CEO of Wintergreen Advisers David Winters (Trades, Portfolio) unwound his position in Alphabet (GOOG, Financial) and reduced his stake in long-term holding British American Tobacco PLC (BTI, Financial) during the fourth quarter, his firm reported Friday.
With the exit of Alphabet, Winters’ stock portfolio held just six stocks at the end of the quarter. The $162 million in common stocks combines with foreign stocks to represent 87.4% of the entire portfolio, the balance of which Winters has allocated to short-term investments. One stock, Consolidated-Tomoka Land Co. (CTO, Financial), encompassed 60.9% of the portfolio.
Winters co-founded the New Jersey-based Wintergreen Fund (Trades, Portfolio) in 2005. He invests in high-quality companies with “pristine balance sheets,” and shareholder-focused management teams, according to a recent shareholder letter.
Alphabet Inc. (GOOG, Financial)(GOOGL, Financial)
Winters eliminated a final 10,832 shares of online media company Alphabet (GOOG, Financial) he had been trimming in the past four years since starting it in 2013. After a strong run by Alphabet, the estimated gain Winters exited the position with stands at 60%.
Winters also closed a position in Alphabet’s GOOGL class of shares, selling the 10,686 shares he retained after heavy selling over the years. Overall, his gain on the holding was estimated at 49%.
Over the past five years, Google presented growth rates of 17.3% for revenue, 13.2% for EBITDA, 16.5% for free cash flow and 15.2% for book value.
In the fourth quarter, Alphabet posted a 24% increase in revenue to $32.3 billion. It also reported a net loss of $3.02 billion, or $4.34 per share, compared to net earnings of $5.33 billion, or $7.56 per share, for the fourth quarter the previous year. The fourth quarter net loss resulted from a $9.9 billion one-time charge related to the new U.S. tax law.
British American Tobacco (BTI, Financial)
Winters severed 74.79% of his holding of British American Tobacco, selling 736,847 shares and retaining 248,333. Following the sale, the holding remained 10.27% of the portfolio. British American Tobacco shares traded for an average of $65 in the fourth quarter. Winters had held the position since the firm’s founding, and the stock’s price advanced 72% over the past 10 years.
Winters also supported British American Tobacco’s acquisition of fellow tobacco company Reynolds on July 25.
In a mid-year 2017 letter, Winters said:
“Reynolds continues to produce steady cash flows from its leading U.S. brands, while it assists BAT in its product diversification efforts. The merger seems to be well-timed for BAT shareholders as Reynolds is just at the beginning of an accelerated growth curve fueled by “next generation” products, or those that are smoke-free. We believe that BAT and Reynolds have rewarded shareholders handsomely over the years with historically predictable earnings, accretive acquisitions (including former portfolio holding Lorillard in 2015), and increasing dividends, and that the future of the now combined company continues to be bright.
For the past five years, British American Tobacco had annual loss rates of 0.8% for revenue and 0.2% for book value. The company also had annual growth rates of 4.9% for EBITDA and 1.8% for free cash flow.
British American Tobacco trades with a price-book ratio of 10.76, near a three-year low.
See David Winters (Trades, Portfolio)’ portfolio here.
