The Yacktman Focused Fund (Trades, Portfolio) disclosed this week its top four buys from fourth-quarter 2018 included two new holdings and two position boosts.
Managed by Stephen Yacktman and Jason Subotky, the Austin, Texas-based fund seeks companies that meet at least one of the following criteria: good business, shareholder-oriented management and low purchase price. The fund’s two new holdings for the quarter were State Street Corp. STT and Goldman Sachs Group Inc. GS, while its top two position boosts were Samsung Electronics Co. Ltd. XKRX:005935 and Bollore SA XPAR:BOL.
Fund updates investment strategy in a "challenging" 2019
Yacktman and Subotky said in a “Market View 2019” video that while the fund is more optimistic about the opportunities available in 2019, it still faces the challenge of staying fully invested during a time where market valuations remain high despite increasing volatility. Yacktman introduced the idea of a “snow globe”: particles of snow scatter around when one shakes the globe. While each particle of snow represents an investing opportunity, some are overvalued while others are undervalued. Subotky said the firm seeks the undervalued opportunities using “significant navigation.”
The fund managers also detailed several benefits of investing in family-run businesses like Samsung and Twenty-First Century Fox Inc. FOXFOXA, including the potential for depressed current earnings and investments back to the company. During the quarter, the Focused Fund added 2,462,747 shares of Samsung, boosting the position 19.02%, with shares averaging 34,591 won ($30.80). The transaction increased the equity portfolio 2.60%.
The South Korean diversified electronics conglomerate manufactures and sells a wide range of products, including smartphones, semiconductor chips, printers, home appliances, medical and telecom equipment. GuruFocus ranks the company’s financial strength and profitability 8 out of 10 on several positive signs, which include a solid Altman Z-score of 4.46 and a strong Piotroski F-score of 8. Additionally, Samsung’s profit margins have increased approximately 5.80% per year over the past five years and are outperforming over 96% of global competitors.
State Street
The fund managers purchased 580,000 shares of State Street, dedicating 1.35% of the equity portfolio to the position. Shares traded at an average price of $71.19 during the quarter.
Boston-based State Street provides investment management services to various institutions like mutual funds, retirement plans and insurance companies. GuruFocus ranks the company’s profitability 4 out of 10: while the company’s return on equity of 10.26% outperforms 65% of global competitors, State Street’s return on assets underperforms 65% of global asset management companies.
Other gurus with large holdings in State Street include Bill Nygren (Trades, Portfolio) and Hotchkis & Wiley.
Goldman Sachs
Yacktman and Subotky bought 110,000 shares of Goldman Sachs, dedicating 0.68% of the equity portfolio to the position. Shares averaged $200.26 during the quarter.
Shares of Goldman Sachs, a major Warren Buffett (Trades, Portfolio) bank holding, rose on Wednesday as the New York-based investment bank reported stronger-than-expected revenue across key segments like investment banking and institutional client services. Goldman Sachs’ revenue increased approximately 12% over the past 12 months, contributing to a five-year compound annual growth rate of sales of approximately 2.30%.
Bollore
Yacktman and Subotky added 4,894,116 shares of Bollore, increasing their equity portfolio 0.73%. The shares traded for an average price of 3.70 euros ($4.21) during the quarter.
The French shipping and logistics company operates four business segments: transportation and logistics, oil logistics, communication and electricity storage and solutions. GuruFocus ranks Bollore’s profitability 7 out of 10 on several good signs, which include expanding profit margins and a solid Piotroski F-score of 7.
Other funds riding Bollore’s strong profitability include the Tweedy Browne (Trades, Portfolio) Global Value Fund and Charles de Vaulx (Trades, Portfolio)’s IVA Worldwide Fund.
Disclosure: No positions.
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