Wallace Weitz

Wallace Weitz

Last Update: 05-15-2017

Number of Stocks: 81
Number of New Stocks: 2

Total Value: $2,383 Mil
Q/Q Turnover: 1%

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

Wallace Weitz Watch

  • Weitz Funds Comments on United Parcel Service

    United Parcel Service (NYSE:UPS) is a package delivery company and a provider of supply chain management solutions. Over the past several years, the growth of e-commerce has created challenges for UPS during its peak holiday shipping season. While the market can not quite decide whether the onslaught of less profitable residential delivery volume is beneficial, UPS has announced plans to significantly accelerate capital spending in anticipation of even more residential delivery volume. Investors’ lack of faith in management’s intended path led to this most recent sell off. We believe the company’s efforts toward a more streamlined holiday shipping experience will bear fruit in time, and we expect the company’s stock price will eventually reflect this stepped-up commitment to its customers.


    From Weitz Funds' first-quarter 2017 Balanced Fund shareholder letter.

      


  • Weitz Funds Comments on Compass Minerals

    Compass Minerals (NYSE:CMP) produces and sells salt, specialty plant nutrition and chemical products around the world. Despite a strong fourth quarter, Compass stock was a weak performer due to concern around the lack of snow in their geographic footprint. Though the company guided to 12% volume growth in salt in 2017 as municipalities restocked, prices still remain under pressure, as a lot of volume was contracted in the summer months when inventories were high. The news was similarly mixed at their sulfate of potash (SOP) operation. While prices seem to be stabilizing and volume growth was exceptional, cost improvements have been slow to materialize. As a result, much of the inventory they are selling now was produced under their higher legacy cost structure. We believe the salt business will recover as soon as we have a “normal” winter and recent capital investments lower their costs even more. In addition, SOP prices are stabilizing and once Compass adjusts its cost structure to the current reality, the business will return to earning historic returns on capital.


    From Weitz Funds' first-quarter 2017 Balanced Fund shareholder letter.

      


  • Weitz Funds Comments on Anheuser-Busch InBev

    Anheuser-Busch InBev (NYSE:BUD) is the clear-cut leading global beer company after its recent acquisition of SABMiller plc. The stock briefly traded above $130 last fall due to high expectations for the combined company’s prospects and strong investor demand for stable, cash-generative consumer staples companies. Anheuser-Busch InBev’s stock declined later in the year due in part to temporary challenges in its Brazilian business. At $110, we think the company trades at a moderate discount to value for a world-class business, with a roadmap to significantly higher earnings in three years.


    From Weitz Funds' first-quarter 2017 Balanced Fund shareholder letter.

      


  • Weitz Funds Comments on Texas Instruments

    Texas Instruments (NASDAQ:TXN) is the market leader in the sale of analog and embedded semiconductors. Shares rose on optimism that the available market for the company’s products will continue to expand as industrial and automotive markets include more electronic content in their products. The company’s long-term strategy of moving incremental business to its low-cost 300 millimeter wafer manufacturing process also continues to expand the long-term margin horizon for the company. Furthermore, Texas Instruments has continued to benefit from investor recognition of the company’s execution, disciplined capital allocation (returning all excess cash to shareowners) and the potential that the market for analog semiconductors is becoming slightly less cyclical, as the industry has matured and consolidated.


    From Weitz Funds' first-quarter 2017 Balanced Fund shareholder letter.

      


  • Weitz Funds Comments on Laboratory Corp. of America

    Laboratory Corp. of America (LabCorp) (NYSE:LH) operates as a diversified global life sciences company through two segments: LabCorp Diagnostics and Covance Drug Development. Following a choppy 2016 third quarter, LabCorp’s fourth quarter operating results resumed a more normal course. Test volumes rebounded at LabCorp Diagnostics, as did new clinical trial bookings at Covance. The company closed the year on a high note, with sales increasing 11% and cash earnings per share up 12% versus the prior year. Underlying clinical lab trends remain stable and the pace of clinical research outsourcing continues to be healthy. Anticipated cuts in Medicare reimbursement for lab tests and a gradual shift by payers toward value-based payment models are creating new, long hoped-for opportunities for LabCorp’s low cost lab network. LabCorp announced the acquisition of two valuable hospital- based labs during the first quarter and continues to see a steady flow of attractive potential ‘tuck-in’ lab acquisition opportunities. The company’s combination of durable organic growth and significant reinvestment runway remains appealing to us as long-term investors


    From Weitz Funds' first-quarter 2017 Balanced Fund shareholder letter.

