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Wallace Weitz’s Top Holdings: Berkshire Hathaway, Liberty Media Interactive, Liberty Global Inc., Redwood Trust Inc., Dell Inc., Comcast Corp.

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guruek

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Wallace Weitz’s firm Weitz Funds offers eight mutual funds, with about $3 billion of asset under management. It is quite an achievement for an asset manager who started the firm 25 years ago with a modest $10 million of asset under management. Since the firm is located in Omaha, Nebraska and Weitz also confesses subscribing to value investing approach, one would expect him to share some traits with his neighbor Warren Buffett down the street in the same city.

Value investing! It is in the air or water of that city, especially this weekend when Warren Buffett held his annual Berkshire shareholders’s meeting.

Weitz Funds’ website features an article Eight Funds - One Philosophy that list the following investment principles for the firm:
  • "We eat our own cooking."
  • We are patient, long-term investors.
  • We try to stay within our "circle of competence."
  • We worry about permanent loss of capital—not price volatility.
  • We think "benchmark risk" is part of investment life.
sounds familiar? Some of the language does remind us of Buffett, doesn't it?

Performance

During the first quarter of 2010, his flagship Weitz Value Fund returned10.2% vs. S&P 500’s 5.4%. The fund did better than S&P500 during the past 15, 20, and since inception of 5/9/1986.

WeitzFundPerformance20100331.jpg




Discussing the quarterly performance, Weitz highlighted in the recent quarterly report the stocks that contributed to the success of the fund:
Berkshire Hathaway rose 24% during the quarter. The company completed the Burlington Northern acquisition, and Berkshire was subsequently added to the S&P 500 creating a wave of new demand for the stock. While we trimmed our holdings modestly, we believe the business remains undervalued. A trio of Liberty companies chaired by John Malone continued to climb during the quarter (Liberty Media - Capital +52%, Liberty Media - Interactive +41% and Liberty Global +32%). Comcast (+13%) and UPS (+13%) had less remarkable percentage returns but generated solid business results and dollar gains for the Fund. Construction materials stocks Vulcan Materials (-10%) and Martin Marietta Materials (-6%) declined modestly as volumes remained weak, but recent railcar loading data for aggregates has been more encouraging.


Top Holdings

Weitz tends to run a relatively concentrated portfolio and put good money in the top holdings. In his own words:
Value Fund continues to tilt toward our best larger company ideas, with more than 75% of the Fund’s stock investments in companies with market caps greater than $5 billion. The Fund also remains relatively concentrated, with the ten largest holdings representing 47% of net assets.


We highlight his top holdings below:

No. 1: Berkshire Hathaway Inc. (BRK-B), Weightings: 8.76% - 1,981,853 Shares

Perhaps the near 10% holding in Buffett’s stock is Weitz’s way of showing his respect to his senior neighbor. Weitz sold about 800,000 shares of BRK-B or a bit more than 25% of his holdings during the quarter. But he still thinks the stock remains undervalued and the stock continues to be his top holding.

No. 2: Liberty Media Corp. Interactive Common S (LINTA), Weightings: 6.85% - 8,223,200 Shares

Liberty Media Corporation owns a broad range of electronic retailing, media, communications and entertainment businesses and investments. Liberty Media Corp. Interactive Common S has a market cap of $8.68 billion; its shares were traded at around $15.3 with and P/S ratio of 1.2.

Weitz has held the stock since before 2006 and he has been selling shares ever slowly (about 330,000 shares for the quarter).

No. 3: Liberty Global Inc. Series C (LBTYK), Weightings: 5.87% - 3,734,000 Shares

Liberty Global Inc. Series C has a market cap of $34.36 billion; its shares were traded at around $26.79 .

Again, Weitz has been selling shares in this stock during 1Q10 (about 300,000 shares).

No. 4: Redwood Trust Inc. (RWT), Weightings: 5.82% - 6,934,100 Shares

REDWOOD TRUST INC. is a self-advised and self-managed real estate investment trust. Redwood Trust Inc. has a market cap of $1.27 billion; its shares were traded at around $16.28 with a P/E ratio of 23 and P/S ratio of 4.4. The dividend yield of Redwood Trust Inc. stocks is 6.1%.

Weitz increased his holding in the REIT, from 6.669 million shares to 6.934 million shares.

No. 5: Dell Inc. (DELL), Weightings: 4.87% - 5,965,621 Shares

Dell Inc. is a premier provider of products and services required for customers worldwide to build their information-technology and Internet infrastructures. Dell Inc. has a market cap of $32.32 billion; its shares were traded at around $16.51 with a P/E ratio of 16.7 and P/S ratio of 0.6. Dell Inc. had an annual average earning growth of 4.1% over the past 10 years.

Weitz increased holdings in the stock from 5.641 million shares to 5.965 million shares.

No. 6: Comcast Corp. Special (CMCSK), Weightings: 4.16% - 4,259,600 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 $52.03 billion; its shares were traded at around $17.83 with and P/S ratio of 1.4. The dividend yield of Comcast Corp. Special stocks is 2.2%. Comcast Corp. Special had an annual average earning growth of 14.6% over the past 10 years.

Weitz held his shares steady during the quarter.

Conclusion

There has been little change in Wallace Weitz’s top holdings for this quarter. Fund is performing well and he simply trimmed some stock that has gone up a lot.

One thing I find interesting those is that at the end of the quarter, cash accounts for about 20% of his fund. If this is typical, it makes outperforming the benchmark S&P 500 so much more difficult.

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