Yacktman Asset Management (Trades, Portfolio) has revealed a reduction in its Macy's Inc. (M, Financial) holding according to GuruFocus' Real-Time Picks, a Premium feature.
The firm employs a disciplined investment strategy. The team buys growing companies with value fundamentals to combine the best aspects of both strategies. Potential investments must come at a low purchase price and feature good business practices with shareholder-orientated management.
On Nov. 30, the firm sold shares for the second time this year. The Macy's holding was reduced by 21.35% with the sale of 7.49 million shares. During the day of the transaction, shares traded at an average price of $10.21. Overall, the sale had an impact of -1.13% and GuruFocus estimates the firm has lost 40.84% on the holding so far.
Founded in 1858, Macy's operates about 600 stores under the Macy's brand, 56 stores under the Bloomingdale's brand and about 170 freestanding Bluemercury specialty beauty stores. Macy's also operates e-commerce sites, owns 65% of a Chinese e-commerce joint venture and licenses two Bloomingdale's stores in the United Arab Emirates and Kuwait. Women's apparel, accessories, shoes, cosmetics and fragrances constitute approximately 61% of the retailer's sales.
As of Dec. 10, the stock was trading at $11.40 with a market cap of $3.56 billion. The GF Value Line shows the stock trading at a modestly undervalued level.
GuruFocus gives the company a financial strength rating of 3 out of 10, a profitability rank of 6 out of 10 and a valuation rank of 10 out of 10. There are currently five severe warning signs issued, including declining revenue per share and an Altman Z-Score of 0.44 placing the company in the distress column. Free cash flow was easily able to support dividend payouts prior to 2020, but struggling retail sales caused by the ongoing pandemic have cut net sales well below the year prior.
Yacktman Asset Management is the company's second-largest shareholder with 8.90% of shares outstanding. BlackRock Inc. (Trades, Portfolio) comes in the number one spot with 14.79% of shares outstanding. Other top shareholders include Vanguard Group Inc. (Trades, Portfolio), Yacktman Fund (Trades, Portfolio) and State Street Corp. (Trades, Portfolio).
Portfolio overview
At the end of the third quarter, the firm's portfolio contained 60 stocks, with one new holding in TD Ameritrade Holding Corp. (AMTD, Financial). It was valued at $6.75 billion and has seen a turnover rate of 4%. Top holdings are PepsiCo Inc. (PEP, Financial), Procter & Gamble Co. (PG, Financial), Microsoft Corp. (MSFT, Financial), The Walt Disney Co. (DIS, Financial) and Sysco Corp. (SYY, Financial).
By weight, the top three sectors represented are consumer defensive (26.88%), communication services (24.03%) and technology (15.18%).
Disclosure: Author owns no stocks mentioned.
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