The Yacktman Fund (Trades, Portfolio), part of Yacktman Asset Management (Trades, Portfolio), disclosed it expanded its position in three holdings when it released its third-quarter portfolio last week.
Managed by Stephen Yacktman and Jason Subotky, the Austin, Texas-based fund seeks to achieve long-term capital appreciation and current income by investing in growth companies that are trading at a discount.
During the quarter, the fund added to its holdings of Samsung Electronics Co. Ltd. (XKRX:005930, Financial), KT&G Corp. (XKRX:033780, Financial) and Bollore SA (XPAR:BOL, Financial).
Samsung
The fund expanded its Samsung stake by 43.4%, investing in 4.9 million shares for an average price of 37,450.8 won ($33.18) per share. The fund now holds roughly 16.4 million shares, which represents 10.36% of the fund’s equity portfolio. GuruFocus estimates the fund has gained 67% on the investment since the fourth quarter of 2013.
The South Korean technology company has a market cap of 292.13 trillion won; its shares closed at 35,800 won on Friday with a price-earnings ratio of 6.58, a price-book ratio of 1.33 and a price-sales ratio of 1.18.
The Peter Lynch chart shows the stock is trading below its fair value, suggesting it is undervalued.
Samsung’s financial strength and profitability and growth were both rated 8 out of 10 by GuruFocus. Although the company has issued approximately 3,234 billion won in new long-term debt over the last three years, it is at a sustainable level as a result of comfortable interest coverage. In addition, the Altman Z-Score of 4.84 indicates it is financially stable. The company is also supported by an expanding operating margin, good returns and a high Piotroski F-Score of 9.
Of the gurus invested in Samsung, the fund has the largest position with 0.24% of outstanding shares. The Yacktman Focused Fund (Trades, Portfolio) and Francisco GarcĂ Âa ParamĂ©s (Trades, Portfolio) are also shareholders.
KT&G
Yacktman and Subotky boosted the KT&G position by 11.24%, purchasing 121,380 shares for an average price of 105,362 won per share. It now holds 1.2 million shares, representing 2.08% of the equity portfolio. According to GuruFocus, the fund has lost approximately 5% on the investment since the first quarter of 2018.
The tobacco company, which is also headquartered in South Korea, has a market cap of 12.16 trillion won; its shares closed at 96,300 won on Friday with a price-earnings ratio of 10.39, a price-book ratio of 1.58 and a price-sales ratio of 2.69.
According to the Peter Lynch chart, the stock is undervalued.
GuruFocus rated KT&G’s financial strength 8 out of 10, supported by good interest coverage and a high Altman Z-Score of 5.45. The company’s profitability and growth scored a 7 out of 10 rating as a result of an expanding operating margin and a moderate Piotroski F-Score of 4, which means business conditions are stable. The company also has a business predictability rank of 2.5 out of five stars. GuruFocus says companies with this rank typically see their stock prices gain an average of 7.3% per year. The rank is on watch, however, since there has been a decline in KT&G’s revenue per share over the last 12 months and assets are building at a faster rate than its revenue.
With 0.95% of outstanding shares, the fund is KT&G’s largest guru shareholder. Charles de Vaulx (Trades, Portfolio), the Focused Fund and the IVA International Fund (Trades, Portfolio) also hold the stock.
Bollore
The fund picked up 1.3 million shares of Bollore for an average price of 3.9 euros ($4.52) per share, expanding the holding 3.52% to 37.9 million shares. The stake represents 3.03% of the equity portfolio. GuruFocus estimates the fund has lost an estimated 17% on the investment since the third quarter of 2017.
The French transportation and logistics company has a market cap of 10.49 billion euros; its shares closed at 3.6 euros on Friday with a price-earnings ratio of 15, a price-book ratio of 1 and a price-sales ratio of 0.57.
Based on the Peter Lynch chart, the stock appears to be trading near its fair value.
Bollore’s financial strength was rated 5 out of 10 by GuruFocus. While the company has issued 1.3 billion euros in new long-term debt over the last three years, its sufficient interest coverage makes it manageable. The low Altman Z-Score of 0.67, however, indicates the company is at risk of going bankrupt. The company’s profitability and growth fared a bit better, scoring a 7 out of 10 rating, due to an expanding operating margin, a high Piotroski F-Score of 7 and a 2.5-star business predictability rank. In addition to consistent earnings and revenue growth, GuruFocus says companies with this rank typically see their stock prices gain an average of 7.3% per year.
The fund is the company’s largest guru shareholder with 1.3% of outstanding shares. Other guru shareholders include de Vaulx, the Focused Fund, IVA International, the Invesco European Growth Fund (Trades, Portfolio) and Paramés.
Other trades
During the quarter, the fund managers also trimmed positions in Oracle Corp. (ORCL, Financial), Johnson & Johnson (JNJ, Financial), PepsiCo Inc. (PEP, Financial), Sysco Corp. (SYY, Financial) and Cisco Systems Inc. (CSCO).
The fund’s $5.42 billion portfolio, which is composed of 29 holdings, is largely invested in the consumer defensive and technology sectors. According to its website, the fund has underperformed the S&P 500 year to date with a return of 6.74%. The index has posted a 10.56% return.
Disclosure: No positions.
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