      


  • Wally Weitz Comments on Visa

    Visa (NYSE:V) is the world’s largest electronic payment network. The company recently closed on its acquisition of Visa Europe, allowing it to provide a fully integrated network to clients, which should result in increased market share and lower costs. We believe Visa will compound nicely as worldwide payment volumes grow, developing countries switch from cash to cards, and the company uses its technology and network to participate in all forms of electronic payments.


    From Weitz Funds' first-quarter 2017 Research Fund shareholder letter.

      


  • Wally Weitz Comments on Donnelley Financial Solutions

    Donnelley Financial Solutions (NYSE:DFIN) is a financial compliance company recently spun out of RR Donnelley. Primarily a printing company, RR Donnelley split itself into three public companies to ascribe better value to its individual parts, as the printing industry is facing secular decline. While 40% of Donnelley Financial’s revenue is still print related, the remainder is software and services, which not only have better margins than print but are also growing organically. We believe the market has misvalued Donnelley Financial due to lack of transparency around the cost structure and the compliance services segment’s sensitivity to capital markets transactions. Generally, when a company is spun-off, there is inevitable noise in its income statement as it seeks to recreate the services that its parent previously provided. The result is a host of duplicative costs, which can temporarily mask earnings power. More recently, Donnelley Financial’s quarterly results and guidance disappointed investors, as capital market activity was down 15% affecting an otherwise high margin segment. While the recent results are disappointing, we believe a recovery in the capital market is forthcoming and will allow Donnelley Financial to demonstrate more normalized earnings power, aggressively pay down debt, and continue to invest in compliance technology solutions, which are in high demand.


    From Weitz Funds' first-quarter 2017 Research Fund shareholder letter.

      


  • Wally Weitz Comments on National CineMedia

    National CineMedia (NASDAQ:NCMI) produces the “FirstLook” pre-show, a collection of advertising and entertainment content shown in movie theaters prior to show time. The operating business (NCM LLC) is jointly owned by public shareholders (ticker: NCMI) and the founding three theater circuits: AMC, Regal Entertainment and Cinemark. During the first calendar quarter, AMC reached an agreement with the Department of Justice over its proposed acquisition of Carmike (a partial owner and client of theater advertising competitor Screenvision). The most significant of these conditions requires AMC to reduce its stake in NCM from 39% to fewer than 5% over a period of 24 months; the goal being to encourage continued competition in theater advertising services between the two competitors. The sale of these shares has put pressure on the stock price and represents a significant volume for the buyers to absorb. Nevertheless, we continue to believe NCM’s unique position and network creates an opportunity for advertisers to reach their audiences. During the quarter we took advantage of the price decline and added to our position.


    From Weitz Funds' first-quarter 2017 Hickory Fund shareholder letter.

      


  • Wally Weitz Comments on ILG Inc.

    ILG, Inc. (NASDAQ:ILG) is a provider of non-traditional lodging, encompassing a portfolio of leisure businesses, from exchange and vacation rental to vacation ownership. A year ago, the stock price was suffering under the combined weight of both a general market swoon and a share overhang from ILG’s imminent merger with Starwood’s timeshare business. That merger ultimately put over half (70+ million shares) of this small-cap company’s stock in the hands of large-cap hotel investors. One year later, the market has marched steadily higher, and the bulk of those shares have likely found homes in the portfolios of more appropriate investors. As such, the stock price has rebounded and reclaimed much of what it had lost in the year prior. We continue to like the prospects and valuation of the newly combined entity.


    From Weitz Funds' first-quarter 2017 Hickory Fund shareholder letter.

      


  • Wally Weitz Comments on Formula One

    Formula One (NASDAQ:FWONA), which began in 1950, is an iconic global motorsports business. The 2017 FIA Formula One World Championship spans 20 races in 20 countries across five continents. In January, Liberty Media closed on its 100% acquisition of the Formula One racing series. Upon closing, the Liberty Media tracking stock was renamed Liberty Formula One Group. Investors are enthusiastic about the highly regarded executive and newly appointed chairman, Chase Carey. Furthermore, the potential to grow Formula One under Liberty Media’s guidance–greater sponsorship prospects, the potential for new races and venues to grow awareness of the sport, and new opportunities to bring Formula One content to digital platforms excite investors.


    From Weitz Funds' second-quarter 2017 Hickory Fund shareholder letter.

      


  • Weitz Funds' Comments on Zoe’s Kitchen

    Zoe’s Kitchen (NYSE:ZOES) is a small, growing restaurant concept serving “better for you” Mediterranean cuisine. While 2016 was a weak year for many restaurants, Zoe’s fared better than most, though they were not immune. Worries around weakening U.S. consumer spending and the lack of near-term earnings continue to depress the stock price. We believe this is temporary and think the next several years of growth can produce outsized, though likely volatile, returns. We continue to add to our position on share price declines.


    From Weitz Funds' first-quarter 2017 Research Fund shareholder letter.

      


  • Wally Weitz Comments on Wesco Aircraft Holdings

    Wesco Aircraft Holdings (NYSE:WAIR) is the world’s leading distributor and provider of supply chain services to the global aerospace industry. During the past year, the company has continued its transition to a “One Wesco” culture, which includes an implementation of continuous improvement initiatives. In addition, the company has won several new contracts. These new contracts have required funding of upfront inventory and preparation expenses, temporarily depressing free cash flow. We believe Wesco is making significant progress in transforming its business, which we expect to soon be reflected in reported results.


    From Wally Weitz's first-quarter 2017 Partners III Opprtunity Fund shareholder letter.

      


  • Wally Weitz Comments on LiLAC Group

    LiLAC Group (NASDAQ:LILA) is a tracking stock distributed by Liberty Global with respect to its businesses in Latin America and the Caribbean. LiLAC’s stock has struggled throughout the last year as management revealed additional unanticipated headaches with the May 2016 acquisition of Cable & Wireless Communications. After meeting with management, we believe the company understands the nature of the problem and is set to grow from this reset base. We anticipate that in the coming quarters, LiLAC will demonstrate the benefits they saw in this acquisition, beginning with identifying operating synergies for investors. Management further demonstrated their confidence in their revised outlook by announcing a $300 million stock repurchase authorization.


    From Wally Weitz's first-quarter 2017 Partners III Opprtunity Fund shareholder letter.

      


  • Weitz Funds' Analyst Corner: A Perspective on Dollar Tree Inc.

    Dollar Tree (NASDAQ:DLTR) operates a network of approximately 14,400 discount variety stores across the United States and Canada under the Dollar Tree, Dollar Tree Canada and Family Dollar brands. During the summer of 2015, Dollar Tree completed a transformational acquisition of competitor Family Dollar Stores for $8.8 billion and now operates under two distinct banners. The legacy Dollar Tree segment operates 6,400 stores, offering everyday basics, seasonal, closeout and promotional merchandise at a fixed $1 price point ($1.25 CAD in Canada). The Family Dollar segment operates approximately 8,000 general merchandise discount retail stores focused on providing customers basic necessities such as diapers, food and paper products as well as seasonal merchandise at prices between $1 and $10.

      


  • Weitz Value Fund Comments on Dollar Tree

    Dollar Tree (NASDAQ:DLTR) operates a network of approximately 14,400 discount variety stores under the Dollar Tree, Dollar Tree Canada and Family Dollar brands. The legacy Dollar Tree concept is the last remaining true dollar store, where every item is a dollar. Its balanced offering of consumables (food and toilet paper) and more discretionary items (toys, stationery and party supplies) has generated consistently attractive financial results, with same store sales rising 22 of the past 23 years. Family Dollar, acquired for $8.8 billion in 2015, focuses more heavily on basic necessities such as diapers, food and paper products at prices between $1 and $10. Dollar Tree is early in the process of improving Family Dollar’s operating results, executing what we believe is a credible plan toward closing the gap in financial performance that exists with its nearest competitor Dollar General. Dollar stores’ unique combination of low prices and convenience continues to resonate with low- and middle-class consumers, providing attractive future store growth opportunities and durable excess cash flow. Portfolio Manager Dave Perkins profiles Dollar Tree in more detail in this quarter’s Analyst Corner.


