Mason Hawkins

Mason Hawkins

Last Update: 11-16-2017

Number of Stocks: 28
Number of New Stocks: 2

Total Value: $8,317 Mil
Q/Q Turnover: 5%

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

Mason Hawkins Watch

  • Longleaf Partners Comments on Chesapeake Energy

    Chesapeake Energy (NYSE:CHK) (+377%; +8.46%), one of the largest U.S. producers of natural gas, oil, and natural gas liquids, was the Fund’s top contributor to performance in 2016 and gained an additional 12% in the fourth quarter. Earlier in the year, we transitioned our equity position into heavily discounted bonds and convertible preferred stock, which offered equity-like returns higher in the capital structure and a potentially faster payback. As the bonds rose close to par, we exited them. At the end of the third quarter, we converted all of our appreciated preferred securities into common stock for an attractive premium. Over the course of the year, management executed beyond expectations, selling various assets, improving the balance sheet through discounted debt repurchases, reducing operating and capital expenditures, and renegotiating midstream contracts. The most recent asset sales in the fourth quarter included a portion of the company’s properties in the Haynesville Shale in northern Louisiana for proceeds of approximately $915 million. Signed or closed asset sales reached $2.5 billion in 2016, exceeding management’s original target of $1 billion. To further strengthen its balance sheet, the company secured a term loan and convertible debt offering, which raised more capital at better terms than expected. Since the beginning of 2012, Chesapeake has reduced debt by 50%, and its remaining fixed liabilities should be well covered in the coming years. The company has targeted a two times net debt over earnings before interests, taxes, depreciation, and amortization (EBITDA) with cash flow neutrality by 2018 and 5 to 15% of annual production growth by 2020. We salute CEO Doug Lawler and Chesapeake’s board, with Brad Martin as Chairman, for their successful pursuit of shareholder value in the face of massive headwinds.


  • Longleaf Partners Fund Commentary 4th Quarter

    Longleaf Partners Fund made substantial gains throughout the year, rising 20.72% in 2016, a large premium over the S&P 500’s 11.96% return. The Fund’s outperformance began in mid-February and occurred in spite of higher-than-normal cash in the portfolio. In the fourth quarter, the Fund appreciated 2.03% while the S&P 500 added 3.82%, most of which came following the presidential election.


  • Longleaf Partners 4th Quarter Shareholder Letter

    We are pleased to report that 2016 was a great year for the shareholders of the Longleaf Partners Funds. All four Funds delivered strong absolute results, three outperformed their indices by a wide margin, and each Fund ended the year well-positioned for the future. We produced good returns because: the competitive advantages of our businesses built organic value growth; our corporate leaders made intelligent capital allocation decisions that meaningfully augmented value; the market began to recognize our companies’ higher intrinsic worth; and, we positioned the Funds’ portfolios to maximize returns while limiting downside. We are highly confident the Funds will continue delivering excess returns because the quality and leadership of our investees should drive additional value accretion and because of market factors that appear more favorable to our bottom-up, valuation based investment approach.

    Our most widely held and more heavily weighted holdings across the Funds are uniquely long-term investments that we know very well. These companies1, like Level 3 Communications, FedEx, CK Hutchison, Cheung Kong Property, EXOR, CNH Industrial, Graham Holdings, LafargeHolcim, and Liberty Media, all have growing competitive advantages, highly capable management partners, and cash-generative businesses that should continue to grow their values per share. This group trades at a very attractive average multiple of 11 to 12 times our calculated 2017–18 earnings power versus the S&P 500’s 16 to 17 times and MSCI EAFE’s 14 to 15 times current price-earnings (P/E) multiple based on next twelve month estimates.


  • Fairholme, Longleaf Overcome Painful Year to Lead Best Funds of 2016

    The peaks and valleys that define the chart of the Fairholme Fund (Trades, Portfolio)’s performance jutted to a new summit in 2016, proclaiming to investors that a mere $10 laid in the hands of Bruce Berkowitz (Trades, Portfolio) in 2000 would be worth $62.21 today. Far below, at base camp, investors entrusting the same amount to the comparatively plodding and oxygen-starved S&P 500, after clocking another year in its hike, get $20.84 back.

