Donald Yacktman (Trades, Portfolio) founded Yacktman Asset Management in 1992. He graduated with a degree in economics from the University of Utah and earned an MBA from Harvard. Yacktman is the co-manager for AMG Yacktman Focused Fund (Trades, Portfolio) and the award winning AMG Yacktman Fund (Trades, Portfolio). He was also awarded the 1994 “Portfolio Manager of the Year” award by Mutual Fund Letter.
In the third quarter of 2015, Yacktman reduced his positions in PepsiCo Inc. (PEP, Financial) in all three of the funds that he currently manages. In his Yacktman Focused Fund (Trades, Portfolio), he reduced the holding by 1.7 million shares for a 22.58% reduction. He now holds 6 million shares in the Yacktman Focused Fund (Trades, Portfolio). He also sold 2.2 million shares in the Yacktman Fund (Trades, Portfolio), a reduction of 20.37%.
PepsiCo is a global food and beverage company that makes products such as Pepsi cola, Quaker Oats, Dole juice, Tostitos, Doritos, Aunt Jemima and Tropicana juice.
PepsiCo has a market cap of $145.1 billion, an enterprise value of $166.43 billion, a P/E ratio of 29.52, a quick ratio of 1.03 and a dividend yield of 2.80%.
Below is a Peter Lynch chart for PepsiCo Inc.
PepsiCo has onesevere warning sign, which is the operating margin has been in a five-year decline. The average rate of decline per year is 3.6%.
PepsiCo also has several medium warning signs according to GuruFocus:
Payout ratio is too high, meaning its dividend may not be sustainable.Â
PepsiCo's revenue growth has slowed down over the past 12 months.
PepsiCo's stock price is close to the 10-year high.
P/E ratio of 29 is close to the 10-year high of 30.39.
P/B ratio of 10.66 is close to the 10-year high of 11.16.
P/S ratio of 2.28 is close to the five-year high of 2.38.
PepsiCo has been issuing new debt. Over the past three years, it issued $4.6 billion of debt. But overall, its debt level is acceptable.
It is definitely noteworthy that Yacktman has reduced the stake in PepsiCo in all three of his funds. I believe that with all of the downsides to PepsiCo, it’s worth considering to either short or sell this stock.
Cheers to your investment success.
Disclaimer: Author does not own any shares in this stock.
