David Winters

David Winters

Last Update: 11-14-2017
Related: Wintergreen Fund

Number of Stocks: 8
Number of New Stocks: 1

Total Value: $219 Mil
Q/Q Turnover: 28%

Countries: USA
Details: Top Buys | Top Sales | Top Holdings  Embed:

David Winters past Portfolios

David Winters 13F Filings

Portfolio DateNumber of StocksTotal Value (Mil)Number of New StocksQ/Q Turnover

David Winters 13D/G Filings

Filing date : 2017-11-21,

David Winters Watch

  • David Winters Takes Aim at Passive Investing

    David Winters (Trades, Portfolio) discussed why he believes passive investing doesn't offer all the benefits it advertises on Tuesday in an address to the CFA Society in New York.

    In the talk titled “The Hidden Costs of Passive Investing,” the founder of the actively managed Wintergreen Fund (Trades, Portfolio) said passive investing had transformed over the past 40 years when index investing was introduced as a means of buying a slice of an index at a low cost. As inflows to passively managed index funds mount – with $500 million in cash inflows in 2016 versus more than $300 million flowing out of active funds – investors have incurred both hidden expenses and risks, he said.  

  • David Winters Comments on Nestle

    During the first-half of 2017, the Fund took profits on two sets of Nestle (NSRGY) long-dated call options that the Fund purchased in 2013. At that time, Nestle was trading near CHFii 65 per share, and it seemed that the market indicated flat growth for the company. We thought otherwise, as we have been investors in Nestle’s common stock since 2007, and participated in many growth developments including, product innovations, new categories, acquisitions, emerging market growth, and management changes. We identified and executed on an intriguing value investment in late 2013 when we took advantage of an opportunity in call options. The Fund bought a set of options with a strike price of CHF 60, and another set with a strike price of CHF 68. In early June of this year, when Nestle common shares traded at approximately CHF 83 per share, the Fund sold these options as they were ’deep in the money’.

    We believe that our diligence and advocacy for the Fund’s shareholders allows us to take advantage of opportunities like this. It also is an example of our knowledge of options and our discipline to sell when purchased securities arrive at full value. While the Fund sold the options, it continues to hold the common stock because of our continued long-term confidence in the historically steady performance of this global giant and its new CEO. The first major step the new CEO plans to take is the sale of their U.S. chocolate business, which will include the Butterfinger and Baby Ruth brands. We endorse the strategy of concentrating on faster growing segments in Nestle’s operations and staying ahead of changing markets, trends, and tastes.

    From David Winters (Trades, Portfolio)' 2017 Wintergreen Fund Semi-Annual Report.   

  • David Winters Comments on British American Tobacco

    Since the Fund’s inception in 2005, Wintergreen has held significant investments in both BAT (NYSE:BTI) and Reynolds (NYSE:RAI). BAT’s management team has increased the company’s operating margin from the high-20s to mid-30s, doubled free cash flow to well over GBPi 3 billion per year, and raised the dividend by a 12% compounded annual growth rate. At the same time, the Reynolds management team used a value formula that consisted of employing pricing power, generating substantial free cash flow, and returning much of that cash to shareholders through increasing dividends and share repurchases. Earlier this year, BAT, which has a global footprint and had long held approximately 42% of Reynolds shares, announced a bid for the remainder of Reynolds, which primarily caters to consumers in the U.S. In addition to corporate due diligence, this deal required both government and shareholder approval before the transaction could occur. We saw significant value in both companies individually, and believed there was considerable future value whether or not the acquisition occurred. After careful consideration, the Fund supported the proposed transaction. We believe it will benefit shareholders of both companies for the long run.

    It is worth noting that the BAT purchase of Reynolds closed on July 25, 2017, after the reporting period for this report. Reynolds shares will no longer trade on the NYSE, with the company now under full ownership of BAT. 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.

    From David Winters (Trades, Portfolio)' 2017 Wintergreen Fund Semi-Annual Report.   

  • David Winters' Wintergreen Fund Semi-Annual Letter to Shareholders

    Dear Fellow Wintergreen Fund (Trades, Portfolio) Shareholder,  

  • David Winters Comments on Heineken Holding NV

    Most investors are familiar with Heineken Holding NV (XAMS:HEIO) (“Heineken”), in particular because of its dark green premium beer bottle. Second only to Corona in U.S. imported beer, Heineken is sold virtually everywhere in the world. Growing from a single brewery in Amsterdam in 1864 to the second-largest beer company in the world today, Heineken brews more than 250 brands, with widespread name recognition of Amstel, Dos Equis, Sol and Tiger, in addition to its premium flagship brand. The company is focused on continued growth in emerging markets. Five years ago only about 20% of its profits came from developing markets. That percentage now exceeds 60%. The company has been able to combine sales growth with stable and improving margins, forming one of the pillars of our investment thesis in the company. Heineken’s management also keeps a sharp eye on efficient capital deployment, adhering to hard RONA (Return on Net Assets) metrics. In combination with well-defined executive compensation plan determinants, this properly ties management pay to performance. Make no mistake, the global beer business is extremely competitive, but we believe Heineken management is out in front seeking major growth opportunities. At the time of this writing, the company is working on a transaction intended to increase its business in India and has just finalized a deal in Brazil.