    Such was the year of fresh wind not just for Berkowitz, but another popular value fund, Mason Hawkins' (Trades, Portfolio) Longleaf Partners. Most of their returns are owed to stock picking. A generally verdant environment for underpriced equities offered a dose of help, too, as U.S. large cap equity value funds raised the average bar to 15.1% in returns, as measured by Morningstar, year to date. Fairholme topped it with a 26.7% return and Longleaf with 21.62%. Their performance placed them among the best 10 large-cap stock funds of 2016, according to Kiplinger


  • Mason Hawkins Extends His Kodak Moment

    Mason Hawkins' (Trades, Portfolio) Southeastern Asset Management added to its position in Eastman Kodak Co. (NYSE:KODK) by 2,704.52% on Nov. 30.

    Hawkins is the CEO and chairman of Southeastern, which he founded in 1975. His firm manages the Longleaf Partners Fund. The firm relies on in-depth, fundamental research to find strong businesses that are discounted and have good management.


  • Mason Hawkins Adds to FedEx

    Guru Mason Hawkins (Trades, Portfolio) added 241,024 shares of FedEX (NYSE:FDX) for an average price of $163.73 per share during the third quarter. The trade had a 0.4% impact on Southeastern Asset Management’s portfolio, a global investment firm Hawkins manages and founded in 1975.

    FedEx’s market price has climbed an estimated 19% since the third quarter. Since the first quarter of 2010, Hawkins has gained an estimated 77% with his investment in FedEx.


  • Mason Hawkins Goes 3 for 3 in 3rd Quarter

    Southeastern Asset Management’s Mason Hawkins (Trades, Portfolio) acquired three new holdings and sold out of three others in the third quarter.

    Hawkins founded Southeastern in 1975 in Memphis where he currently serves as chairman and CEO. He and his partners manage the Longleaf Partners Fund. The firm follows an investment process that relies on in-depth, fundamental research. It believes the key to success is high-conviction investing for the long term in businesses that are strong, deeply discounted and have good management.


  • Mason Hawkins Boosts Chesapeake, Buys Alphabet

    Mason Hawkins (Trades, Portfolio) has been chairman and CEO of Southeastern Asset Management since 1975. During the third quarter the guru’s largest trades were as follows:

    His stake in Chesapeake Energy Corp. (CHK) saw a strong increase of 260.26% with an impact of 4% on the portfolio.


  • Lemon Juice, Knights and Hybrids

    Being a hybrid maker off and on over the years, I'm very comfortable with the idea and have been the subject of quite a few pretty good mashups myself.” – David Bowie


  • Insider Invests in GTx

    The Pyramid Peak, a charitable organization that was founded by guru Mason Hawkins (Trades, Portfolio), purchased 7,716,049 shares of GTx Inc. (NASDAQ:GTXI) for 81 cents per share Oct. 14, according to a Form 4 filing with the Securities and Exchange Commission.

    GTx is headquartered in Memphis, Tennessee. It is a biopharmaceutical company that is dedicated to the discovery, development and commercialization of small molecules that selectively modulate the effects of certain hormones produced by the body. The company is developing selective androgen receptor modulators also referred to as SARMs – to potentially treat a number of serious diseases including breast cancer, stress urinary incontinence and Duchenne muscular dystrophy.


  • Southeastern Asset Management Comments on Level 3 Communications

    Level 3 Communications (NYSE:LVLT) (-10%; -0.6%), the global fiber and integrated communications network company, was the Fund’s primary detractor in the third quarter. In spite of disappointing flat revenue growth, our appraisal increased with the company’s reported higher free cash flow coupon. In local currencies, the company’s Enterprise business grew across regions, with a particularly strong 10% rate in Latin America. Currency translations, however, created a significant drag in the quarter, turning Latin American and Europe, Middle East, Africa (EMEA) reported top line results negative. More importantly, total EBITDA in the quarter, as well as projections for the remainder of 2016, were exactly in line with expectations. The company’s growing cash position after over $260 million of free cash flow (FCF) in the quarter took net leverage to 3.5X EBITDA. We remain confident that CEO Jeff Storey and his team will continue to execute and will ultimately close the gap between the stock price and corporate value.

    Southeastern Asset Management's Longleaf Partners third quarter 2016 commentary.


  • Southeastern Asset Management Comments on CONSOL Energy

    CONSOL Energy (NYSE:CNX) (+19%; +1.1%), the natural gas and Appalachian coal company, added to the Fund’s return. CEO Nick Deluliis and the board, led by Chairman Will Thorndike, continued to pursue monetization of assets with the goal of ultimately separating the coal and gas businesses. Following the disposition of its metallurgical coal assets in the first half of the year, CONSOL sold its high-cost Miller Creek and Fola mines to a privately owned buyer who valued them higher than we did. The company also lowered costs across all segments and delivered positive free cash flow once again. Higher coal and gas prices drove strong returns at CONSOL’s holdings in coal master limited partnership (MLP) CNXC and midstream pipeline MLP CNNX. Sales of other companies’ exploration and production assets in Appalachia highlighted the value of CONSOL’s assets.

    Southeastern Asset Management's Longleaf Partners third quarter 2016 commentary.


  • Southeastern Asset Management Comments on CK Hutchison

    CK Hutchison (HKSE:00001) (+18%; +1.1%), the Hong Kong-based global conglomerate, was a top performer in the quarter. Following the initial shock of Brexit in late June, the company’s limited impact from a weaker pound became more apparent. Regulators rejected the company’s proposed acquisition of O2 by its UK mobile phone business Three UK, but CK Hutchison received approval in September for the merger of Three Italia with Wind in a 50/50 joint venture between CK Hutchison and VimpelCom. This combination will create the largest mobile operator in Italy with approximately 37% market share versus the two remaining primary competitors. CK Hutchison expects at least 5 billion euros of synergies from this merger, with most to be delivered within three years of the transaction closing in the fourth quarter of 2016. These projected synergies exclude any upside from selling assets and spectrum, utilizing tax losses, or refinancing expensive debt. CK Hutchison’s European businesses grew nicely, and the company expects to see solid global growth, particularly in its telecom and retail segments. Li Ka-shing and his son, Victor, continue to build value for shareholders.

    Southeastern Asset Management's Longleaf Partners third quarter 2016 commentary.


  • Southeastern Asset Management Comments on FedEx

    FedEx (NYSE:FDX) (+15%; +1.2%), the global transportation and logistics company, was a leading contributor. The company reported strong results across the board, with an increase in margins in its Express and Ground divisions. Ground had 10% growth in average daily volumes year-over-year and announced a price increase of 4.9% in 2017, once again demonstrating the company’s strong pricing power even in a time of low inflation.

    Management indicated that the integration of TNT, which the company acquired in May of this year, would generate at least $750 million of annual synergies across its network over the next few years. The company’s tax rate should also benefit from more profits based in Europe. The company raised guidance for fiscal year 2017 and continued to buy back shares. Our appraisal increased, and in spite of the price appreciation, the stock remains significantly discounted.


  • Southeastern Asset Management Comments on LafargeHolcim

    LafargeHolcim (XSWX:LHN) (+31%; +1.5%), the world’s largest global cement, aggregates, and ready-mix concrete producer, was also a top contributor. During the quarter, CEO Eric Olsen and his management team made progress with respect to divestitures, merger synergies, and pricing. The company sold assets in India, Sri Lanka, and Vietnam at attractive prices. These sales coupled with previously announced transactions in South Korea, Saudi Arabia, and China got the company to its 2016 CHF3.5 billion divestiture goal ahead of schedule and helped LafargeHolcim reduce its debt from CHF18 billion to CHF13 billion in 2016. An announced CHF1.5 billion of additional divestitures are targeted for 2017, which will move the balance sheet to investment grade quality and allow management to return free cash flow (FCF) to shareholders. Expected synergies from last year’s merger between Lafarge and Holcim have come through on target with an expected CHF450 million this year. Industry cement pricing is moving in the right direction. During the quarter, prices increased 2.2% sequentially versus 1.2% in 1Q 2016 and -1.6% in 4Q 2015. LafargeHolcim now has higher prices in almost 70% of its markets versus 2015 levels. Even though volumes did not grow in all markets, higher prices and large cost savings resulted in strong earnings before interest, taxes, depreciation, and amortization (EBITDA). Despite the stock’s rise, the company remains one of the more undervalued securities in the portfolio.

