Welcome, Fools, to part 23 of our several-thousand-part series, "Better Know a Stock Picker," which is loosely, but not too loosely, based on Stephen Colbert's "Better Know a District" from The Colbert Report.
Like Stephen and his thorough investigations into America's congressional districts, each week I take a look at a fund you may want to own. What's on tap this week?
|
Yacktman (YACKX) | |
|---|---|
|
Expense ratio |
0.92% |
|
Fund size |
$410 million in assets |
|
1-year return |
14.45% |
|
5-year return |
15.42% |
|
10-year return |
10.13% |
Top 5 holdings
|
Company |
% of Assets |
|---|---|
|
Coca-Cola (NYSE:KO) |
9.50% |
|
Microsoft Corp. (NASDAQ:MSFT) |
5.80% |
|
Lancaster Colony (NASDAQ:LANC) |
5.34% |
|
AmeriCredit Corp. (NYSE:ACF) |
3.73% |
|
Kraft Foods (NYSE:KFT) |
3.47% |
Meet Don and Stephen Yacktman
The fightin' team at the Yacktman Fund is led by the fightin' Yacktmans, Don and son Stephen. It's a powerful combination. Much like Bruce Fund teammates Robert and Jeff Bruce, this pair's signature Yacktman Fund has outdistanced the S&P 500 by roughly 1.5% a year since 1996.
Credit the guts of founder Don Yacktman. He staged a vicious proxy battle over control of the funds in 1998 as his value-driven strategy underperformed the go-go-growth approach espoused by the bubbleistas of the time. Fortunately, his plea for patience paid off. And while others were swimming in red ink in 2001 and 2002, Yacktman was up on the index by more than 30% in each year. Eat that, Wall Street.
Of course, no one should be surprised by that performance. Don has been managing money since 1968 and was named Morningstar's portfolio manager of the year in 1991. He founded Yacktman the next year.
Meanwhile, Stephen joined his father in 1993 fresh out of Brigham Young University with a degree in economics and an MBA. He's since used that pedigree to help his dad search far and wide for the best investments. As he told Smart Money in 2004, "Our approach is to look at the entire universe and generate the best possible return, whether it's in small caps, large caps, or debt instruments."
How they invest
Flexibility is, in fact, a key to the Yacktmans' success. For example, while the investapo debates the relative merits of Google spending $1.6 billion for YouTube, Don and Stephen are investing in cheaper options, such as the various holdings of Liberty Media. John Malone's diverse media empire has big interests in both News Corp. (NYSE:NWS) and Time Warner (NYSE:TWX), which, in turn, makes Yacktman a significant part owner of MySpace and other Web 2.0 properties.
What's more, the Yacktmans write in their latest letter to shareholders that one of its Liberty holdings, Liberty Capital (NASDAQ:LCAPA), is "worth $120 to $140 a share," which would equal at least a 37% premium from today's price.
Certainly, the promise of such returns will raise eyebrows among growth-huggers everywhere. Nevertheless, the Yacktmans remain dyed-in-the-wool value hounds, as witnessed by their latest purchases for the signature fund: Johnson & Johnson (NYSE:JNJ) and Wrigley (NYSE:WWY).
Is this fund for you?
So, will the Yacktmans deliver like Peter Lynch? Their scrounge-for-value approach has certainly worked well for top-notch stock pickers such as Wally Weitz. That said, when Motley Fool Champion Funds advisor Shannon Zimmerman interviewed Don for the August 2005 issue, he said that the seven-figure sum in his IRA is invested in Yacktman Focused instead of the signature fund.
But that hasn't stopped Shannon from recommending Yacktman to the portfolio. And it remains one of the distinct minority to be underperforming -- though marginally so -- since being named a champ in the July 2005 issue. Try Champion Funds free for 30 days to get Shannon's buy report for Yacktman, or for any of the dozens of other funds helping to him to beat the benchmark by more than 8% as of this writing.
And that's this week's profile. See you back here next week, fund nation. Good night.
Think you can't beat the market with funds? Think again! The selections in Shannon Zimmerman's Motley Fool Champion Funds portfolio are up an average of 22% vs. just 14% for their comparable benchmarks. Ask us for an all-access pass to get an unfettered look at all of Shannon's picks, manager interviews, and model portfolios. Go ahead; it's free for 30 days and there's no obligation to buy.
Fool contributor Tim Beyers is a regular viewer of The Colbert Report. (Stay the course.) Tim didn't own shares in any of the companies or funds mentioned in this article at the time of publication. Get the skinny on all of the stocks in Tim's portfolio by checking his Fool profile. Johnson & Johnson and Wrigley are both Motley Fool Income Investor selections. Coca-Cola and Microsoft are Motley Fool Inside Value picks. Time Warner is a Motley Fool Stock Advisor recommendation. The Motley Fool's disclosure policy is always championship caliber.
