Tracking Yacktman Asset Management Portfolio – Q3 2022 Update

This article is part of a series that provides an ongoing analysis of the changes made to Yacktman’s 13F stock portfolio on a quarterly basis. It is based on Yacktman Asset Management’s regulatory 13F Form filed on 11/7/2022. Please visit our Tracking Yacktman Asset Management series to get an idea of their investment philosophy and our previous update for the fund’s moves during Q2 2022.

This quarter, Yacktman Asset Management’s (MUTF:YACKX) (MUTF:YAFFX) (MUTF:YASSX) 13F portfolio value decreased ~5% from $9.64B to $9.17B. The number of holdings increased from 65 to 67. The largest holding is Canadian Natural Resources at ~8% of the 13F portfolio. Largest five individual stock positions are Canadian Natural Resources, PepsiCo Inc., Microsoft, Alphabet, and AMERCO. Together they account for ~28% of the 13F portfolio. The firm currently holds around ~15% cash. The portfolio is concentrated with recent 13F reports showing around 65 individual positions. 44 of their stakes are significantly large (over ~0.5% of the 13F portfolio each) and they are the focus of this article.

Note: Three of their top holdings in their flagship Yacktman Fund are not in the 13F report as they are not US listed 13F securities – Bollore SE (OTCPK:BOIVF), Samsung Electronics (OTCPK:SSNLF) Preferred, and Brenntag SE (OTCPK:BNTGY). The fund has generated alpha since their 1992 inception (10.25% annualized compared to 9.79% for the S&P 500 index) but they are lagging in the most recent ten-year period (10.59% annualized vs 12.79%).

New Stakes:

EOG Resources (EOG), Devon Energy (DVN), Diamondback Energy (FANG), and Pioneer Natural Resources (PXD): These are the new positions this quarter. EOG is a 1.75% of the portfolio position purchased at prices between ~$95 and ~$127 and the stock currently trades well above that range at ~$148. The 1.75% DVN stake was established at prices between ~$51 and ~$74 and it is now at ~$72. FANG is a 1.66% of the portfolio stake purchased at prices between ~$107 and ~$135 and the stock is now well above that range at ~$164. The 1.62% PXD position was established at prices between ~$205 and ~$263 and it now goes for ~$259.

Stake Increases:

Alphabet Inc. (GOOG): The top five 4.35% stake in GOOG was established in Q1 2019 at prices between ~$51 and ~$62 and it now goes for ~$89. Q1 2020 saw a roughly one-third stake increase at prices between ~$53 and ~$77. Last several quarters have seen only minor adjustments.

AMERCO (UHAL): The ~4% of the portfolio UHAL position saw a ~50% stake increase during Q1 & Q3 2020 at prices between ~$242 and $384. Q2 2021 saw another ~75% stake increase at prices between ~$527 and ~$632. That was followed with a ~60% stake increase in Q1 2022 at prices between ~$557 and ~$726. The stock currently trades at ~$529. Last two quarters have seen a marginal increase.

Fox Corp (FOX) (FOXA): The FOX stake came about because of the merger transaction between Walt Disney and Twenty First Century Fox. Yacktman had a huge position in Twenty First Century Fox. The deal closed in March and the terms were ~$38 per share in cash or Disney stock subject to a collar and one-third of one-share of new Fox for each share of Twenty First Century Fox. Last three quarters of 2019 had seen a ~42% stake increase at prices between $30 and $39. Q1 2020 saw another ~55% stake increase at prices between $20 and $38.60. There was a ~38% reduction over the two quarters through Q1 2021 at prices between ~$25 and ~$41.50. The stock currently trades at $27.62, and the stake is at 3.58%. Last six quarters have seen only minor adjustments.

Cognizant Technology (CTSH): The 3.45% portfolio stake in CTSH saw a stake doubling in Q2 2019 at prices between $56.75 and $74.60. There was a ~60% stake increase in Q1 2020 at prices between $42 and $71.50. That was followed with a roughly one-third increase in Q3 2021 at prices between $66.50 and $78. The stock currently trades at $53.22. Last four quarters have seen only minor adjustments.

News Corp (NWSA): The 2.81% portfolio position was built in 2019 at prices between $12.50 and $14.60. Q1 2020 also saw a ~30% stake increase at prices between $8.20 and $15. There was a ~25% selling in Q1 2021 at prices between $18 and $27.30. The stock currently trades at ~$17. Last six quarters have seen only minor adjustments. They have a ~4% ownership stake in the business.

Charles Schwab (SCHW): Most of the 2.80% of the portfolio stake in SCHW was purchased in Q4 2020 at prices between $37 and $53. The stock is now well above that range at $79.63. Last few quarters have seen minor increases.

Booking Holdings (BKNG): BKNG is a 2.80% of the portfolio position purchased in Q1 2019 at prices between $1650 and $1935. Q2 2020 saw a ~20% reduction at prices between $1231 and $1841. The stock currently trades at ~$1859. Last nine quarters have seen only minor adjustments.

State Street Corporation (STT): The 2.32% STT stake saw a ~150% increase in Q4 2018 at prices between $60 and $87. Q3 2019 saw another ~63% stake increase at prices between $49 and $61. There was a ~20% selling over the three quarters thru Q2 2020. The stock currently trades at $76.15. Last nine quarters have seen only minor adjustments.

