(GuruFocus, October 30, 2009) Investment Guru Donald Yacktman wrote a letter to his investors. His two funds had a good third quarter and a good year. For the quarter, the Yacktman Fund and The Yacktman Focused Fund were up 19% and 16.9%, respectively, beating S&P 500’s rising of 15.6% . For the year, The Yacktman Fund and The Yacktman Focused Fund have appreciated 48% and 51%, respectively, surpassing S&P 500’s climbing of 19.3%.
It is the long term return that matters, someone may say. In the last decade, The Yacktman Fund and The Yacktman Focused Fund have compounded at 10.86% and 10.59% respectively while the S&P 500 declined slightly. Clearly, Yacktman earned his right to be optimistic. In his letter, he explained “Why market predictions do not matter”. But the end of the day, it is the security-by-security analysis that wins the day.
In the letter, Yacktman listed top ten stocks for each of his two funds to illustrate the high quality of his holdings. Here is a review of the top holdings of the aggregated portfolio of his funds:
No. 1: News Corp. (NWS-A), Weightings: 8.54% - 12,295,460 Shares
NEWS CORPORATION is a diversified entertainment company with operations in eight industry segments: filmed entertainment; television; cable network programming; direct broadcast satellite television; magazines and inserts; newspapers and information services; book publishing; and other. The activities of News Corporation are conducted principally in the United States Continental Europe the United Kingdom Australia Asia and the Pacific Basin. News Corp. has a market cap of $15.45 billion; its shares were traded at around $0 with a P/E ratio of 6.86 and P/S ratio of 0.47. The dividend yield of News Corp. stocks is 1.41%. News Corp. had an annual average earning growth of 17.2% over the past 5 years.
No. 2: The CocaCola Company (KO, Financial), Weightings: 8.08% - 2,595,595 Shares
The Coca-Cola Company is the world's largest beverage company and is the leading producer and marketer of soft drinks. The Cocacola Company has a market cap of $125.35 billion; its shares were traded at around $54.09 with a P/E ratio of 17.9 and P/S ratio of 3.9. The dividend yield of The Cocacola Company stocks is 3.1%. The Cocacola Company had an annual average earning growth of 5.3% over the past 10 years. GuruFocus rated The Cocacola Company the business predictability rank of 2-star.
No. 3: PepsiCo Inc. (PEP, Financial), Weightings: 7.68% - 2,259,515 Shares
PepsiCo Inc. consists of: Frito-Lay Company Pepsi-Cola Company and Tropicana Products. Pepsico Inc. has a market cap of $95.65 billion; its shares were traded at around $61.39 with a P/E ratio of 16.6 and P/S ratio of 2.2. The dividend yield of Pepsico Inc. stocks is 3%. Pepsico Inc. had an annual average earning growth of 8.4% over the past 10 years. GuruFocus rated Pepsico Inc. the business predictability rank of 2.5-star.
No. 4: Viacom Inc. (VIA-B), Weightings: 7.5% - 4,617,556 Shares
Viacom is a leading global entertainment content company whose family of prominent and respected brands includes the multiplatform properties of MTV Networks BET Networks Paramount Pictures Paramount Home Entertainment and DreamWorks. MTV Networks a unit of Viacom is one of the world's leading creators of programming and content across all media platforms. MTV Networks connects with its audiences through its robust consumer products businesses and its more than three hundred interactive properties worldwide including online broadband wireless and interactive television services and also has licensing agreements joint ventures and syndication deals whereby all of its programming services can be seen worldwide. Viacom Inc. has a market cap of $15.57 billion; its shares were traded at around $28.34 with a P/E ratio of 11.9 and P/S ratio of 1.1.
No. 5: Microsoft Corp. (MSFT, Financial), Weightings: 6.98% - 4,655,175 Shares
Microsoft develops manufactures licenses and supports a wide range of software products for a multitude of computing devices. Microsoft software includes scalable operating systems for servers personal computers and intelligent devices; server applications for client/server environments; knowledge worker productivity applications; and software development tools. The Company's online efforts include the MSN network of Internet products and services and alliances with companies involved with broadband access and various forms of digital interactivity. Microsoft Corp. has a market cap of $251.95 billion; its shares were traded at around $28.22 with a P/E ratio of 17.3 and P/S ratio of 4.3. The dividend yield of Microsoft Corp. stocks is 1.8%. Microsoft Corp. had an annual average earning growth of 10% over the past 10 years. GuruFocus rated Microsoft Corp. the business predictability rank of 4-star.
No. 6: Pfizer Inc (PFE, Financial), Weightings: 6.27% - 6,536,150 Shares
Pfizer Inc is a research-based global pharmaceutical company that discovers and develops innovative value-added products that improve the quality of life of people around the world and help them enjoy longer healthier and more productive lives. Pfizer has three business segments: health care animal health and consumer health care. Its products are available in numerous countries. (Company Press Release) Pfizer Inc has a market cap of $118.45 billion; its shares were traded at around $17.55 with a P/E ratio of 8.2 and P/S ratio of 2.4. The dividend yield of Pfizer Inc stocks is 3.6%. Pfizer Inc had an annual average earning growth of 11% over the past 10 years. GuruFocus rated Pfizer Inc the business predictability rank of 2.5-star.
