Here's What This 817% Gainer Has Been Buying

Yacktman funds are well-respected -- see what they've been favoring.

Feb 3, 2014 at 5:29PM

Every quarter, many money managers have to disclose what they've bought and sold via "13F" filings. Their latest moves can shine a bright light on smart stock picks.

Today, let's look at investing giant Donald Yacktman, who founded Yacktman Asset Management in 1992. He isn't as well known as investors like Buffett, Soros, Berkowitz, and the like, but his track record is right up there with them. Yacktman is a value investor, aiming to achieve the highest possible risk-adjusted long-term return on his investments. The company's flagship Yacktman Fund has gained 817% since its 1992 inception (as of the end of December) compared with 586% for the S&P 500 during the same period. Annualized, that's 10.9% vs. 9.4%.

The company's reportable stock portfolio totaled $24.4 billion in value as of Dec. 31.

Interesting developments
So what does Yacktman's latest quarterly 13F filing tell us? Here are a few interesting details:

The only new holding is a small position in the SPDR S&P 500 ETF, an exchange-traded fund that tracks the performance of the S&P 500.

Among holdings in which Yacktman Asset Management increased its stake were its biggest holding, PepsiCo (NYSE:PEP), along with Cisco Systems, (NASDAQ:CSCO), Oracle Corporation (NYSE:ORCL), and Coca-Cola Company (NYSE:KO). PepsiCo's soft-drink market share of about 28% may be smaller than Coke's 42%, but PepsiCo is about much more than just beverages. It dominates the salty-snack market (think Frito-Lay, Doritos, Cheetos, etc.), and snack sales have been growing more briskly than drink sales. And carbonation aside, in overall beverages, PepsiCo actually leads Coca-Cola in retail sales. In recent news, PepsiCo is spending $5 billion to expand in Mexico, and after facing some lawsuits, the company has changed the name of its line of "Simply Natural" Frito-Lay chips to just "Simply." PepsiCo stock yields 2.8% and the company reports its fourth quarter on Feb. 13.

Cisco Systems has lost some of its luster in the past few years, but bulls see it as appealingly priced. Investors must accept a lot of uncertainty as the company enacts new strategies. An article in Barron's recently suggested that fears are overblown and that the stock might jump 20% in 2014, and analysts at Cowen like its big pile of cash and equivalents that can fund acquisitions as well as Cisco's prospects due to a surge in capital expenditure spending. JPMorgan Chase analysts, though, have downgraded Cisco, seeing weak emerging markets growth. Cisco Systems yields 3.1%, and it has been growing its newish dividend aggressively in recent years. It reports its second quarter on Feb. 12.

Data management software giant Oracle, yielding about 1.3%, isn't the fast grower it once was. It has made some competitive compromises and partnerships, as well as some acquisitions, such as online marketing specialist Responsys and cloud player Corente. One thing that hasn't changed is CEO Larry Ellison's generous and controversial compensation, which has often been in the tens of millions and in 2013 topped $150 million. Oracle is facing significant competition from other tech titans, but its second quarter still featured estimate-topping results. Oracle has doubled its dividend while announcing big stock buybacks and generating prodigious free cash flow that tops $14 billion annually. The stock seems appealingly valued at recent levels, with Deutsche Bank upgrading it in late January.

Coca-Cola is looking to the growing global middle class to help it double its revenue in the next seven years, but it won't be easy. The stock underperformed the market in 2013, facing weak international growth and challenges from regulators and health advocates. Coca-Cola is a favorite among dividend fans and yields 3%. Bulls are pleased with recent marketing successes and management's capital priorities, and Barron's has suggested that the stock could jump 20% in 2014.

Yacktman Asset Management reduced its stake in companies such as Microsoft Corporation (NASDAQ:MSFT) and closed out positions in Dell, Inc., Pfizer, and Janus Capital Group, Inc. Microsoft also yields 3% and is getting close to naming its new CEO. Bears see limited growth prospects in the face of strong competition and don't love its Office pricing, but bulls have high hopes for Microsoft's cloud computing moves and they also note that PCs aren't' exactly dead yet. Meanwhile, many are waiting to see how the company's purchase of Nokia's core assets will work out. Microsoft's fourth quarter was strong.

We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing. 13F forms can be great places to find intriguing candidates for our portfolios.

The No. 1 Way to Lose Your Wealth Without Even Knowing It
You’ve fought hard to build wealth for you and your family. Yet one all-too-common pitfall could completely derail your dreams before you even know it. That's why a company The Economist hails as "an ethical oasis" has isolated five simple questions you must answer to ensure that your financial future is really secure.

Can you answer YES to all five of these eye-opening questions?
Click here to find out -- before it’s too late!

Selena Maranjianwhom you can follow on Twitter, owns shares of Coca-Cola, JPMorgan Chase, Microsoft, and PepsiCo. The Motley Fool recommends Cisco Systems, Coca-Cola, and PepsiCo. It owns shares of Coca-Cola, JPMorgan Chase, Microsoft, Oracle, and PepsiCo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers