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Fortune Profiles Guru Don Yacktman

December 14, 2012 | About:

A look at Yacktman's portfolio and a profile of the man. A good read:

FORTUNE -- The County Line barbecue joint in Austin is buzzing at lunchtime -- you can smell the charred red meat half a mile away. Way in the back corner, Don Yacktman is enjoying his usual: a plate of lean brisket, peppered turkey breast, potato salad, and baked beans. He's surrounded by a gaggle of local bankers who are pitching him on services he doesn't need and eagerly asking him questions. How does he beat the market? What's his secret?

This isn't Warren Buffett holding court at Piccolo Pete's, but it's close. Yacktman is one of the world's most successful mutual fund managers, yet you would never know it. He's dressed in khakis and wearing a Timex. He speaks softly and keeps his head down. When the bankers press him for investing tips, Yacktman first cracks a corny joke -- "the secret's in the sauce," he says, passing a cup of barbecue sauce -- then tells them it's simple: He waits to buy great companies when they're down and rides them until they recover, which great companies almost always do. You don't need to jump in and out of stocks, he tells them. "You just need to catch the wind enough times," he says. "And you need to be very, very patient."

You won't find a more patient investor -- one who's seemingly programmed to withstand the whipsaw stock market of today, with its fiscal cliffs and earnings uncertainty -- than Yacktman. The 71-year-old with a broad build and bald pate is thriving in the slumping, post-crisis world of stock mutual funds. During the past decade his flagship Yacktman Fund (YACKX) has returned 10.5% a year, almost double the S&P 500's return, while his more concentrated Yacktman Focused Fund (YAFFX) has returned 11%. His record since the middle of the financial crisis is even more impressive. After prescient bets on beat-up stocks like Viacom and News Corp., the fund skyrocketed 99% from the end of 2008 through mid-November, scorching 98% of competitors as well as the overall market.The spectacular returns and conservative approach have attracted new money -- a lot of new money -- to Yacktman's funds. The two funds have pulled in $12.9 billion since 2008, Morningstar estimates -- more than all but one other stock fund, a BlackRock dividend fund.

What's shocking is that one of the hottest fund managers today isn't celebrated for his market-trouncing returns the way stars like Ken Heebner and Bill Miller were a few years ago. Yacktman's not a gunslinger, nor does he think he'll beat the S&P 500 every year. You won't hear his opinion about the European debt crisis. In fact, if you don't catch his rare segments on CNBC, you might not hear him at all.

What's also exceptional is Yacktman's dedication to his family. Six of his seven children have followed him from Chicago, where he lived for 38 years, to Austin, where he moved in 2005. He's been transferring control of the funds to his second-oldest son, Steve, 42. And for the past seven years he has dedicated his life to helping his adult daughter recover from a devastating stroke that left her in a locked-in state.

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