    From Weitz Value Fund first quarter 2017 commentary.

      


  • Weitz Value Fund Comments on United Parcel Service

    United Parcel Service (NYSE:UPS) is a package delivery company and a provider of supply chain management solutions. Over the past several years, the growth of e-commerce has created challenges for UPS during its peak holiday shipping season. While the market can not quite decide whether the onslaught of less profitable residential delivery volume is beneficial, UPS has announced plans to significantly accelerate capital spending in anticipation of even more residential delivery volume. Investors’ lack of faith in management’s intended path led to this most recent sell off. We believe the company’s efforts toward a more streamlined holiday shipping experience will bear fruit in time, and we expect the company’s stock price will eventually reflect this stepped-up commitment to its customers.


    From Weitz Value Fund first quarter 2017 commentary.

      


  • Weitz Value Fund Comments on TransDigm Group

    TransDigm Group (NYSE:TDG) is a designer, producer and supplier of engineered aircraft components for use on commercial and military aircraft. The prospect of rising interest rates and accusations of rigged/fake bids from a critical short report pressured TransDigm’s stock during January. The company’s levered balance sheet, while married with historically consistent cash flows, increases the company’s sensitivity to potential declines in profitability. In his first several weeks in office, President Trump targeted the cost of specific programs at several of TransDigm’s larger peers. While it remains to be seen what, if any, lasting impact this scrutiny will have on growth and cash flow, with TransDigm’s shares close to our estimate of intrinsic value, we elected to close our position in the stock with a nice gain.


    From Weitz Value Fund first quarter 2017 commentary.

      


  • Weitz Value Fund Comments on Range Resources

    Range Resources (NYSE:RRC) is an independent producer of natural gas and natural gas liquids (NGLs) based in Fort Worth, Texas, with operations in the Marcellus shale and emerging Terryville field. Range Resources stock weakened during the first quarter as mild winter weather once again put downward pressure on natural gas prices. The company’s higher-than-projected 2017 drilling budget and 20% 2018 production growth target likely also raised fears that Range’s balance sheet could once again deteriorate in the event of a prolonged downturn in gas prices. March supply/demand was kinder than January and February, however, leaving


    natural gas storage levels in better shape entering injection season than a year ago (approximately 20% lower). Longer-term demand fundamentals for gas remain attractive, and improving oil prices together with international transport capacity have provided a spark for natural gas liquids prices that should benefit Range’s cash flow. We believe Range shares are undervalued, assuming mid-cycle natural gas prices of $2.75 or higher.

      


  • Weitz Value Fund Comments on Liberty Global

    Liberty Global (NASDAQ:LBTYA) is the largest international cable company, with operations in 14 countries providing video, broadband Internet, fixed-line telephone and mobile services to its customers. Liberty Global’s shares were strong in the first calendar quarter and made up some of the ground that had been lost during the prior year. The company’s quarterly results were solid, but shares have likely been driven upward as speculation of deals in the media industry has heated up of late, including revived speculation of a potential Vodafone transaction. We view Liberty Global as a standalone provider of broadband and Pay-TV services as an attractive opportunity, and although a potential acquisition by Vodafone may create value for shareholders, our investment thesis is not dependent on such an event.


    From Weitz Value Fund first quarter 2017 commentary.

      


  • Weitz Value Fund Comments on Liberty Broadband

    Liberty Broadband (NASDAQ:LBRDA)’s principal asset consists of its interest in Charter Communications. In late January, rumors broke that Verizon Communications had made an informal acquisition offer to Charter Communications, sending both Charter and Liberty Broadband shares higher. We acknowledge that such a combination makes strategic sense for Verizon as it searches for an efficient means to deploy 5G wireless technology (which will require very dense, wired networks). However, we suspect shareholders can reap greater value from Charter continuing to integrate its Time Warner Cable and Bright House Networks acquisitions on a stand- alone basis. That said, we believe management will pursue the right course (stand-alone or M&A) that will maximize long-term shareholder value.


    From Weitz Value Fund first quarter 2017 commentary.

      


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