    Southeastern Asset Management's Longleaf Partners third quarter 2016 commentary.


  • Southeastern Asset Management Comments on Chesapeake

    Chesapeake (NYSE:CHK) (+112%; +4.0%), one of the largest U.S. producers of natural gas, oil, and natural gas liquids, was the top contributor to performance during the quarter. Early in the year we swapped our equity position for near-term bonds and preferred stocks which offered equity-like returns and a shorter horizon for value recognition. As management delivered good results, the bonds approached par. Consequently, we sold all of the remaining bonds over the last three months. On the final day of the quarter, we exchanged all of our preferreds into equity at a price well below our appraisal. In the quarter, both operating expenses and capital expenditures continued to improve, additional debt was retired below face value, and management reduced distribution costs through restructuring agreements with Williams and selling the Barnett assets. The company is pursuing more cost improvements and increased its asset sale target for the year to $2 billion after surpassing the original $1 billion goal. Asset sales plus proceeds from the recent upsized term loan and convertible debt offering, which raised more capital at better terms than expected, should cover the company’s obligations for at least three years. We remain confident that CEO Doug Lawler and Chesapeake’s board will continue to successfully navigate the company through this lower-for-longer commodity price environment.

    Southeastern Asset Management's Longleaf Partners third quarter 2016 commentary.


  • Southeastern Asset Management Comments on Level 3 Communications

    An example is Level 3 Communications (NYSE:LVLT), which is among the largest positions in the Partners, Small-Cap and Global Funds. This fiber network provider reinvests its excess cash into high margin growth rather than paying a dividend, has a beta of 1.5, and only trades at an adjusted 8x earnings before interest, taxes, depreciation, amortization (EBITDA) for expected FCF growth in the teens. By contrast, AT&T and Verizon have dividend yields over 4% with betas of 0.6 or less and trade at 7x EBITDA, with growth prospects limited to mid-single digits. Likewise, FedEx, another large holding in the Partners and Global Funds, shares a duopoly with UPS in the U.S. ground business, yet trades at a 13.9x price-to-earnings ratio (P/E), while UPS is at 18.0x. FedEx has lower labor costs and more growth potential as it takes share from UPS and integrates its recent purchase of TNT. FedEx has a dividend yield of less than 1% and a 1.2 beta, while UPS has a 2.9% dividend yield and a beta of 0.7.

    From Southeastern Asset Management's third quarter 2016 shareholder letter.


  • Southeastern Asset Management Comments on Wynn Resorts

    This pursuit of yield has contributed to the opportunity to own select gaming companies across the Funds. In the U.S., Wynn Resorts (NASDAQ:WYNN), which we own in the Partners, Small-Cap and Global Funds, trades at 9.5x projected EBITDA and has a dividend yield of 2.1%. Its comparable peer, Las Vegas Sands, has a dividend yield of over 5% and trades at 15.0x EBITDA. Similarly, in Macau, Melco Crown, the operating business for the casinos we own in the International and Global Funds through Melco International, has a dividend yield of 0.5% and is dramatically cheaper at 9.2x EBITDA than its competitor, Sands China, which has a 5.9% dividend yield and trades at 15.6x EBITDA.


  • Longleaf Partners 3rd Quarter Fund Commentary

    Longleaf Partners Fund delivered a hefty 11.07% in the third quarter, taking the year-to-date (YTD) return to 18.32%. In spite of above normal cash levels, our results far surpassed the S&P 500 Index’s 3.85% return for the last three months and 7.84% for 2016. Over the last twelve months, the Fund has more than doubled our annual absolute goal of inflation plus 10% and outperformed the index.


  • Longleaf Partners Funds 3rd Quarter Shareholder Letter

    We are pleased to report strong absolute returns for all four Longleaf Partners Funds for the first nine months of 2016. All four Funds also surpassed their respective benchmarks by a wide margin for the year-to-date. In the third quarter, Fund benchmark indices rose, and the Funds were well above those benchmarks, with the exception of the Small-Cap Fund. Over the last twelve months, all four funds exceeded our annual absolute goal of inflation plus 10% as well as their relative benchmarks.

    Impact of the Low Interest Rate Environment


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