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James Li
James Li
Articles (1282)  | Author's Website |

Yacktman Asset Management Buys 4 Companies in 3rd Quarter

New buys include Tepper’s Micron Technology and Post-It notes parent 3M

Yacktman Asset Management (Trades, Portfolio) disclosed on Friday that it established four new positions during the third quarter: Micron Technology Inc. (NASDAQ:MU), 3M Co. (NYSE:MMM), Abbott Laboratories (NYSE:ABT) and GrafTech International Ltd. (NYSE:EAF).

Managed by Stephen Yacktman, the firm seeks growth companies with three key attributes: good business, shareholder-oriented management and a low purchase price. This approach combines the best of growth and value investing according to the firm’s prospectus.

Micron Technology

The firm invested in 257,513 shares of Micron Technology, a major memory and storage solutions provider. Shares averaged $50.44 during the quarter: additionally, the company trades below the price-earnings multiple of 15 according to its Peter Lynch Chart.

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Micron CEO Sanjay Mehrotra said on Sept. 20 that strong results for the 12 months ending Aug. 30 propelled the company to “the second-largest semiconductor company in the U.S.” in terms of revenue: trailing 12-month revenues of $30.391 billion are second only to Intel Corp.’s (INTC) $69.244 billion according to All-in-one Screener data. The company set revenue records in several key businesses, including automotive, industrial, mobile and cloud.

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GuruFocus ranked Micron’s profitability 10 out of 10 on several positive investing signs, which include expanding profit margins and an excellent Piotroski F-score of 8. The company’s operating margin has increased approximately 38.10% per year over the past five years and is outperforming 99% of global competitors. Additionally, Micron’s forward rate of return of 24.99% ranks higher than 88% of global semiconductor memory companies.

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Appaloosa fund manager David Tepper (Trades, Portfolio) has not released his third-quarter portfolio as the deadline is 45 days after quarter-end. As of the second quarter, Tepper owns 40,527,800 shares of Micron.

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3M

The firm invested in 1,000 shares of 3M, a major manufacturer of well-known products like Scotch tape and Post-It notes. Shares averaged $206.01 during the quarter.

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The St. Paul, Minnesota-based company reported a 0.2% sales decline for the quarter, driven by declining organic sales in the company’s Health Care and Consumer business. GuruFocus placed the company’s four-star business predictability rank on watch: although it has expanding profit margins and consistent revenue growth over the past 10 years, 3M’s three-year revenue growth rate of 2.40% underperforms 52% of global diversified industrials companies.

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Gurus with large holdings in 3M include First Eagle Investment (Trades, Portfolio), Mairs and Power (Trades, Portfolio), and Jeremy Grantham (Trades, Portfolio).

Abbott Laboratories

The firm invested in 2,800 shares of Abbott Laboratories, a manufacturer of medical devices and blood glucose monitoring kits. Shares averaged $65.66 during the quarter.

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The Abbott Park, Illinois-based company reported a 12.1% increase in revenues for the quarter, driven on continued strength in the company’s new product pipeline according to CEO Miles White. GuruFocus ranks the company’s profitability 7 out of 10 primarily due to expanding profit margins and a Joel Greenblatt (Trades, Portfolio) return on capital that outperforms 76% of global competitors.

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Gurus with large holdings in Abbott include the Vanguard Health Care Fund (Trades, Portfolio), PRIMECAP Management (Trades, Portfolio) and Diamond Hill Capital (Trades, Portfolio).

GrafTech International

The firm invested in 20,000 shares of GrafTech International, a diversified industrials company that manufactures high-quality graphite electrodes. Shares averaged $18.85 during the quarter.

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The Brooklyn Heights, Ohio-based company said on Nov. 2 that revenues of $455 million increased approximately $318 million from the prior-year quarter on the increase in the weighted average price of graphic electrodes, which increased from $2,903 per metric ton to $9,744 per metric ton on several factors, including strong demand and pricing.

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See also

The firm also boosted its holdings in several companies, including Warren Buffett (Trades, Portfolio)’s conglomerate Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) and Seth Klarman (Trades, Portfolio)’s Twenty-First Century Fox Inc. (NASDAQ:FOXA).

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Yacktman also manages two funds with partner, Jason Subotky: Yacktman Fund (Trades, Portfolio) and Yacktman Focused Fund (Trades, Portfolio).

Disclosure: As of the time of this writing, the author is long MMM.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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