Donald Yacktman is a growth and value investor, leading the $1.73 billion Yacktman Asset Management Co. Mr. Yacktman is the President and Co-Chief Investment Officer of Yacktman Asset Management Co. He is also a Co-Manager for The Yacktman Funds. Prior to founding Yacktman funds in 1992, he served for nine years as the Portfolio Manager of the Selected American Shares mutual fund and was named Portfolio Manager of The Year by Morningstar in 1991.
His latest Wall Street Journal Interview:
In a ten year look from 1999 to 2008, The Yacktman Fund has beaten the S&P 500 six out of ten times, with an average 6.24% rate of return. In the fund’s 3Q performance: the third quarter continued the strong rebound from the March lows with the S&P 500 rising 15.6% while The Yacktman Fund and The Yacktman Focused Fund were up 19% and 16.9%, respectively. For the year, the S&P 500 is now up 19.3% while The Yacktman Fund and The Yacktman Focused Fund have appreciated 48% and 51%, respectively. The Yacktman Fund had more than $994 million in assets and The Yacktman Focused Fund was at $431 million.
Mr. Donald Yacktman “survived and thrived” in the 2008 crisis by putting 30% of assets in cash, avoiding financial stocks, and keeping “safe stocks”. In 2008, Yacktman funds posted negative 26% rate of return, but did better than S&P500 by 11%. 2009 year-to-date, Yacktman Fund (YACKX) came back to the “rally” and made 49.5% rate of return, and Yacktman Focus Fund (YAFFX) made 52.3% rate of return. The $739 million fund grew over 24% between January and June of this year. Bloomberg recently ranked him as #1 on their list of top mutual fund manager of 2009. In his Bloomberg interview, Yacktman dubbed companies like Coke-Cola, Pepsi and P&G as safe stocks. Lessons learned: he answered, “Patience, think long term and have a strategy that has repeatability to it.” See the interview video. Also, an article in Kiplinger's – And the Leader's Are—ranked & compared various top performing funds with Yacktman Funds topping the charts.
Donald Yacktman achieved the honor by steering clear of high-techs in the high-tech bubble! In 1999, his sticking-to-the-value strategy actually cost him -16.9% in performance, but the investors was rewarded for the following three years. Yacktman Fund returned 13.46%, 19.47%, and 11.41% during year 2000, 2001, and 2002, when S&P 500 declined three years in row.
Gurufocus.com hosted a QA session. Mr. Donald Yacktman and his son Mr. Brian Yacktman personally answered questions posted by our users. Key topics covered: valuation of high quality companies ie. P&G have higher value than USG; valuation parameters; opinion that predicting the market is a waste of time; bold statements: Yacktman Focused Fund (YAFFX) will do better than (YACKX) over the next decade; and advice on investment business.
In client letter, Mr. Brian Yacktman wrote, “To clarify buy-and-hold, we like to extend the phrase to “buy-and-hold until price converges with value.” This is why long-term investors who understand the meaning of buy-and-hold have experienced more turnover this past year – the more volatility in the markets, the larger the disconnect between business value and stock price. Nevertheless, true value investors remain long-term thinkers.”
Donald Yacktman looks for growing businesses with good cash flow, low capital, sensible shareholder-oriented management, reinvestment goals. The current fund holds less than 25 companies.
Before June, Donald Yacktman bought 42,500 shares. His stake of Stryker has more than doubled to 152,500 shares as of September 2009 compared to same period a year ago. Stryker’s chairman John W. Brown will retire at the end of the year, with Stephen P. MacMillan, as the newly appointed chairman. The company was indicted this month on several counts of marketing scheme. Workers deceived doctors into using its bone healing devices not approved by the FDA. Stryker Corp income decline 16% on $48 million restructuring charge. Earnings fell to $229 million, or 57 cents per share, from $273.8 million, or 66 cents per share, during the last two 3Qs ending in September. Revenue stayed at $1.65 billion in the same period.
