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 such as 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 737% since its 1992 inception (as of the end of June, 2013), compared with 490% for the S&P 500 during the same period. (Annualized, that's 10.7% vs. 8.8%.)
The company's reportable stock portfolio totaled $21.2 billion in value as of June 30, 2013.
Interesting developments
So what does Yacktman's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Oracle (ORCL 0.56%) and Wells Fargo. (Well, technically, Yacktman did own a negligible number of Wells Fargo shares when the quarter began, but the shares held went from fewer than 20,000 to more than 4.8 million.) Oracle shares got whacked in March after the company reported disappointing earnings, though part of the reason for that is the beefing up of its sales force, which could pay off later. Some see its purchase of Acme Packet as promising, too. Meanwhile, Oracle is a strong presence in cloud computing, in part through savvy partnerships, though it's not without competition there. Its stock yields 1.5% and it has doubled its dividend while announcing big stock buybacks.
Among holdings in which Yacktman Asset Management increased its stake were Sysco (SYY -0.03%) and C.H. Robinson Worldwide (CHRW 0.04%). Sysco is a giant in food delivery to restaurants and other institutions, and recently yielded 3.2%. The stock is near its 52-week high, despite the company's last quarter featuring falling margins and profits . Management blamed our sluggish economy and poor weather. A significant ray of hope is Sysco's international expansion.
In May, freight and shipping specialist C. H. Robinson Worldwide posted first quarter revenue up 17%, but earnings per share were down a bit, in part due to rising operating expenses. The biggest gain came from ocean shipping, where revenue rose 170%. In discussing results and the trucking market, management described a very fragmented marketplace, with thousands of small competitors. It also pointed out the company's relatively solid performance in recent difficult years. The stock yields 2.4%, and has been paying out consistently for more than 25 years . Some worry about the company's pricing power shrinking, while others maintain faith in the competitive edge of its network.
Yacktman Asset Management reduced its stake companies such as needle and syringe maker Becton, Dickinson (BDX 0.27%), which recently appeared reasonably priced to my colleague Chuck Saletta. Yielding 1.9%, it has been paying dividends for more than 40 years and it has been reducing its share count via buybacks. Bulls look to growth in emerging markets and new products such as prefilled injectibles, while bears worry about ObamaCare-related taxes and pressured margins.
Finally, Yacktman's biggest closed positions included Pfizer (PFE 0.42%) and Western Union. (A few shares of Pfizer remain, but Yacktman sold some 99% of its position.) Pharmaceutical giant Pfizer has been posting sluggish revenue growth numbers lately, but many of its other numbers are quite impressive, such as rising profit margins and solid free cash flow growth. It yields 3.3%, too. Pfizer recently announced plans to reorganize itself internally into three units, and has some wondering whether this is the beginning of a bigger breakup. Meanwhile, the company is buying back many shares.
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. 13-F forms can be great places to find intriguing candidates for our portfolios.
