Mason Hawkins, CEO of Southeastern Asset Management, was quoted to be bullish on the stock market in this article appeared in CNBC.com on August 30, 2010.
The article credited his flagship Longleaf Partners Fund for returning 4.9 percent annually in the past ten years versus a 1.6 percent decline in the S&P 500.
Here is what he said according to the article:To get a sense of whether stocks are cheap, the 62-year-old Hawkins looks at how much of your investment you get back in earnings in a year. Based on analyst estimates, if you bought every Dow stock at Friday's 10,150.65 close, you'd get 11 percent back. Though you're not actually pocketing any cash, that's still a big return. After all, some relatively safe investment-grade corporate bonds are throwing off annual interest of 5.3 percent what you pay for them now. That means you'd get nearly six extra percentage points by holding stocks. Since 1932, the difference in yields between bonds and stocks following big drops in the stock market has been 2.8 percent, Hawkins says. Of course, there's another side to this argument.
Earlier on, in his 2010 Semi-Annual Report, Hawkins built the bullish case in more details:
In particular, Hawkins is proud of the collection of stock he gathered for his funds:
So what are the companies that made the list? Here are his top holdings:
No. 1: DIRECTV Group Inc. (DTV, Financial), Weightings: 10.99% - 64,017,245 Shares
DIRECTV is a provider of digital multichannel television entertainment in the United States and Latin America. Directv Group Inc. The has a market cap of $34.64 billion; its shares were traded at around $39.05 with a P/E ratio of 19 and P/S ratio of 1.6. Directv Group Inc. The had an annual average earning growth of 33.4% over the past 10 years.
No. 2: Yum! Brands Inc. (YUM, Financial), Weightings: 9.64% - 48,757,668 Shares
Yum! Brands Inc. is the one of the world's largest restaurant companies, with restaurants around the world in numerous countries and territories. Yum! Brands Inc. has a market cap of $20.73 billion; its shares were traded at around $44.35 with a P/E ratio of 18.7 and P/S ratio of 1.9. The dividend yield of Yum! Brands Inc. stocks is 1.9%. Yum! Brands Inc. had an annual average earning growth of 10.1% over the past 10 years. GuruFocus rated Yum! Brands Inc. the business predictability rank of 3.5-star.
No. 3: Dell Inc. (DELL, Financial), Weightings: 8.68% - 142,215,599 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 $24.65 billion; its shares were traded at around $12.59 with a P/E ratio of 11.1 and P/S ratio of 0.4. Dell Inc. had an annual average earning growth of 4.1% over the past 10 years.
No. 4: Chesapeake Energy Corp. (CHK, Financial), Weightings: 8.57% - 80,812,905 Shares
Chesapeake Energy Corp. is an independent oil and gas company engaged in the development, exploration, acquisition and production of onshore natural gas and oil reserves. Chesapeake Energy Corp. has a market cap of $14.14 billion; its shares were traded at around $21.72 with a P/E ratio of 7.2 and P/S ratio of 1.8. The dividend yield of Chesapeake Energy Corp. stocks is 1.4%. Chesapeake Energy Corp. had an annual average earning growth of 14.7% over the past 10 years. GuruFocus rated Chesapeake Energy Corp. the business predictability rank of 2-star.
No. 5: The Walt Disney Company Disney (DIS, Financial), Weightings: 7.53% - 47,231,751 Shares
Walt Disney Company owns 100% of Disney Enterprises, Inc. The Walt Disney Company Disney has a market cap of $67.9 billion; its shares were traded at around $34.67 with a P/E ratio of 16.8 and P/S ratio of 1.9. The dividend yield of The Walt Disney Company Disney stocks is 1.1%. The Walt Disney Company Disney had an annual average earning growth of 11.2% over the past 10 years.
GuruFocus tracks mason Hawkins's complete long equity positions and trading activities. Check out his complete portfolio: http://www.gurufocus.com/holdings.php?GuruName=Steven+Romick
GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and Mason Hawkins for Premium Members. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.
Read Hawkins’s 2010 Semi Annual Report:
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Also check out:
The article credited his flagship Longleaf Partners Fund for returning 4.9 percent annually in the past ten years versus a 1.6 percent decline in the S&P 500.
