Donald Yacktman Comments on Sysco

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Nov 05, 2015

Sysco (NYSE:SYY)’s shares were strong during the quarter after Trian Partners, an activist investment firm, announced a large investment in the company. In August, two of Trian’s partners joined Sysco’s Board of Directors.

Trian has substantial expertise in the distribution industry, and we think they will add significant value to the Sysco Board. One likely area of focus is improving Sysco’s profit margins, which have compressed meaningfully over the last few years. The dangers of this point in the cycle are only exacerbated by all-time-high corporate profit margins. This dynamic reinforces our belief in owning companies which have the opportunity to improve their margins. We think many of our top holdings, including Fox, P&G, PepsiCo, Sysco and Coca-Cola, will be able to improve profit margins over the next several years while many companies struggle to maintain their current levels of profitability.

From Donald Yacktman (Trades, Portfolio)'s third quarter 2015 commentary.