Wallace Weitz’s firm Weitz Funds offers eight mutual funds, with about $3 billion of asset under management. It is quite an achievement for an asset manager who started the firm 25 years ago with a modest $10 million of asset under management. Since the firm is located in Omaha, Nebraska and Weitz also confesses subscribing to value investing approach, one would expect him to share some traits with his neighbor Warren Buffett down the street in the same city.
Value investing! It is in the air or water of that city, especially this weekend when Warren Buffett held his annual Berkshire shareholders’s meeting.
Weitz Funds’ website features an article Eight Funds - One Philosophy that list the following investment principles for the firm:
Performance
During the first quarter of 2010, his flagship Weitz Value Fund returned10.2% vs. S&P 500’s 5.4%. The fund did better than S&P500 during the past 15, 20, and since inception of 5/9/1986.
Discussing the quarterly performance, Weitz highlighted in the recent quarterly report the stocks that contributed to the success of the fund:
Top Purchases:
Weitz tends to run a relatively concentrated portfolio and put good money in the top holdings. For the quarter that ended on March 31, he commented his portfolio activities in the quarterly report:
Here are his top purchases (in reverse order):
No. 5: Accenture Ltd (ACN, Financial), Add: 1.05% of the portfolio - Total: 602,900 Shares
Accenture Limited is a management consulting, technology services and outsourcing organization. Accenture Ltd has a market cap of $27.52 billion; its shares were traded at around $43.52 with a P/E ratio of 16.9 and P/S ratio of 1.2. The dividend yield of Accenture Ltd stocks is 0.9%. Accenture Ltd had an annual average earning growth of 18.3% over the past 10 years.
No. 4: AutoZone Inc. (AZO, Financial), Add: 1.1% of the portfolio - Total: 179,564 Shares
Autozone is the nation's specialty retailer of automotive parts and accessories, primarily focusing on do-it-yourself customers. Autozone Inc. has a market cap of $8.92 billion; its shares were traded at around $180.26 with a P/E ratio of 14.1 and P/S ratio of 1.3. Autozone Inc. had an annual average earning growth of 19.4% over the past 10 years. GuruFocus rated Autozone Inc. the business predictability rank of 3.5-star.
No. 3: ConocoPhillips (COP, Financial), Add: 1.18% of the portfolio - Total: 853,700 Shares
ConocoPhillips is a major international integrated energy company with operations in some 49 countries. Conocophillips has a market cap of $87.05 billion; its shares were traded at around $58.55 with a P/E ratio of 16.3 and P/S ratio of 0.6. The dividend yield of Conocophillips stocks is 3.3%. Conocophillips had an annual average earning growth of 18.2% over the past 10 years.
No. 2: Live Nation Inc. (LYV, Financial), Buy: 1.45% of the portfolio - Total: 1,843,324 Shares
Live Nation Entertainment, Inc. is the world's premier live entertainment company, consisting of Live Nation, Ticketmaster and Front Line Management Group. Live Nation Inc. has a market cap of $1.33 billion; its shares were traded at around $15.94 with and P/S ratio of 0.3. Live Nation Inc. had an annual average earning growth of 14% over the past 5 years.
No. 1: Weight Watchers International Inc. (WTW, Financial), Buy: 1.45% of the portfolio - Total: 1,043,617 Shares
Weight Watchers International, Inc. is the largest provider of weight control programs in the world. Weight Watchers International Inc. has a market cap of $2.05 billion; its shares were traded at around $26.67 with a P/E ratio of 10.1 and P/S ratio of 1.5. The dividend yield of Weight Watchers International Inc. stocks is 2.6%. Weight Watchers International Inc. had an annual average earning growth of 15% over the past 10 years.
Conclusion
There is little change in Wallace Weitz’s top holdings for this quarter. Fund is performing well and he simply trimmed some stock that has gone up a lot. [/b][/b]
One thing I find interesting those is that at the end of the quarter, cash accounts for about 20% of his fund. If this is typical, it makes outperforming the benchmark S&P 500 so much more difficult.
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Value investing! It is in the air or water of that city, especially this weekend when Warren Buffett held his annual Berkshire shareholders’s meeting.
Weitz Funds’ website features an article Eight Funds - One Philosophy that list the following investment principles for the firm:
sounds familiar?
- "We eat our own cooking."
- We are patient, long-term investors.
- We try to stay within our "circle of competence."
- We worry about permanent loss of capital—not price volatility.
- We think "benchmark risk" is part of investment life.
Performance
During the first quarter of 2010, his flagship Weitz Value Fund returned10.2% vs. S&P 500’s 5.4%. The fund did better than S&P500 during the past 15, 20, and since inception of 5/9/1986.