Donald Yacktman owns 285,000 shares as of September 2009, which accounts for 0.54% of the $1.73 billion portfolio of Yacktman Asset Management Co. Donald Yacktman owns 286,000 shares as of June, which accounts for 0.68% of the $1.73 billion portfolio of Yacktman Asset Management Co. The clothing chain reported less than spectacular sales in September. Same-store sales fell 10% in September to $248.2 million: 14% for Abercrombie & Fitch stores, and 21% for Hollister Co. Year to date sales have declined 28% as revenue lowered 22% to $1.82 billion.
Donald Yacktman owns 96,300 shares as of September 2009. Last month, Lowe's Co. signed exclusive deal with insulation and building products supplier Johns Manville. The contract will allow the materials company to expand their products to all of Lowe’s 1,700 stores. Lowe’s spokesperson warned that the company may have to pay-out $100 million in fees from reductions in asset value. The company reduced their plans to open from 62-66 stores to 35- 45 stores.
Donald Yacktman owns 51,900 shares as of September 2009. The Home Depot Inc. bought 72 acres of land in Massachusetts for $5.76 million. The company plans to build a Northeastern commercial distribution center. Martha Stewart Living Omnimedia Inc’s deal with Kmart terminates at the end of the year. Martha Stewart plans to continue to sell their product line at Home Depot chains next year.
Donald Yacktman increased his stake in ConocoPhillips this year. He owns 1,879,780 shares as of September 2009. Conoco is going on a diet. The company plans to sell $10 billion in assets, and reduce 9% of Canada’s Syncrude oil. The company plans to rid of 10% of under performing oil & gas assets to reduce expenditures.
Sources:
QA with Gurufocus.com
Yacktman Funds
Yacktman Capital Group
His latest Wall Street Journal Interview:
“We view the selection process as though we were buying a long-term bond. Our logo is a triangle. The base of the triangle is a low purchase price. We look at businesses as if we were going to buy them and own them for a long period of time. We look at the rate of the return we would earn and the quality of those businesses. The higher the quality is, the lesser the required rate of return. It’s very much like a person buying a bond. But we don’t like to calculate returns to the fourth decimal; we try to make sure we have a lot of room for error. Then we try to get as much as we can of the other two sides of the triangle, namely good businesses run by shareĂ‚Âholder-oriented managers.
On the good business side, our sweet spot is businesses that have low capital intensity and low cyclicality. One of our largest holdings, for instance, is Coca-Cola (KO). It fits our criĂ‚Âteria very well. We will also move away from those components if the rates of return are adequate for the additional unpredictĂ‚Âability that comes with the business, whether it has more fixed assets or more economic sensitivity. We have moved in both diĂ‚Ârections, but we don’t typically invest in businesses that have both enormous amounts of fixed assets and cyclicality. The airĂ‚Âline industry would be the classic example. Coca-Cola is the opposite side of the grid. If you think of it like a bond, we’re buying high coupon bonds.
The third part of the triangle is the management. The difference between a stock and a bond is with a bond, the invesĂ‚Âtor reinvests the cash flow most of the time. In the case of an equity owner, a lot of the reinvestment is done by the manager, so we like to evaluate the manager on the basis of how well he has invested cash in the past. We look at five basic options the manager has. The first option is putting the money back into the business through R&D, marketing, cost reduction, distribution, etc. The second option is making acquisitions, but the acquisiĂ‚Âtions should be synergistic and the manager should not pay too high a price for them. The problem is, in a lot of cases, the egos of managers get in the way of doing a proper job. Another opĂ‚Âtion is buying back stock, which is buying more of the same. The fourth is paying a dividend and the fifth option is paying down debt or letting it accumulate, which is pretty much the same thing. We also tend to be very concentrated. The top 10 holdings plus cash will typically be 50% in The Yacktman Fund, and 75% in the Yacktman Focused Fund.”
In a ten year look from 1999 to 2008, The Yacktman Fund has beaten the S&P 500 six out of ten times, with an average 6.24% rate of return. In the fund’s 3Q performance: the third quarter continued the strong rebound from the March lows with the S&P 500 rising 15.6% while The Yacktman Fund and The Yacktman Focused Fund were up 19% and 16.9%, respectively. For the year, the S&P 500 is now up 19.3% while The Yacktman Fund and The Yacktman Focused Fund have appreciated 48% and 51%, respectively. The Yacktman Fund had more than $994 million in assets and The Yacktman Focused Fund was at $431 million.
Mr. Donald Yacktman “survived and thrived” in the 2008 crisis by putting 30% of assets in cash, avoiding financial stocks, and keeping “safe stocks”. In 2008, Yacktman funds posted negative 26% rate of return, but did better than S&P500 by 11%. 2009 year-to-date, Yacktman Fund (YACKX) came back to the “rally” and made 49.5% rate of return, and Yacktman Focus Fund (YAFFX) made 52.3% rate of return. The $739 million fund grew over 24% between January and June of this year. Bloomberg recently ranked him as #1 on their list of top mutual fund manager of 2009. In his Bloomberg interview, Yacktman dubbed companies like Coke-Cola, Pepsi and P&G as safe stocks. Lessons learned: he answered, “Patience, think long term and have a strategy that has repeatability to it.” See the interview video. Also, an article in Kiplinger's – And the Leader's Are—ranked & compared various top performing funds with Yacktman Funds topping the charts.
Donald Yacktman achieved the honor by steering clear of high-techs in the high-tech bubble! In 1999, his sticking-to-the-value strategy actually cost him -16.9% in performance, but the investors was rewarded for the following three years. Yacktman Fund returned 13.46%, 19.47%, and 11.41% during year 2000, 2001, and 2002, when S&P 500 declined three years in row.
Gurufocus.com hosted a QA session. Mr. Donald Yacktman and his son Mr. Brian Yacktman personally answered questions posted by our users. Key topics covered: valuation of high quality companies ie. P&G have higher value than USG; valuation parameters; opinion that predicting the market is a waste of time; bold statements: Yacktman Focused Fund (YAFFX) will do better than (YACKX) over the next decade; and advice on investment business.
In client letter, Mr. Brian Yacktman wrote, “To clarify buy-and-hold, we like to extend the phrase to “buy-and-hold until price converges with value.” This is why long-term investors who understand the meaning of buy-and-hold have experienced more turnover this past year – the more volatility in the markets, the larger the disconnect between business value and stock price. Nevertheless, true value investors remain long-term thinkers.”
Donald Yacktman looks for growing businesses with good cash flow, low capital, sensible shareholder-oriented management, reinvestment goals. The current fund holds less than 25 companies.
Stryker Corp. (SYK, Financial) 0.4% Weightings
Stryker Corporation develops manufactures and markets specialty surgical and orthopedic medical products such as bone implants. Stryker Corp. has a market cap of $18.29 billion; its shares were traded at around $46 with a P/E ratio of 16.03 and P/S ratio of 2.72. The dividend yield of Stryker Corp. stocks is 0.87%. Stryker Corp. had an annual average earning growth of 23.4% over the past 10 years.Before June, Donald Yacktman bought 42,500 shares. His stake of Stryker has more than doubled to 152,500 shares as of September 2009 compared to same period a year ago. Stryker’s chairman John W. Brown will retire at the end of the year, with Stephen P. MacMillan, as the newly appointed chairman. The company was indicted this month on several counts of marketing scheme. Workers deceived doctors into using its bone healing devices not approved by the FDA. Stryker Corp income decline 16% on $48 million restructuring charge. Earnings fell to $229 million, or 57 cents per share, from $273.8 million, or 66 cents per share, during the last two 3Qs ending in September. Revenue stayed at $1.65 billion in the same period.
