The Global Value Fund and Global Value Fund II have owned more or less of Krones (XTER:KRN, Financial) over the years, depending on its price in relation to our estimate of intrinsic value at various points in time, and we decided to purchase shares in the recent quarter for the Value Fund given that its stock price had nearly halved over the last year. Krones is the dominant competitor in the manufacture of bottling machinery for beverage companies. Its business is somewhat cyclical and its growth has slowed a bit over the last year, and it has also faced cost pressures which have brought down margins. However, we believe these headwinds are temporary and that the market has overreacted, affording us an attractive pricing opportunity in its shares. Krones currently pays a dividend yield just over 3% and, in our view, can continue to compound its intrinsic value over time.
From Tweedy Browne (Trades, Portfolio)'s third-quarter 2019 commentary.
