Yacktman Fund Buys 2, Slims 4 Positions in 2nd Quarter

The AMG Yacktman Fund (Trades, Portfolio), part of Affiliated Managers Group Inc. (NYSE:AMG), disclosed this week that it established two new positions and trimmed four holdings during the second quarter.

Managed by Stephen Yacktman and Joseph Subotky, the Austin, Texas-based fund seeks long-term growth capitalization using a disciplined investment strategy that focuses on three pillars: good business, shareholder-oriented management and low purchase price. The fund looks for companies with high market share in the company’s product lines, high return on tangible assets, relatively low capital requirements and short customer repurchase cycles.

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As of the quarter's end, the fund’s $4.99-billion equity portfolio contains 49 stocks with a 1% turnover ratio. The fund’s top-three sectors in terms of weight are in technology, communication services and consumer staples.

Based on the its investing criteria, the fund established stakes in Ingredion Inc. (NYSE:INGR) and FirstCash Inc. (NASDAQ:FCFS). The fund also trimmed its positions in Oracle Corp. (NYSE:ORCL), Johnson & Johnson (NYSE:JNJ), Continental AG (XTER:CON) and Booking Holdings Inc. (NASDAQ:BKNG).

Ingredion

The fund purchased 390,000 shares of Ingredion, giving the position 0.65% weight in the equity portfolio. Shares averaged $81.70 during the second quarter.

The Westchester, Illinois-based company manufactures ingredients for the food, beverage, paper and personal-care industries. GuruFocus ranks the company’s profitability 7 out of 10 on the back of operating margins that have expanded over the past five years and are outperforming over 77% of global competitors. Other positive investing signs include consistent revenue growth and a return on equity that outperforms 79.78% of global peers.

The Yacktman Focused Fund (Trades, Portfolio) also purchased shares of Ingredion during the second quarter.

FirstCash

The fund purchased 460,000 shares of FirstCash, giving the position 0.62% weight in the equity portfolio. Shares averaged $70.52 during the second quarter.

The Fort Worth, Texas-based company operates pawn loan stores across the U.S. and Latin America. GuruFocus ranks the company’s profitability 9 out of 10 on several positive investing signs, which include a 4.5-star business predictability rank and a return on assets that outperforms 87.14% of global credit service competitors.

Jim Simons (Trades, Portfolio)’ Renaissance Technologies also has a holding in FirstCash.

Oracle

The fund sold 2,067,280 shares of Oracle, axing 65.27% of the holding. Shares averaged $52.90 during the second quarter; the transaction pared 2.14% of the equity portfolio.

GuruFocus ranks the Redwood City, California-based software company’s profitability 9 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7, a 4.5-star business predictability rank and an operating margin that outperforms 97.10% of global competitors.

Johnson & Johnson

The fund sold 450,000 shares of Johnson & Johnson, reducing the position 30% and the equity portfolio 1.26%. Shares averaged $145.42 during the second quarter.

The New Brunswick, New Jersey-based company said this week that it accelerated its Phase 1/2a study for its Covid-19 vaccine candidate from its previous date in September to late July. The company announced its second-quarter earnings release as coronavirus cases in the U.S. surpassed 3.55 million according to Johns Hopkins University statistics.

Continental

The fund sold 710,000 shares of Continental, reducing the position 26.79% and the equity portfolio 1.08%. Shares averaged 79.50 Euros ($90.86) during the second quarter.

According to GuruFocus, the German auto manufacturer has several warning signs, including a weak Piotroski F-score of 3 and declining profit margins.

Booking

The fund sold 27,500 shares of Booking, reducing the holding 23.4% and the equity portfolio 0.79%. Shares averaged $1,519.55 during the second quarter.

GuruFocus ranks the Norwalk, Connecticut-based online travel giant’s profitability 9 out of 10 on several positive investing signs, which include a 3.5-star business predictability rank and operating margins that are outperforming 96.45% of global competitors.

Disclosure: No positions.

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