Comments
After taking advantage of the sharp fall and rally of the low quality issues, Yacktman is back to a portfolio of high quality stocks. He is optimistic about the future return of the stocks even after the stock rallied more than 60% from the lowest point. In his own words:
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It is the long term return that matters, someone may say. In the last decade, The Yacktman Fund and The Yacktman Focused Fund have compounded at 10.86% and 10.59% respectively while the S&P 500 declined slightly. Clearly, Yacktman earned his right to be optimistic. In his letter, he explained “Why market predictions do not matter”. But the end of the day, it is the security-by-security analysis that wins the day.
In the letter, Yacktman listed top ten stocks for each of his two funds to illustrate the high quality of his holdings. Here is a review of the top holdings of the aggregated portfolio of his funds:
No. 1: News Corp. (NWS-A), Weightings: 8.54% - 12,295,460 Shares
NEWS CORPORATION is a diversified entertainment company with operations in eight industry segments: filmed entertainment; television; cable network programming; direct broadcast satellite television; magazines and inserts; newspapers and information services; book publishing; and other. The activities of News Corporation are conducted principally in the United States Continental Europe the United Kingdom Australia Asia and the Pacific Basin. News Corp. has a market cap of $15.45 billion; its shares were traded at around $0 with a P/E ratio of 6.86 and P/S ratio of 0.47. The dividend yield of News Corp. stocks is 1.41%. News Corp. had an annual average earning growth of 17.2% over the past 5 years.
No. 2: The CocaCola Company (KO, Financial), Weightings: 8.08% - 2,595,595 Shares
The Coca-Cola Company is the world's largest beverage company and is the leading producer and marketer of soft drinks. The Cocacola Company has a market cap of $125.35 billion; its shares were traded at around $54.09 with a P/E ratio of 17.9 and P/S ratio of 3.9. The dividend yield of The Cocacola Company stocks is 3.1%. The Cocacola Company had an annual average earning growth of 5.3% over the past 10 years. GuruFocus rated The Cocacola Company the business predictability rank of 2-star.
No. 3: PepsiCo Inc. (PEP, Financial), Weightings: 7.68% - 2,259,515 Shares
PepsiCo Inc. consists of: Frito-Lay Company Pepsi-Cola Company and Tropicana Products. Pepsico Inc. has a market cap of $95.65 billion; its shares were traded at around $61.39 with a P/E ratio of 16.6 and P/S ratio of 2.2. The dividend yield of Pepsico Inc. stocks is 3%. Pepsico Inc. had an annual average earning growth of 8.4% over the past 10 years. GuruFocus rated Pepsico Inc. the business predictability rank of 2.5-star.
No. 4: Viacom Inc. (VIA-B), Weightings: 7.5% - 4,617,556 Shares
Viacom is a leading global entertainment content company whose family of prominent and respected brands includes the multiplatform properties of MTV Networks BET Networks Paramount Pictures Paramount Home Entertainment and DreamWorks. MTV Networks a unit of Viacom is one of the world's leading creators of programming and content across all media platforms. MTV Networks connects with its audiences through its robust consumer products businesses and its more than three hundred interactive properties worldwide including online broadband wireless and interactive television services and also has licensing agreements joint ventures and syndication deals whereby all of its programming services can be seen worldwide. Viacom Inc. has a market cap of $15.57 billion; its shares were traded at around $28.34 with a P/E ratio of 11.9 and P/S ratio of 1.1.
No. 5: Microsoft Corp. (MSFT, Financial), Weightings: 6.98% - 4,655,175 Shares
Microsoft develops manufactures licenses and supports a wide range of software products for a multitude of computing devices. Microsoft software includes scalable operating systems for servers personal computers and intelligent devices; server applications for client/server environments; knowledge worker productivity applications; and software development tools. The Company's online efforts include the MSN network of Internet products and services and alliances with companies involved with broadband access and various forms of digital interactivity. Microsoft Corp. has a market cap of $251.95 billion; its shares were traded at around $28.22 with a P/E ratio of 17.3 and P/S ratio of 4.3. The dividend yield of Microsoft Corp. stocks is 1.8%. Microsoft Corp. had an annual average earning growth of 10% over the past 10 years. GuruFocus rated Microsoft Corp. the business predictability rank of 4-star.
No. 6: Pfizer Inc (PFE, Financial), Weightings: 6.27% - 6,536,150 Shares
Pfizer Inc is a research-based global pharmaceutical company that discovers and develops innovative value-added products that improve the quality of life of people around the world and help them enjoy longer healthier and more productive lives. Pfizer has three business segments: health care animal health and consumer health care. Its products are available in numerous countries. (Company Press Release) Pfizer Inc has a market cap of $118.45 billion; its shares were traded at around $17.55 with a P/E ratio of 8.2 and P/S ratio of 2.4. The dividend yield of Pfizer Inc stocks is 3.6%. Pfizer Inc had an annual average earning growth of 11% over the past 10 years. GuruFocus rated Pfizer Inc the business predictability rank of 2.5-star.
Comments
After taking advantage of the sharp fall and rally of the low quality issues, Yacktman is back to a portfolio of high quality stocks. He is optimistic about the future return of the stocks even after the stock rallied more than 60% from the lowest point. In his own words:
We think our funds are in very good shape today. After some portfolio rebalancing, many of the largest holdings in the funds are again the same ones that we owned going into the downturn that began in 2007. However, many of these positions are cheaper than they were two years ago. Coca”Cola, PepsiCo, Johnson & Johnson, Microsoft, and Proctor & Gamble all have higher earnings and revenues per share even though each stock remains lower than it was in 2007. On an absolute basis, this makes our forward return prospects for these positions superior to a couple of years ago. In addition, we have made new purchases which we think will add value over the long term.
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