Here is what he said according to the article:To get a sense of whether stocks are cheap, the 62-year-old Hawkins looks at how much of your investment you get back in earnings in a year. Based on analyst estimates, if you bought every Dow stock at Friday's 10,150.65 close, you'd get 11 percent back. Though you're not actually pocketing any cash, that's still a big return. After all, some relatively safe investment-grade corporate bonds are throwing off annual interest of 5.3 percent what you pay for them now. That means you'd get nearly six extra percentage points by holding stocks. Since 1932, the difference in yields between bonds and stocks following big drops in the stock market has been 2.8 percent, Hawkins says. Of course, there's another side to this argument.
Earlier on, in his 2010 Semi-Annual Report, Hawkins built the bullish case in more details:
Equities offer a superior opportunity for investors today, particularly compared to fixed income. The earnings yield of the S&P 500 based on 2011 projected EPS is 9.4%. If adjusted for the approximately $100 of cash imbedded in the S&P, the operating earnings yield increases to 10.4%. The numbers are slightly more attractive overseas. Based on 2011 estimates, the EAFE Index earnings yield is 9.8%. If earnings grow organically from today’s depressed levels at only 5% per year (a rate that does not require the reinvestment of earnings because of current excess capacity), and even if the P/E ratio remains below the long-term average, an investor’s five year average annual return will be in the mid-teens.
In particular, Hawkins is proud of the collection of stock he gathered for his funds:
We are highly confident that (1) the competitive strengths of our companies make them more certain to deliver growing free cash flow coupons than the average business; (2) our companies have superior corporate captains; and (3) the stock prices of our holdings are much cheaper than the S&P 500, EAFE, and the DJIA. P/Vs are in the mid-50% range for all three Funds, implying a large margin of safety as well as tremendous upside performance opportunity which will be magnified as values grow.
So what are the companies that made the list? Here are his top holdings:
No. 1: DIRECTV Group Inc. (DTV, Financial), Weightings: 10.99% - 64,017,245 Shares
DIRECTV is a provider of digital multichannel television entertainment in the United States and Latin America. Directv Group Inc. The has a market cap of $34.64 billion; its shares were traded at around $39.05 with a P/E ratio of 19 and P/S ratio of 1.6. Directv Group Inc. The had an annual average earning growth of 33.4% over the past 10 years.
No. 2: Yum! Brands Inc. (YUM, Financial), Weightings: 9.64% - 48,757,668 Shares
Yum! Brands Inc. is the one of the world's largest restaurant companies, with restaurants around the world in numerous countries and territories. Yum! Brands Inc. has a market cap of $20.73 billion; its shares were traded at around $44.35 with a P/E ratio of 18.7 and P/S ratio of 1.9. The dividend yield of Yum! Brands Inc. stocks is 1.9%. Yum! Brands Inc. had an annual average earning growth of 10.1% over the past 10 years. GuruFocus rated Yum! Brands Inc. the business predictability rank of 3.5-star.
No. 3: Dell Inc. (DELL, Financial), Weightings: 8.68% - 142,215,599 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 $24.65 billion; its shares were traded at around $12.59 with a P/E ratio of 11.1 and P/S ratio of 0.4. Dell Inc. had an annual average earning growth of 4.1% over the past 10 years.
No. 4: Chesapeake Energy Corp. (CHK, Financial), Weightings: 8.57% - 80,812,905 Shares
Chesapeake Energy Corp. is an independent oil and gas company engaged in the development, exploration, acquisition and production of onshore natural gas and oil reserves. Chesapeake Energy Corp. has a market cap of $14.14 billion; its shares were traded at around $21.72 with a P/E ratio of 7.2 and P/S ratio of 1.8. The dividend yield of Chesapeake Energy Corp. stocks is 1.4%. Chesapeake Energy Corp. had an annual average earning growth of 14.7% over the past 10 years. GuruFocus rated Chesapeake Energy Corp. the business predictability rank of 2-star.
No. 5: The Walt Disney Company Disney (DIS, Financial), Weightings: 7.53% - 47,231,751 Shares
Walt Disney Company owns 100% of Disney Enterprises, Inc. The Walt Disney Company Disney has a market cap of $67.9 billion; its shares were traded at around $34.67 with a P/E ratio of 16.8 and P/S ratio of 1.9. The dividend yield of The Walt Disney Company Disney stocks is 1.1%. The Walt Disney Company Disney had an annual average earning growth of 11.2% over the past 10 years.
GuruFocus tracks mason Hawkins's complete long equity positions and trading activities. Check out his complete portfolio: http://www.gurufocus.com/holdings.php?GuruName=Steven+Romick
GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and Mason Hawkins for Premium Members. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.
Read Hawkins’s 2010 Semi Annual Report:
LongLeafPartnersMasonHawkins2Q10
Also check out:
