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James Li
James Li
Articles (1286)  | Author's Website |

Yacktman Asset Management’s Top 4 Buys in the 4th Quarter

Firm boosts positions in media companies, Macy’s and Buffett’s conglomerate

Yacktman Asset Management (Trades, Portfolio) disclosed this week that its top four buys in fourth-quarter 2019 were News Corp. (NASDAQ:NWSA), Fox Corp. (NASDAQ:FOX)(NASDAQ:FOXA), Macys Inc. (NYSE:M) and Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B).

According to its website, the Austin-based firm seeks long-term capital appreciation by employing an objective, patient and diligent investing approach. Chief Investment Officer Stephen Yacktman identifies growth companies that have the following attributes: good business with high returns on tangible assets, shareholder-oriented management and a low purchase price.


As of quarter-end, Yacktmans $7.91 billion equity portfolio contains 48 stocks, with a turnover ratio of 2%. The funds top three sectors in terms of portfolio weight are consumer defensive, communication services and technology, with weights of 27.69%, 19.80% and 16.09%.



The firm added 6,247,004 shares of News, increasing the position 56.09% and the equity portfolio 1.12%. Shares averaged $13.45 during the quarter.


The New York-based company publishes digital and print media through brands like the Wall Street Journal, the New York Times and the Herald Sun. GuruFocus ranks News financial strength 6 out of 10: Although the companys trailing-12-month return on invested capital of 8.46% exceeds its weighted-average cost of capital, itsdebt ratios are underperforming over 51% of global competitors.


The T Rowe Price Equity Income Fund (Trades, Portfolio) also increased its holding of News during the quarter, adding 650,000 shares.



Yacktman added 1,642,493 Class A shares and 656,684 Class B shares of Fox, increasing the equity portfolio 1.07% in the aggregate. Class A shares averaged $34.36 during the quarter while Class B shares averaged $33.69.



The New York-based company produces a wide range of media content through its FOX banner of brands, including Fox News, Fox Sports and Fox Business Network. GuruFocus ranks itsfinancial strength 5 out of 10 on the back of a moderately weak Altman Z-score of 2.67 and an interest coverage ratio that is above Benjamin Grahams safe threshold of five despite underperforming 55% of global competitors.


Other gurus with large holdings in Fox include Dodge & Cox and Baupost manager Seth Klarman (Trades, Portfolio).



The firm added 684,105 shares of Macys, increasing the stake 2.88% and the equity portfolio 0.15%. While shares averaged $15.65 during the fourth quarter, shares of Macys reached an intraday high of $17.18, up over 4% from Tuesdays close of $16.48, on the back of its three-year Polaris strategy to stabilize profitability and position the company for growth.


Macys said in a press release on Tuesday that as part of its growth strategy, the retailer will close approximately 125 of its least-productive stores and upgrading its higher-tier stores. The company also plans to test a new store format, Market by Macys, a small store that features a mix of curated merchandise and local food and beverage products. The company expects to open its first Market by Macys on Thursday in Dallas. Additionally, Macys also plans to close its San Francisco, downtown Cincinnati and Lorain, Ohio offices and move its corporate headquarters to New York.


GuruFocus ranks Macys profitability 7 out of 10: Even though operating margins are contracting and outperforming just over 59% of global competitors, itsreturn on equity outperforms 79.29% of global cyclical retail companies.


Berkshire Hathaway

The firm added 5,697 Class B shares of Berkshire Hathaway, increasing the holding 4.49%. Shares averaged $217.51 during the quarter.


The Omaha, Nebraska-based conglomerate operates a wide range of subsidiaries engaged in diverse activities, which primarily include insurance. Berkshire co-managers Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio) seek good companies at fair prices using a four-criterion investing approach: understandable business, predictable earnings, no debt while growing its business and trading at an attractive share price. Premium members can access a wide range of value screeners including the Buffett-Munger Screener.

See also

Stephen Yacktman also manages the Yacktman Fund (Trades, Portfolio) and Yacktman Focused Fund (Trades, Portfolio), with partner Jason Subotky.

Disclosure: No positions.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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