    From David Winters (Trades, Portfolio)' Wintergreen Fund (Trades, Portfolio) 2016 annual report letter to shareholders.   

  • David Winters Comments on Baker Hughes

    Like the tobacco industry, the oil and gas industry is also undergoing consolidation, and the Fund has benefited from its holding in Baker Hughes, Inc. (NYSE:BHI) (“BHI”). The Fund’s position in BHI was initiated in late 2015 as an arbitrage opportunity when Halliburton Company (“HAL”) bid for BHI, and as a proxy for an anticipated return to growth in the oil services industry. Because the outcome of the merger was uncertain, the deal was written with a breakup fee of $3.5 billion, which we viewed as an attractive safety cushion for BHI in the event that the merger agreement was terminated. The deal did indeed break around mid-2016, and HAL paid the breakup fee to BHI, which then commenced a massive buyback of its stock. Shortly thereafter, General Electric Co. made an approach to merge its own oil and gas business unit with BHI. The Board of BHI approved the transaction and the merger is scheduled to close in the middle of 2017. We highlight this arbitrage win for the Fund as an example of an investment strategy that we sometimes employ as a supplement to our core value investing style.

    From David Winters (Trades, Portfolio)' Wintergreen Fund (Trades, Portfolio) 2016 annual report letter to shareholders.   

  • David Winters Comments on British American Tobacco

    Let’s look at some highlights for the Fund. In last year’s annual letter, we noted many virtues of Reynolds as a core portfolio investment for many years. A smart management team combined Reynolds with Lorillard, Inc. in an earnings-accretive deal, creating an even more powerful cash generating business. In the process, the company increased its appeal to British American Tobacco plc (“BAT”), its largest owner with 42% of outstanding shares, as a must-own asset to fully capture opportunities in the U.S. and benefit from Reynolds’s product innovations. Our belief that BAT (BAT) would eventually bid for the rest of the shares came to fruition last October, resulting in a surge in the value of Reynolds, the Fund’s largest holding. With an improved deal price and structure more favorable to shareholders, Reynolds agreed to the takeover in January of 2017 (closing is expected by the Adviser to occur in the third quarter of 2017). As shareholders of BAT, another top holding of the Fund, we hope to continue to collect the steady amounts of cash returned by this combined powerhouse.

    From David Winters (Trades, Portfolio)' Wintergreen Fund (Trades, Portfolio) 2016 annual report letter to shareholders.   

  • David Winters' Wintergreen Fund 4th Quarter Letter to Shareholders

    Dear Fellow Wintergreen Fund (Trades, Portfolio) Shareholder,  

  • David Winters Buys Israeli Defense Company

    Israel’s largest publicly traded arms and defense company, Elbit Systems Ltd. (XTAE:ESLT), singularly caught the eye of a manager who focuses on fundamental research but who has also tangled with public companies’ boards of late, David Winters (Trades, Portfolio).

    Winters’ global Wintergreen Fund (Trades, Portfolio) had $580 million in assets as of June 30, with 76% invested in common stocks concentrated in the U.S., Switzerland and U.K. He described the fund, started in 2005, in a recent shareholder letter as embracing companies with pristine balance sheets and shunning modish market favorites, with cigarette companies Reynolds American Inc. (NYSE:RAI), British American Tobacco (LSE:BATS) and Altria Group (NYSE:MO) among its largest four holdings as of Sept. 30.


  • David Winters Comments on British American Tobacco

    British American Tobacco plc (“BAT”) (BTI) was one of the Fund’s first investments in 2005. The position has grown to become the Fund’s second largest stock holding, behind Reynolds American Inc. All along the way, BAT’s very capable management team has driven the operating margin up from the high 20s to mid-30s, doubled free cash flows to well over GBPii 3 billion per year, and raised the dividend by a 12% compounded annual growth rate. Shareholders of BAT have been rewarded nicely with an 18% average annual return since October 2005. BAT remains an important core holding for the Fund because it has historically been a dependable cash generator, particularly during times of uncertainty, the most prominent of which is presently unfolding in its home country. “Brexit” was a surprise to many and it is likely that in the U.K. business world there will be many winners and losers as a result of it. An immediate visible impact was the fall in the value of the pound sterling in June 2016, which could be net beneficial to BAT’s bottom line, as the company sells its products in dozens of overseas markets. Enhanced international consumer consumption power that comes with stronger local currencies versus the pound sterling could help promote overall sales growth. Another reason we remain investors in BAT is that it has an extremely modest equity compensation plan for executives, which contributes to extremely low Look Through Expenses.

