>
  1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Margaret Moran
Margaret Moran
Articles (449) 

Tweedy Browne's Top 4th-Quarter Trades

Guru takes new stake in Alibaba, trims Cisco

Tweedy Browne (Trades, Portfolio) recently disclosed its portfolio updates for the fourth quarter of 2020, which ended on Dec. 31.

The firm was established in 1920 by Forest Birchard Tweedy as a dealer in closely held and inactively traded securities. Over its 100-year history, it has evolved into an investing company that seeks long-term capital growth in companies around the globe. Its Benjamin Graham-style value investing approach focuses on investing in undervalued securities that have strong growth potential, above-average dividend yields and established dividend history.

Based on the above criteria, the firm's top buys for the quarter were Alibaba Group Holding Ltd. (NYSE:BABA) and Bank of America Corp. (NYSE:BAC), while its top sells were Bank of New York Mellon Corp. (NYSE:BK) and Cisco Systems Inc. (NASDAQ:CSCO).

Alibaba Group Holding

The firm established a new holding of 661,015 shares in Alibaba Group Holding (NYSE:BABA), impacting the equity portfolio by 4.78%. During the quarter, shares traded for an average price of $277.43.

ceb33c15d619f4182f5826540c4c493e.png

Alibaba is a Chinese multinational conglomerate with holdings in e-commerce, retail, internet and technology assets, among many others. By volume, Alibaba is the largest e-commerce company in the world, with millions of merchants and hundreds of millions of users.

On Feb. 19, shares of Alibaba traded around $263.79 for a market cap of $716.89 billion. According to the GuruFocus Value chart, the stock is modestly undervalued.

573eeafdfa81437f906f58b58e117d77.png

The company has a financial strength rating of 7 out of 10 and a profitability rating of 9 out of 10. The cash-debt ratio of 3.93 surpasses 82% of industry peers, while the Altman Z-Score of 6.39 indicates the company is not in danger of bankruptcy. The three-year revenue growth rate is 45% and the three-year Ebitda growth rate is 38.1%.

31220ee7d3e2a5fa0652b753f7853ff8.png

Bank of America

The firm added 1,345,167 shares, or 218.03%, to its Bank of America (NYSE:BAC) investment for a total holding of 1,962,127 shares. The trade had a 1.27% impact on the equity portfolio. Shares traded for an average price of $26.85 during the quarter.

f4ea1f50723d3e7da507b141ec3ab44a.png

Bank of America is a U.S. global bank major headquartered in North Carolina. With approximately $2.61 trillion in total assets, it provides a wide range of traditional, corporate and investment banking services and other financial services.

On Feb. 19, shares of Bank of America traded around $34.41 for a market cap of $297.33 billion. According to the GuruFocus Value chart, the stock is fairly valued.

2acfc3b5f24f801ffd4f1e40c4116ba6.png

The company has a financial strength rating of 3 out of 10 and a profitability rating of 5 out of 10. The cash-debt ratio of 1.37 is average for the industry, while the Piotroski F-Score of 5 out of 9 implies the company is financially stable. The return on equity of 6.13% and return on assets of 0.68% are both underperforming the respective industry medians.

a3de7925cbeee2a9f53c8e1abae1e3a5.png

Bank of New York Mellon

The firm reduced its stake in Bank of New York Mellon (NYSE:BK) by 655,835 shares, or 17.59%, for a remaining holding of 3,073,096 shares. The trade had a -0.87% impact on the equity portfolio. During the quarter, shares traded for an average price of $38.47.

b8f689dacae804cf0e5f265df79e97f0.png

Bank of New York Mellon is a New York-based corporate investment banking company. It helps clients manage and service their financial assets throughout the investment lifecycle. Clients include banks, asset managers, broker-dealers, companies and governments.

On Feb. 19, shares of Bank of New York Mellon traded around $42.85 for a market cap of $37.88 billion. According to the GuruFocus Value chart, the stock is modestly undervalued.

8486621fbaf95f098939e4efbfceddeb.png

The company has a financial strength rating of 3 out of 10 and a profitability rating of 6 out of 10. The equity-to-asset ratio of 0.1 is lower than 96% of other companies in the industry, but the Piotroski F-Score of 7 out of 9 indicates a healthy financial situation. The return on equity of 7.84% and return on assets of 0.85% are outperforming the respective industry medians.

d4cbb6e094dd7b06e16312e68bba6e0a.png

Cisco Systems

The firm also cut its Cisco Systems (NASDAQ:CSCO) holding by 446,368 shares, or 8.33%, leaving a remaining holding of 4,913,172 shares and impacting the equity portfolio by -0.68%. Shares traded for an average price of $41.13 during the quarter.

b83766924044383f7a5dd9680173d0eb.png

Cisco Systems is a multinational technology company and worldwide leader in IT, networking and cybersecurity solutions. Based in San Jose, California, the company develops, manufactures and sells networking hardware, software, telecommunications equipment and other tech products.

On Feb. 19, shares of Cisco traded around $45.86 for a market cap of $193.89 billion. According to the GuruFocus Value chart, the stock is fairly valued.

fbbd01b9673f47bf2fa5fcb116bfe542.png

The company has a financial strength rating of 6 out of 10 and a profitability rating of 9 out of 10. The interest coverage ratio of 28.58 and Piotroski F-Score of 8 out of 9 both suggest a fortress-like balance sheet. The return on invested capital typically surpasses the weighted average cost of capital, meaning the company is creating value for shareholders.

0bf6621992e4b0fda62dde29ad468f87.png

Portfolio overview

As of the end of the fourth quarter, Tweedy Browne (Trades, Portfolio)'s $3.22 billion equity portfolio consisted of holdings in 48 stocks. The top holdings were Berkshire Hathaway Inc. (NYSE:BRK.A) with 10.80% of the equity portfolio, Baidu Inc. (NASDAQ:BIDU) with 9.48% and Johnson & Johnson (NYSE:JNJ) with 8.75%.

In terms of sector weighting, the firm is most heavily invested in financial services and communication services, followed distantly by consumer cyclical and health care.

60d2b4c63e88abbdc90c49b207463e13.png

Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Investors should always conduct their own careful research and/or consult registered investment advisors before taking action in the stock market.

Read more here:

Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.


Rating: 0.0/5 (0 votes)

Comments

Please leave your comment:



Performances of the stocks mentioned by Margaret Moran


User Generated Screeners


pjmason14Momentum
wigbertHigh FCF-M2
kosalmmuse6
kosalmmuseBest one1
DBrizanall 2019Feb26
kosalmmuseBest one
DBrizanall 2019Feb25
kosalmmuseNice
kosalmmusehan
MsDale*52-Week Low
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)