Wallace Weitz (Trades, Portfolio), the founder of Weitz Investment Management, a value firm, declined to start new positions during the second quarter but added to a slew of holdings he already owned, he reported Thursday.
Weitz studies business fundamentals to select stocks that trade at a discount to his estimate of their intrinsic value. Each analyst at Weitz Investment Management focuses on a defined area of expertise, or “circle of competence.” In a second-quarter fund letter, Weitz described his approach in the current economic environment:
“… There seem to be plenty of reasons to be wary, but attempting to sidestep every possible problem hasn’t historically proved effective for investors. Instead, we look to invest in businesses that can not only withstand adversity, but take advantage of it. We like the collection of businesses we own…”
In the second quarter, Weitz’s firm purchased additional shares of 15 of his positions. He made the largest increases to his holdings in: Box Inc. (BOX, Financial), Markel Corp. (MKL, Financial), Booking Holdings Inc. (BKNG, Financial), Qurate Retail Inc. (QRTEA, Financial) and DXC Technology Co. (DXC, Financial). Weitz sold out of: Mondelez International Inc. (MDLZ, Financial), Tupperware Brands Corp. (TUP, Financial) and Murphy USA Inc. (MUSA, Financial).
Weitz’s largest long positions were in Berkshire Hathaway Inc. A-shares (BRK.A, Financial) at 7.14% of the equity portfolio and B-shares (BRK.B, Financial) at 6.84% of the portfolio. The Parters III Opportunity Fund, which Weitz manages, has a short position against the S&P 500 index that represents 15% of net assets.
Financial services form the largest sector at 28.17% of the equity portfolio, followed by technology at 23.58% and communication services at 13.56%. The portfolio’s 69 stocks had an aggregate value of $2.49 billion as of the end of the second quarter.
Largest increases
Weitz purchased 575,500 shares of Box Inc., increasing the position by 55.02% to 1,622,100 shares. The holding represented 1.15% of the equity portfolio. The stock’s second-quarter price averaged $19.
Box Inc. has a market cap of $2.13 billion; its shares were traded around $14.51 Thursday with a price-sales ratio of 3.28. Box Inc. had an annual average earnings growth of 28.40% over the past five years.
Weitz purchased 7,000 shares of Markel Corp., increasing the position by 53.85% to 20,000 shares. The holding represented 0.88% of the portfolio. The stock’s second-quarter share price averaged $1,048.
Markel Corp. has a market cap of $15.78 billion; its shares were traded around $1,141.28 Thursday with a price-earnings ratio of 21.34 and price-sales ratio of 1.94.
Booking Holdings Inc. (BKNG, Financial)
Weitz purchased 8,585 shares of Booking Holdings Inc., increasing the holding by 39.93% to 30,085 shares. The holding represented 2.27% of the equity portfolio. The stock’s second-quarter share price averaged $1,795.
Qurate Retail Inc. (QRTEA, Financial)
Weitz purchased 499,614 shares of Qurate Retail Inc., increasing the position by 30.2% to 2,154,064 shares. The holding represented 1.07%. The stock’s second-quarter share price averaged $15.
Qurate Retail Inc. has a market cap of $5.86 billion; its shares were traded around $13.64 Thursday with a price-earnings ratio of 10.55 and price-sales ratio of 0.40. Qurate Retail Inc. had an annual average earnings growth of 10.60% over the past 10 years. GuruFocus rated Qurate Retail Inc. the business predictability rank of 3-star.
DXC Technology Co. (DXC, Financial)
Weitz purchased 821,900 shares of DXC Technology Co., increasing the position by 24.25% to 768,500 shares. The holding represented 1.7% of the equity portfolio.
DXC Technology Co. has a market cap of $13.76 billion; its shares were traded around $51.65 with a price-earnings ratio of 11.46 and price-sales ratio of 0.68. The trailing 12-month dividend yield of DXC Technology Co. is 1.50%. The forward dividend yield of DXC Technology Co. is 1.68%. DXC Technology Co. had an annual average earnings growth of 6.30% over the past five years.
See Wally Weitz’s portfolio here.
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