The AMG Yacktman Fund (Trades, Portfolio) (YACKX) gave their second quarter update on July 27. Joe Maccone from Affiliated Managers Group Fund (AMG) moderated the meeting. Stephen Yacktman and Jason Subotky, the portfolio managers at Yacktman Asset Management, gave their views on the portfolio’s performance as well as discussed their major stock purchases and sales.
The AMG Yacktman Focused Fund (Trades, Portfolio)-Service Class (YAFFX) reported a return of 2.23% for the second quarter, with a 6.7% return for the year to date. The Yacktman Focused Fund (Trades, Portfolio)-Institutional Class (YAFIX) reported a quarterly return of 2.23% and a year-to-date return of 6.8%. The AMG Yacktman Fund (Trades, Portfolio)-Service Class reported a return of 2.4% for the quarter and a year-to-date return of 6.6%. According to GuruFocus, Yacktman reported a three-year cumulative return of 34.2% from 2013-2015 with an excess gain of -18.1% over the same time period.
Donald Yacktman (Trades, Portfolio) founded Yacktman Asset Management Co in 1992, where he served as portfolio manager. In 2016, he stepped into an advisory role when his son, Stephen, became the portfolio manager.
The fund said its top contributors for the quarter were Samsung (XKRX:000830, Financial), Johnson & Johnson (JNJ, Financial), Proctor & Gamble (PG, Financial), Sysco Corp (SYY, Financial), PepsiCo (PEP, Financial) and C. R. Bard (BCR, Financial).
Yacktman and Subotky both expressed their enthusiasm for Samsung and said they believe it has potential to expand in the industry. They indicated it is expected to perform well in the future, regardless of a downturn in the industry.
Despite PepsiCo’s performance as a top contributor to the portfolio, the fund curbed some of its holdings this quarter. Yacktman said the reason for this was mainly driven by price.
Its top detractors for the quarter were Twenty-First Century Fox (FOXA, Financial), Microsoft Corp (MSFT, Financial), Avon Products Inc (AVP, Financial) and Coca-Cola (KO, Financial).
Yacktman and Subotky said they were not worried about the performance of Fox, despite it being a detractor for the quarter. Fox was impacted financially by Britain’s decision to leave the European Union last month, but it is a stable business so they expect it to recover quickly. They did not feel the departure of Roger Ailes would have an impact on the company either, as management change can be healthy. Rather, they see it as an opportunity for Fox to attract a younger audience. Subotky also mentioned Fox has assets that are not cable-related and are often overlooked.
Coca-Cola, like PepsiCo, was reduced this quarter. Yacktman said that despite it being a good company with a wide global presence, growth in the U.S. has slowed. He said it is still producing an acceptable rate of return, however.
The Yacktman Fund (Trades, Portfolio) seeks long-term capital appreciation and current income. The fund is non-diversified and mainly invests in common stocks of U.S. companies, of which, some pay dividends. Their goal is to protect capital against permanent loss and inflation and grow capital by achieving strong returns over time, as well as exceed the S&P 55 Index return from market peak to market peak. Subotky emphasized their criteria were prioritized by low purchase price, good business practices and shareholder-oriented management.
For more information, their presentation can be viewed in the attached PowerPoint.
Pt Yacktman Webinar 2Q 2016 by Charlie Tian on Scribd
Disclosure: I do not own stock in any companies mentioned.
Start a free 7-day trial of Premium Membership to GuruFocus.
