Yacktman Fund (Trades, Portfolio) managers Stephen Yacktman and Jason Subotky trimmed their position in four companies: Microsoft Corp. (MSFT, Financial), Samsung Electronics Co. Ltd. (XKWX:005935, Financial), Sysco Corp. (SYY, Financial) and Cisco Systems Inc. (CSCO, Financial). The fund managers also axed their positions in Wal-Mart Stores Inc. (WMT, Financial) and Intel Corp. (INTC, Financial).
Microsoft
Yacktman and Subotky trimmed 27.45% off their Microsoft position, selling 1.4 million shares at an average price of $82 per share. With this transaction, the fund managers pared 1.66% off their portfolio.
Microsoft develops, licenses and supports a wide variety of software products to over 190 countries worldwide. The company’s operating margin still outperforms 91% of global software companies even though the margins contracted approximately 6.9% per year over the past five years.
Microsoft’s profitability ranks 8 out of 10, driven primarily by a strong Piotroski F-score of 7 and a GuruFocus business predictability rank of 3.5 stars. While the company has good short-term growth potential, Microsoft trades above its median price-earnings valuation line, suggesting moderate overvaluation. Additionally, the company’s share price is near a 10-year high and its forward rate of return underperforms 61% of global competitors.
Samsung
The fund managers knocked 11.57% off of their Samsung stake, selling 26,682 shares at an average price of 2,141,310 Korean won per share. With this transaction, Yacktman and Subotky pared 0.77% off their portfolio.
South Korea-based Samsung manufactures and sells a wide variety of electronics, including smartphones, semiconductors, printers, home appliances, medical equipment and telecommunications equipment. The company has strong financial strength, with a Piotroski F-score of 7, a cash-to-debt ratio of approximately 4 and a debt-to-equity ratio of just 0.09.
Samsung’s operating margin is near a 10-year high of 21.03% and outperforms 92% of global competitors. As the company also has strong returns on equity, Samsung receives a high profitability rank of 8.
Samsung trades around 2.04 million Korean won per share, approximately 200,000 won higher than its median price-earnings line.
Sysco
Yacktman and Subotky divested 27.97% of their Sysco stake, selling 1.79 million shares at an average price of $56.65 per share. With this transaction, the fund managers pared 1.54% off their portfolio.
Sysco distributes over 400,000 food and nonfood products to approximately 500,000 institutions, including restaurants, health care facilities, educational facilities and lodging establishments. Although the company has good growth potential, Sysco trades approximately $11.5 higher than its median price-earnings value, suggesting moderate overvaluation. The company has several warning signs, including price valuations near a 10-year high.
Cisco Systems
Yacktman and Subotky pared 9.84% off their Cisco Systems position, selling 1.2 million shares at an average price of $35.70 per share. The fund managers trimmed 0.64% off their portfolio with this transaction.
Cisco Systems supplies various data networking products, including routers, switches and access equipment. Although the company has good profitability, Cisco’s revenue growth has decelerated over the past 12 months. Cisco’s predictability rank of 3.5 stars is on watch, suggesting inconsistent revenue and earnings growth in the upcoming years.
Fund managers divest Walmart and Intel
Yacktman and Subotky sold their 800,000 Walmart shares for an average price of $91.70 and their 950,000 Intel shares for an average price of $43.62. With these transactions, the fund managers pared 1.57% off their portfolio in the aggregate.
See also
Yacktman and Subotky also manage the Yacktman Focused Fund (Trades, Portfolio). You can view the latest guru trades by clicking “Latest Guru Picks” under the Gurus tab.
Disclosure: I do not have positions in the stocks mentioned.