Discussing the quarterly performance, Weitz highlighted in the recent quarterly report the stocks that contributed to the success of the fund:
Berkshire Hathaway rose 24% during the quarter. The company completed the Burlington Northern acquisition, and Berkshire was subsequently added to the S&P 500 creating a wave of new demand for the stock. While we trimmed our holdings modestly, we believe the business remains undervalued. A trio of Liberty companies chaired by John Malone continued to climb during the quarter (Liberty Media - Capital +52%, Liberty Media - Interactive +41% and Liberty Global +32%). Comcast (+13%) and UPS (+13%) had less remarkable percentage returns but generated solid business results and dollar gains for the Fund. Construction materials stocks Vulcan Materials (-10%) and Martin Marietta Materials (-6%) declined modestly as volumes remained weak, but recent railcar loading data for aggregates has been more encouraging.
Top Purchases:
Weitz tends to run a relatively concentrated portfolio and put good money in the top holdings. For the quarter that ended on March 31, he commented his portfolio activities in the quarterly report:
We purchased two new stocks during the quarter, AutoZone and The Progressive Corporation. AutoZone is a leading retailer of automotive replacement parts and accessories. AutoZone caters to "do-it-yourself" retail customers, complemented by a growing commercial distribution business. The stores operate at attractive profit margins, driving strong cash flows, which management ably allocates to profitable new store growth and share repurchase. Progressive is the nation’s fourth largest insurer of personal and commercial automobiles. The company has a strong consumer brand, a long history of product innovation and a relatively low-cost position, especially in the growing direct distribution channel. Consequently, we think the company can continue to underwrite more profitably than the broader industry and is poised to capture additional market share over time.
We sold Lowe’s during the quarter as the stock approached our revised estimate of business value, and we eliminated Burlington Northern when Berkshire Hathaway acquired the company. In other activity, we bought more Accenture shares, added to our ConocoPhillips holdings and continued to trim Telephone & Data Systems. We also bought more WellPoint and then wrote covered call options against our entire position. This is a modestly bullish strategy that gives up some of our upside potential in exchange for current income in the form of a call premium. This call premium income can be significant in times of substantial uncertainty, which aptly describes the environment surrounding the managed care sector. The Fund’s residual cash position was relatively unchanged at 20% of net assets at quarter end.
Here are his top purchases (in reverse order):
No. 5: Accenture Ltd (ACN, Financial), Add: 1.05% of the portfolio - Total: 602,900 Shares
Accenture Limited is a management consulting, technology services and outsourcing organization. Accenture Ltd has a market cap of $27.52 billion; its shares were traded at around $43.52 with a P/E ratio of 16.9 and P/S ratio of 1.2. The dividend yield of Accenture Ltd stocks is 0.9%. Accenture Ltd had an annual average earning growth of 18.3% over the past 10 years.
No. 4: AutoZone Inc. (AZO, Financial), Add: 1.1% of the portfolio - Total: 179,564 Shares
Autozone is the nation's specialty retailer of automotive parts and accessories, primarily focusing on do-it-yourself customers. Autozone Inc. has a market cap of $8.92 billion; its shares were traded at around $180.26 with a P/E ratio of 14.1 and P/S ratio of 1.3. Autozone Inc. had an annual average earning growth of 19.4% over the past 10 years. GuruFocus rated Autozone Inc. the business predictability rank of 3.5-star.
No. 3: ConocoPhillips (COP, Financial), Add: 1.18% of the portfolio - Total: 853,700 Shares
ConocoPhillips is a major international integrated energy company with operations in some 49 countries. Conocophillips has a market cap of $87.05 billion; its shares were traded at around $58.55 with a P/E ratio of 16.3 and P/S ratio of 0.6. The dividend yield of Conocophillips stocks is 3.3%. Conocophillips had an annual average earning growth of 18.2% over the past 10 years.
No. 2: Live Nation Inc. (LYV, Financial), Buy: 1.45% of the portfolio - Total: 1,843,324 Shares
Live Nation Entertainment, Inc. is the world's premier live entertainment company, consisting of Live Nation, Ticketmaster and Front Line Management Group. Live Nation Inc. has a market cap of $1.33 billion; its shares were traded at around $15.94 with and P/S ratio of 0.3. Live Nation Inc. had an annual average earning growth of 14% over the past 5 years.
No. 1: Weight Watchers International Inc. (WTW, Financial), Buy: 1.45% of the portfolio - Total: 1,043,617 Shares
Weight Watchers International, Inc. is the largest provider of weight control programs in the world. Weight Watchers International Inc. has a market cap of $2.05 billion; its shares were traded at around $26.67 with a P/E ratio of 10.1 and P/S ratio of 1.5. The dividend yield of Weight Watchers International Inc. stocks is 2.6%. Weight Watchers International Inc. had an annual average earning growth of 15% over the past 10 years.
Conclusion
There is little change in Wallace Weitz’s top holdings for this quarter. Fund is performing well and he simply trimmed some stock that has gone up a lot. [/b][/b]
One thing I find interesting those is that at the end of the quarter, cash accounts for about 20% of his fund. If this is typical, it makes outperforming the benchmark S&P 500 so much more difficult.
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