded at around $77.58 with a P/E ratio of 16.40 and P/S ratio of 1.10. The dividend yield of Exxon Mobil Corp. stocks is 3.71%. Exxon Mobil Corp. had an annual average earnings growth of 6.2% over the past 10 years. GuruFocus rated Exxon Mobil Corp. the business predictability rank of 4-star.
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