Abercrombie & Fitch Co. (ANF, Financial) 0.68% Weightings
Apparel distributor Abercrombie & Fitch Co. has a market cap of $2.89 billion; its shares were traded at around $32.82 with a P/E ratio of 23.61 and P/S ratio of 0.82. The dividend yield of Abercrombie & Fitch Co. stocks is 2.13%. Abercrombie & Fitch Co. had an annual average earning growth of 21.8% over the past 10 years.Donald Yacktman owns 285,000 shares as of September 2009, which accounts for 0.54% of the $1.73 billion portfolio of Yacktman Asset Management Co. Donald Yacktman owns 286,000 shares as of June, which accounts for 0.68% of the $1.73 billion portfolio of Yacktman Asset Management Co. The clothing chain reported less than spectacular sales in September. Same-store sales fell 10% in September to $248.2 million: 14% for Abercrombie & Fitch stores, and 21% for Hollister Co. Year to date sales have declined 28% as revenue lowered 22% to $1.82 billion.
Lowe's Companies Inc. (LOW, Financial) 0.12% Weightings
Home improvement retailer Lowe's Companies Inc has a market cap of $28.9 billion; its shares were traded at around $19.57 with a P/E ratio of 15.17 and P/S ratio of 0.6. The dividend yield of Lowe's Companies Inc. stocks is 1.84%. Lowe's Companies Inc. had an annual average earning growth of 21.4% over the past 10 years.Donald Yacktman owns 96,300 shares as of September 2009. Last month, Lowe's Co. signed exclusive deal with insulation and building products supplier Johns Manville. The contract will allow the materials company to expand their products to all of Lowe’s 1,700 stores. Lowe’s spokesperson warned that the company may have to pay-out $100 million in fees from reductions in asset value. The company reduced their plans to open from 62-66 stores to 35- 45 stores.
The Home Depot Inc. (HD, Financial) 0.08%
Home Depot has a market cap of $42.77 billion; its shares were traded at around $25.09 with a P/E ratio of 15.11 and P/S ratio of 0.6. The dividend yield of The Home Depot Inc. stocks is 3.59%. The Home Depot Inc. had an annual average earning growth of 19.5% over the past 10 years.Donald Yacktman owns 51,900 shares as of September 2009. The Home Depot Inc. bought 72 acres of land in Massachusetts for $5.76 million. The company plans to build a Northeastern commercial distribution center. Martha Stewart Living Omnimedia Inc’s deal with Kmart terminates at the end of the year. Martha Stewart plans to continue to sell their product line at Home Depot chains next year.
ConocoPhillips (COP, Financial) 4.92% Weightings
ConocoPhillips is a international integrated energy company with operations in some 49 countries. Conocophillips has a market cap of $74.41 billion; its shares were traded at around $50.18 with a P/E ratio of 13.53 and P/S ratio of 0.31. The dividend yield of Conocophillips stocks is 3.99%. Conocophillips had an annual average earning growth of 19% over the past 10 years.Donald Yacktman increased his stake in ConocoPhillips this year. He owns 1,879,780 shares as of September 2009. Conoco is going on a diet. The company plans to sell $10 billion in assets, and reduce 9% of Canada’s Syncrude oil. The company plans to rid of 10% of under performing oil & gas assets to reduce expenditures.
| TOP TEN HOLDINGS AS OF SEPTEMBER 30, 2009 | |||
|---|---|---|---|
| THE YACKTMAN FUND | Percent of Net Assets | THE YACKTMAN FOCUSED FUND | Percent of Net Assets |
| News Corp. | 6.64% | News Corp. | 8.49% |
| Coca”Cola Co. | 6.21% | PepsiCo, Inc. | 8.11% |
| PepsiCo, Inc. | 6.14% | Coca”Cola Co. | 7.98% |
| Viacom, Inc., Class B | 5.78% | Microsoft Corp. | 7.46% |
| Procter & Gamble Co. | 4.95% | Viacom, Inc. | 6.84% |
| Microsoft Corp. | 4.91% | Pfizer, Inc. | 6.42% |
| Pfizer, Inc. | 4.90% | Procter & Gamble Co. | 4.84% |
| ConocoPhillips | 4.89% | ConocoPhillips | 4.82% |
| AmeriCredit Corp. | 4.12% | Comcast | 4.00% |
| Comcast | 4.05% | AmeriCredit Corp. | 3.23% |
Sources:
QA with Gurufocus.com
Yacktman Funds
Yacktman Capital Group
