While welcoming the return of the more attractive pricing brought on by volatility in its first-quarter letter, the Yacktman Focused Fund (Trades, Portfolio) made substantial purchases of only three stocks in the second quarter, each of which is based outside the U.S.
Portfolio managers Stephen Yacktman and Jason Subotky increased the fund’s positions in South Korea’s Hyundia Home Shopping Network Corp. (XKRX:057050, Financial) and KT&G Corp. (XKRX:033780, Financial), and France’s Bollore SA (XPAR:BOL, Financial). They also made a modest increase to another South Korean stock, Samsung Electronics Co. Ltd. (XKRX:005930, Financial).
The portfolio’s total value runs at $2.70 billion, with 22 stocks listed. Austin-based Yacktman Asset Management, founded by famed investor Donald Yacktman (Trades, Portfolio), prides itself on risk aversion and ability to identify mispriced stocks that will excel over the long run. Although its value approach has been out of step with the bull market in the short term, the fund accumulated 9.67% annualized returns versus 7.96% in the benchmark S&P 500 index since inception.
At the end of the first quarter, the fund’s letter said the market was expensive.
“Prices, which we think are the key determinant of returns over time, are high. We believe high prices lead to lots of risk and disappointing future returns,” the letter read.
The firm also had positive sentiment toward South Korea, saying, “We continue to see improvement in governance in Samsung and in Korea…”
Korea also has a 10% projected annual return, compared to a 2.3% decline for the U.S., according to GuruFocus data. It has a price-earnings ratio of 10.98, versus 24.29 for the U.S. S&P 500.
Yactkman Focused Fund portfolio adds
Hyundia Home Shopping Network Corp. (KXRK:057050)
Yacktman Asset Management purchased 151,724 shares of the company, an increase of 231.32%. It ended the quarter with 217,314 shares, representing 0.81% of the equity portfolio. The stock had a second-quarter average price of 108,467 South Korean won. Yacktman started the position in the first quarter.
Hyundai Home Shopping Network Corp. has a market cap of 1297.34 billion won; its shares were traded around 110,000.00 won with a price-earnings ratio of 10.68 and price-sales ratio of 1.25. The trailing 12-month dividend yield of Hyundai Home Shopping Network Corp. stocks is 1.53%. The forward dividend yield of Hyundai Home Shopping Network Corp. stocks is 1.53%. Hyundai Home Shopping Network Corp. had an annual average earnings growth of 3.60% over the past 10 years.
KT&G Corp. (XKRX:033780, Financial)
The firm purchased 274,243 shares of KT&G Corp., increasing the position by 95.07%. The quarter’s share price for the stock averaged 99853 won. At quarter-end, Yacktman held 562,702 shares, worth 2% of the equity portfolio. The firm purchased KT&G Corp. in the first quarter.
KT&G Corp. has a market cap of $13889.16 billion; its shares were traded around 109,500.00 won with a price-earnings ratio of 11.79 and price-sales ratio of 3.05. The trailing 12-month dividend yield of KT&G Corp. stocks is 3.64%. The forward dividend yield of KT&G Corp. stocks is 3.64%. KT&G Corp. had an annual average earnings growth of 2.70% over the past 10 years. GuruFocus rated KT&G Corp. the business predictability rank of 2.5-star.
Bollore SA (XPAR:BOL, Financial)
Yacktman purchased 8,759,771 shares of Bollore SA, increasing the position by 91.1% to 3.16% of the portfolio. The stock’s quarterly share price averaged 4 euro per share. At quarter-end, the firm owned 18,374,545 shares of Bollore. It began purchasing the company in the third quarter of 2017.
Bollore SA has a market cap of $11.26 billion; its shares were traded around 3.87 euros with a price-earnings ratio of 16.10 and price-sales ratio of 0.61. The trailing 12-month dividend yield of Bollore SA stocks is 1.55%. The forward dividend yield of Bollore SA stocks is 1.55%. Bollore SA had an annual average earnings growth of 12.60% over the past 10 years. GuruFocus rated Bollore SA the business predictability rank of 2.5-star.
Samsung Electronics Co. Ltd. (XKRX:005930, Financial)
Yacktman increased its position in Samsung Electronics 6.96%, buying 675,172 shares. The stock’s quarterly price averaged 40,196 South Korean won. Yacktman held 10,375,172 shares of the company at the end of the quarter, worth 12.97% of the equity portfolio.
Samsung Electronics Co. Ltd. has a market cap of 329,179.72 billion won; its shares were traded around 45,850.00 won with a price-earnings ratio of 6.95 and price-sales ratio of 1.27. The trailing 12-month dividend yield of Samsung Electronics Co. Ltd. stocks is 2.31%. The forward dividend yield of Samsung Electronics Co. Ltd. stocks is 2.31%. Samsung Electronics Co. Ltd. had an annual average earnings growth of 13% over the past 10 years.
See Yacktman Focused Fund (Trades, Portfolio)’s portfolio here.
