Donald Yacktman talks with Bloomberg's Carol Massar about his investment strategy yesterday. In the current environment, he advises investors to have patience with the market.
Specifically, he put his money where his mouth is and invest in companies like Coca-Cola and PepsiCo.. He thinks his holdings are offering a forward cash yield of around low teens, way excessive of the bond yield. Commenting on Warren Buffett, he stated Buffett is the best asset allocator for the past fifty years but each investor should stand on his own. Buffett owns Kraft and Yacktman owns PepsiCo; Yacktmant thinks PepsiCo is of far better value than Kraft.
During the latest quarter (4Q09) for which we have data on, these are the top purchases he made:
No. 1: The Clorox Company (CLX), Add: 4.1% of the portfolio - Total: 1,598,063 Shares
Clorox Company's business operations, represented by the aggregate of its U. The Clorox Company has a market cap of $9.09 billion; its shares were traded at around $64.85 with a P/E ratio of 15.2 and P/S ratio of 1.7. The dividend yield of The Clorox Company stocks is 3.1%. The Clorox Company had an annual average earning growth of 10.7% over the past 10 years. GuruFocus rated The Clorox Company the business predictability rank of 3-star.
Yacktman added more than one million shares during 4Q09.
No. 2: Comcast Corp. Special (CMCSK), Add: 1.78% of the portfolio - Total: 7,000,290 Shares
Comcast Corporation is principally involved in the development, management and operation of broadband cable networks, and in the provision of electronic commerce and programming content. Comcast Corp. Special has a market cap of $50.81 billion; its shares were traded at around $17.41 with and P/S ratio of 1.4. The dividend yield of Comcast Corp. Special stocks is 1.6%. Comcast Corp. Special had an annual average earning growth of 14.6% over the past 10 years.
Yacktman added about 2.6 million shares during the quarter.
The Coca-Cola Company is the world's largest beverage company and is the producer and marketer of soft drinks. The Cocacola Company has a market cap of $125.91 billion; its shares were traded at around $54.62 with a P/E ratio of 17.9 and P/S ratio of 4.1. The dividend yield of The Cocacola Company stocks is 3.2%. The Cocacola Company had an annual average earning growth of 9.1% over the past 10 years. GuruFocus rated The Cocacola Company the business predictability rank of 2.5-star.
Here Yacktman and Buffett can share a drink. He bought about three-quarters of a million shares during the quarter.
No. 4: News Corp. (NWSA), Add: 2.61% of the portfolio - Total: 16,982,915 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. News Corp. has a market cap of $26 billion; its shares were traded at around $14.27 with a P/E ratio of 18 and P/S ratio of 0.8. The dividend yield of News Corp. stocks is 1.1%.
Yacktman added about 4.7 million shares in 4Q09.
No. 5: PepsiCo Inc. (PEP), Add: 3.98% of the portfolio - Total: 3,772,950 Shares
PepsiCo, Inc. consists of: Frito-Lay Company, Pepsi-Cola Company, and Tropicana Products. Pepsico Inc. has a market cap of $104.02 billion; its shares were traded at around $66.26 with a P/E ratio of 17.8 and P/S ratio of 2.4. The dividend yield of Pepsico Inc. stocks is 2.7%. Pepsico Inc. had an annual average earning growth of 8.9% over the past 10 years. GuruFocus rated Pepsico Inc. the business predictability rank of 2.5-star.
Yacktman added 1.5 million during the quarter. Of course, you heard what he said in the interview, this is largest holding for the moment.
ConclusionMarket could go up or down, or up and down; we could have inflation or deflation. Rather than get out of the market and waiting for better days (although we do see he raised cash slightly), Yacktman’s solution to the world’s problem of uncertainty is to invest in highest quality stocks. If the market does nothing, these stocks currently yield a forward cash yield above 10%. If the market goes down dramatically, he can always swap them for lower quality issues which tend to rebound more.
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