    From David Winters (Trades, Portfolio)' Wintergreen Fund 2016 Semi-Annual Report.   

  • David Winters Comments on Birchcliff Energy Ltd.

    Wintergreen Advisers believes the mark of good management in the commodity sector is a steady hand to steer the company through cycles. In Birchcliff Energy Ltd.’s (“Birchcliff”) (BIR) management, we think you have exactly that. Whereas other oil and gas drillers in North America have become unprofitable or even bankrupt due to excessive debt in the recent global downturn in the oil and gas market, Birchcliff has sustained operations in the black on a cash basis, with controlled levels of debt. Credit goes to the leaders of the company who have reduced operating costs per boe (barrel of oil equivalent) to record lows this year. This combination of profitability and balance sheet strength enabled Birchcliff to take advantage of a competitor’s need to sell assets in order to decrease its own dangerous debt burden. At the end of July, Birchcliff acquired a large tract of petroleum and natural gas properties in the Gordondale area of Alberta, Canada. The strategic rationale of the investment in these fields seems readily apparent, as the properties lie between two contiguous drilling areas already owned by Birchcliff. Additional production at a positive netback margin, a profitability measure in the industry, should pump up cash flows for Birchcliff shareholders through any part of the market cycle. The Fund has been a shareholder in Birchcliff since 2009 and with a secondary equity offering in conjunction with the Gordondale transaction, we increased our holdings of the company at what we believe was an attractive price.

    From David Winters (Trades, Portfolio)' Wintergreen Fund 2016 Semi-Annual Report.   

  • David Winters Wintergreen Fund Semi-Annual Report

    Dear Fellow Wintergreen Fund (Trades, Portfolio) Shareholder,  

  • David Winters Sells Stake in Canadian Natural Resources

    David Winters (Trades, Portfolio)' top eight transactions in the first quarter were partial or complete sales of stakes in his portfolio. He made only one new purchase in the quarter, and his two largest reductions were in tobacco stocks.

    Winters’ largest deal of the first quarter was the divestiture of his stake in Canadian Natural Resources (NYSE:CNQ), an oil and gas company based in Calgary, Alberta. The guru sold his 2,251,197-share stake for an average price of $21.93 per share. The divestiture had a -12.79% impact on Winters’ portfolio.


  • Global Investor David Winters Purchases 3 New Stocks

    David Winters (Trades, Portfolio) manages the Wintergreen Fund (Trades, Portfolio), a long-term, global value firm that oversees $636 million.

    Winters eschews short-term, emotion-driven trading in favor of securities priced below their intrinsic value, sometimes taking activist positions. Companies of his caliber have low book value, high cash flow, low price-earnings ratio and quality management.


  • David Winters Comments on Consolidated-Tomoka Land Co.

    With roots that go back to the early 1900’s, Consolidated-Tomoka Land Co. (CTO) (NYSE: CTO, “CTO”) is a land company in Volusia County, Florida, that was formed as the remains of a liquidating trust from Baker, Fentress & Co. In 2006, when Wintergreen first invested in CTO, it was and still is a company with approximately 10,500 acres of largely undeveloped land near the famous Daytona International Speedway and Interstate 95, a primary north-south highway. Although CTO has sold off some acreage over the years, and it has improved the quality of its income property portfolio, in our opinion, CTO has largely not taken advantage of or participated in rising land values during the ongoing real estate recovery. We believe CTO’s stock price is significantly undervalued, and the increase in stock price over the years generally tracks the increase in value of the real estate market. Since initiating a position, Wintergreen has encouraged meaningful changes at CTO including the replacement of what we viewed as a flawed management team and the implementation of annual elections for directors through the removal of the staggered board structure which had worked to entrench the previous slate of directors.

    During the last decade, while Wintergreen has owned a significant portion of CTO, we think the company has been plagued by management issues, lack of overall vision to design and implement a development plan for the company, and the overarching real estate market that, while it was sour for a few years, provided well-run companies with the opportunity to prepare for the current upswing in the real estate market. We believe this current upswing, combined with favorable interest rates makes it a great time to take action. However, we believe that CTO has again lost its way.

    To invigorate and motivate management to re-focus on the best interests of all shareholders, advisory clients of Wintergreen Advisers, as beneficial owners of more than 25% of the outstanding shares of CTO, have initiated a shareholder proposal (the “Wintergreen Proposal”) for the 2016 annual meeting of CTO shareholders. The Wintergreen Proposal is for CTO, in order to capitalize upon the revitalized real estate market in Daytona Beach and Volusia County, to hire an independent advisor to evaluate ways to maximize shareholder value through the sale of CTO or the liquidation of CTO’s assets. We believe numerous CTO shareholders are supportive of event-driven value creation for this company. As we have discussed with current CTO management, we believe that continuation of the status quo at the company is not an acceptable option. CTO’s Board of Directors, in response to the Wintergreen Proposal, and in advance of the shareholder meeting, has hired independent advisor Deutsche Bank to assist in this evaluation. While it is too early to tell how this process will proceed, Wintergreen Advisers will attend the upcoming shareholder meeting and continue its active participation in this investment.

    From David Winters (Trades, Portfolio)' 2015 annual letter to shareholders.   

  • David Winters Comments on Reynolds

    Reynolds (NYSE:RAI) has been a core Wintergreen investment for many years. The Reynolds management team utilizes a value formula that consists of wielding pricing power, generating substantial free cash flows, and returning much of that cash through raising dividends and share repurchases. The company acquired the Newport brand via the takeover of Lorillard during 2015, and traded away lower-return assets, for an attractive price. Reynolds’ market share of the U.S. cigarette market has increased from around 25% to 33% with the addition of Newport as of December 31, 2015. According to Reynolds’ management, the deal is accretive on an earnings per share basis in the first 12 months and will have “strong double-digit accretion second year and beyond.” Reynolds may execute a rapid pay-down of debt after the Lorillard deal, which will increase the prospects of accelerating stock buybacks. With our investment in British American Tobacco plc (LSE: BATS, “BAT”), the largest shareholder in Reynolds with ownership of 42% of Reynolds outstanding shares, we should further benefit from the ongoing success of Reynolds. Since BAT has acquired affiliates of some portfolio companies in the past, we would not be surprised to see one day the complete purchase of Reynolds’ shares that BAT doesn’t already own.

    From David Winters (Trades, Portfolio)' 2015 annual letter to shareholders.   

  • David Winters Comments on Sika AG

    Every now and then, controlling shareholders of an excellent business foolishly attempt to enrich themselves at the expense of minority shareholders. At the close of 2014, the Burkard family announced its intention to sell its controlling stake of Sika AG (XSWX:SIK)(SIX: SIK) of Switzerland to a French competitor, Cie de Saint-Gobain, which has long coveted this prize of a company. The problem in this proposed deal is that the Burkard family, which conducted negotiations away from Sika’s Board of Directors, would receive a premium in the sale and all other shareholders would not. Now held up in the judicial process due to strong and swift legal action taken by Sika’s Board of Directors, and backed by key minority shareholders, we think this brazen attempt to deprive shareholders of Sika’s full and fair value will fail. Shares of this little-known gem of a company—a maker of high value-added construction materials to satisfy growing demand for stronger, lighter, and more energy- efficient building and automobile structures – have been knocked down to a discount, which we intend to exploit. Out of the range of possible outcomes in the battle for control, we believe the current plan of the Burkard family is the least likely, and when this corporate governance distraction is resolved in the favor of the Board of Directors and minority shareholders, the focus will return to the company’s attractive fundamentals of organic sales growth in both developed and emerging markets, earnings-accretive bolt-on acquisitions, and steady cash flow generation.

    From David Winters (Trades, Portfolio)' 2015 annual letter to shareholders.   

  • David Winters' Wintergreen Fund 2016 Annual Letter

    Dear Fellow Wintergreen Fund (Trades, Portfolio) Shareholder,

    As we look back on Wintergreen Fund (Trades, Portfolio), Inc.’s (WGRNX)(NASDAQ: WGRNX, NASDAQ: WGRIX, the “Fund” or “Wintergreen”) first ten years, we are extremely pleased with what we have accomplished. The Fund has sought to act with integrity and to stand up for our shareholders when faced with management teams who we believe have misbehaved. The Fund has remained focused on its long-term, global value investing approach, and has not wavered in an attempt to chase short- term performance. It has clearly been a difficult period to be a true value investor, but we believe that remaining disciplined, while so many others have strayed, offers our shareholders a great opportunity for future success.  

  • David Winters Sells Stake in Franklin Resources

    Most of David Winters (Trades, Portfolio)’ fourth-quarter activitiy involved reductions of existing stakes, but the guru did sell a stake in his portfolio, and it turned out to be his most noteworthy trade of the quarter.

    Winters’ most significant fourth-quarter transaction was the sale of his 1,554,224-share stake in Franklin Resources Inc. (NYSE:BEN), a San Mateo, California-based financial services holding company, for an average price of $39.15 per share. The divestiture had a -11.93% impact on Winters’ portfolio.


  • David Winters: Navigating Turbulent Markets

    While the press headlines would generally lead investors to believe that the world is on the verge of ending, at Wintergreen we believe that these are times of opportunity. Our confidence comes from truly understanding the businesses that we own. Our portfolio is comprised of high quality securities that in most cases have very little borrowing, and most with exceptional management teams that are working for all long-term shareholders.


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