Yacktman Funds Cuts 16 Holdings in Q1 Expecting Market Drop

Managers take gains to prep for stock sale, add to only 2 positions

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Apr 15, 2016
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The Yacktman Fund (TradesPortfolio) pared many more holdings than they increased in the first quarter, most of which posted gains year to date, as the managers gathered cash should more opportunities arise this year.

“In early 2016, markets around the globe have begun to collapse and the U.S. stock market posted its worst start of the year in history,” their fourth-quarter letter said.

“We prepared for this environment and continue to have excess cash to deploy as stocks go on sale. We also have a portfolio full of what we think are some of the best quality franchises in the world selling at reasonable prices. Difficult market environments are our favorite times at Yacktman because the best values often occur during periods of uncertainty or panic.”

A team of three leads oversight of the Yacktman Fund (Trades, Portfolio): founder Donald Yacktman (Trades, Portfolio), CIO Stephen Yacktman and co-portfolio manager Jason Subotky. The conservative value firm considers itself “a manager for riskier times” and outperformed the S&P 500 index for the quarter with a 4.07% return compared to 1.35% for the benchmark.

The Yacktman Fund (Trades, Portfolio) ended the quarter with a total value of $7.3 billion and 39 holdings, predominantly in the consumer defensive sector at 37% of the portfolio.

Managers made scant increases to only two holdings: Twenty-First Century Fox Inc. (FOXA, Financial) and Hengan International Group Co. Ltd. (HKSE:01044, Financial). Otherwise, they trimmed 16 positions, 13 of which posted gains year to date, including seven of their top eight holdings.

Yacktman Fund (Trades, Portfolio)s’ activity closely mirrored last quarter, when they added to no holdings and reduced 26, including eight of their top holdings.

Adds

Yacktman Fund (Trades, Portfolio)s added 250,000 shares to their holding of Hengan International Group Co. Ltd., a 3.7% increase. At the end of the quarter, they held 6,935,400 shares of the company, composing 0.8% of their portfolio. Hengan’s share price increased 1.2% year to date.

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Hengan International Group Co. Ltd. has a market cap of HKD88.71 billion; its shares were traded around HKD73.30 with a P/E ratio of 21.63 and P/S ratio of 3.73. The trailing 12-month dividend yield of Hengan International Group Co. Ltd. stocks is 3.13%. The forward dividend yield of Hengan International Group Co. Ltd. stocks is 3.43%. Hengan International Group Co. Ltd. had an annual average earnings growth of 31.2% over the past 10 years. GuruFocus rated Hengan International Group Co. Ltd. the business predictability rank of 3.5-star.

Yacktman Fund (Trades, Portfolio)s added 400,000 shares to their holding of Twenty-First Century Fox Inc., a 2.04% increase. At the end of the quarter, they held 20 million shares, worth 7.7% of their portfolio and the third largest holding. Twenty-First Century Fox’s shares gained 10.5% year to date.

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Twenty-First Century Fox Inc. has a market cap of $57.52 billion; its shares were traded around $29.99 with a P/E ratio of 25.44 and P/S ratio of 2.31. The trailing 12-month dividend yield of Twenty-First Century Fox Inc. stocks is 1.01%. The forward dividend yield of Twenty-First Century Fox Inc. stocks is 1.01%. Twenty-first Century Fox Inc. had an annual average earnings growth of 11.5% over the past five years.

Reductions

As its largest reduction, Yacktman Fund (Trades, Portfolio)s sold 41.2%, of 850,000, of their shares of C.H. Robinson Worldwide (CHRW, Financial), a holding since 2013. At the end of the quarter, they held 950,000 shares of the company, a 0.97% portfolio weight. C.H. Robinson’s shares climbed 15.5% year to date.

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C.H. Robinson Worldwide Inc. has a market cap of $10.57 billion; its shares were traded around $73.80 with a P/E ratio of 21.04 and P/S ratio of 0.79. The trailing 12-month dividend yield of C.H. Robinson Worldwide Inc stocks is 2.21%. The forward dividend yield of C.H. Robinson Worldwide Inc. stocks is 2.36%. C.H. Robinson Worldwide Inc. had an annual average earnings growth of 10.4% over the past 10 years. GuruFocus rated C.H. Robinson Worldwide Inc. the business predictability rank of 5-star.

Yacktman Fund (Trades, Portfolio)s sold 50,000 shares of Clorox Co. (CLX, Financial), a 20% reduction. At the end of the quarter, they held 200,000 shares, a 0.35% portfolio weight. Clorox declined half a percent year to date.

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Clorox Co. has a market cap of $16.32 billion; its shares were traded around $126.07 with a P/E ratio of 24.3 and P/S ratio of 2.96. The trailing 12-month dividend yield of Clorox Co. stocks is 2.41%. The forward dividend yield of Clorox Co stocks is 2.43%. Clorox Co. had an annual average earnings growth of 4.1% over the past 10 years. GuruFocus rated Clorox Co. the business predictability rank of 3-star.

Yacktman Fund (Trades, Portfolio)s sold 1.6 million shares of Sysco Corp. (SYY, Financial), a reduction of 15%. They held 9.1 million shares at the end of the quarter, a 5.87% portfolio weight. Sysco shares rose 14% year to date.

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Sysco Corp. has a market cap of $26.34 billion; its shares were traded around $46.66 with a P/E ratio of 35.67 and P/S ratio of 0.57. The trailing 12-month dividend yield of Sysco Corp. stocks is 2.62%. The forward dividend yield of Sysco Corp stocks is 2.66%. Sysco Corp. had an annual average earnings growth of 1.4% over the past 10 years.

Yacktman Fund (Trades, Portfolio)s sold 200,000 shares of Wal-Mart Stores Inc. (WMT, Financial), decreasing the position by 13.3%. They held 1.3 million shares at the end of the quarter, a 1.2% portfolio weight. Wal-mart’s shares rose almost 13% year to date.

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Wal-mart Stores Inc. has a market cap of $217.53 billion; its shares were traded around $69.18 with a P/E ratio of 15.16 and P/S ratio of 0.46. The trailing 12-month dividend yield of Wal-Mart Stores Inc. stocks is 2.84%. The forward dividend yield of Wal-Mart Stores Inc. stocks is 2.91%. Wal-Mart Stores Inc. had an annual average earnings growth of 7.2% over the past 10 years. GuruFocus rated Wal-Mart Stores Inc. the business predictability rank of 3.5-star.

Yacktman Fund (Trades, Portfolio)s reduced its stake in Oracle Corp. (ORCL, Financial) by 12.5%, selling 1.5 million shares. At the end of the quarter, they held 10.5 million shares, a 5.9% portfolio weight. The company’s price rose 12.5% year to date.

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Oracle Corp. has a market cap of $170.68 billion; its shares were traded around $41.13 with a P/E ratio of 20.27 and P/S ratio of 4.82. The trailing 12-month dividend yield of Oracle Corp. stocks is 1.45%. The forward dividend yield of Oracle Corp. stocks is 1.45%. Oracle Corp. had an annual average earnings growth of 16.2% over the past 10 years. GuruFocus rated Oracle Corp. the business predictability rank of 3.5-star.

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