Tyson Foods (TSN): TSN is a ~2% of the portfolio stake established in Q4 2020 at prices between $56.50 and $70 and the stock currently trades at $67.73. Last seven quarters have seen only minor adjustments.

U.S. Bancorp (USB): The ~2% USB position has been in the portfolio for over 15 years. Majority of the original stake was purchased in 2011 in the low-20s price-range. The stock currently trades at $44.17. 2015 saw a ~50% reduction in the low-40s price range. Q4 2016 saw another ~25% selling at prices between $42.50 and $52.50. Since then, the activity has been minor.

ConocoPhillips (COP): The ~2% COP stake was primarily built this quarter at prices between ~$82 and ~$118. The stock is now well above that range at ~$134.

Armstrong World Industries (AWI), Bank of New York Mellon (BK), Colgate-Palmolive (CL), Cisco Systems (CSCO), eBay Inc. (EBAY), Embecta Corp. (EMBC), Oracle Corporation (ORCL), and Warner Bros. Discovery (WBD): These very small (less than ~1.10% of the portfolio each) stakes were increased during the quarter.

Note: Embecta was Becton, Dickinson, and Company’s (BDX) diabetes care business. It was spun off in April. Shareholders of BDX received one share of Embecta for every five shares held.

Stake Decreases:

Canadian Natural Resources (CNQ): CNQ is currently the largest position at ~8% of the portfolio. It was purchased in Q1 2021 at prices between $22.50 and $32.50. There was a ~90% stake increase next quarter at prices between $29.40 and $38. That was followed with a ~30% increase in Q3 2021 at prices between $30.40 and $36.50. The stock currently trades at $60.77. There was a ~6% trimming this quarter.

PepsiCo Inc. (PEP): PEP is currently the second largest 13F stake at 6.65% of the portfolio. It was built over multiple years with the bulk established in the 2011-13 timeframe: over 22M shares were purchased during that time at prices between $60 and $86. The six quarters thru Q3 2016 had seen a roughly two-thirds reduction at prices between $91 and $111. Last three quarters of 2019 had also seen another ~40% selling at prices between $121 and $140. That was followed with a ~25% reduction in Q1 2020 at prices between $104 and $147. Q2 2021 saw a one-third increase at prices between ~$141 and ~$149 while in this quarter there was a ~12% trimming. The stock currently trades at ~$181.

Microsoft Corporation (MSFT): MSFT has been in the portfolio since 2003 and it became a significantly large position in 2006 when around 2.2M shares were purchased at prices between $22 and $29.50. ~20M shares were added in 2011 at prices between $24 and $28.50. The six years thru 2019 saw the position reduced by ~95% at prices between $36 and $190. Q2 2020 also saw a ~17% selling at prices between $152 and $204. There was a ~15% stake increase in Q1 2021 at prices between $212 and $245. Since then, there has only been minor adjustments. The stock currently trades at ~$229 and the large (top three) stake is at ~5% of the portfolio.

Procter & Gamble (PG): PG is a very long-term position that has been in the portfolio since Yacktman’s first 13F filing in 1999. The position size remained insignificantly small until 2007 when about 520K shares were purchased at prices between $61 and $74. The stake was cut in half in 2008 but the following four years saw a 100-fold stake increase at prices between $47 and $70. The four quarters thru Q3 2016 saw a 50% reduction at prices between $72 and $90. The six quarters thru Q1 2020 had seen another ~80% selling at prices between $80 and $128. The stock currently trades at ~$137 and the stake is now at ~4% of the portfolio. Last few quarters have seen minor trimming.

Johnson & Johnson (JNJ): JNJ is a 3.72% of the 13F portfolio position that has been in the portfolio since their first 13F filing in Q1 1999. The bulk of the original position was purchased in 2011 in the low 60s price-range. 2015-18 had seen a combined ~45% reduction at prices between $91 and $147. The three quarters thru Q2 2020 had seen another ~50% selling at prices between $111 and $156. The stock currently trades at ~$174. Last few quarters have seen minor trimming.

Reliance Steel & Aluminum (RS): RS is a 2.39% of the portfolio position established in Q4 2021 at prices between ~$141 and ~$167 and the stock currently trades at ~$206. There was a ~20% stake increase in Q1 2022 at prices between ~$149 and ~$195. Last two quarters saw marginal trimming.

L3Harris Tech. (LHX), and Northrop Grumman (NOC): These two stakes were established in Q1 2021. The 1.56% LHX stake was established at prices between $172 and $203 and the stock currently trades at ~$236. The 2.22% NOC stake was established at prices between $287 and $324 and it is now well above that range at ~$541. The positions have seen only minor adjustments in the last six quarters.

Ingredion Inc. (INGR): The ~2% INGR stake was purchased in Q3 2020 at prices between $75 and $90 and increased by ~170% next quarter at prices between $69 and $82. The stock currently trades at ~$93. Last two quarters have seen marginal trimming.

Berkshire Hathaway (BRK.A) (BRK.B): Berkshire position saw a huge stake build-up in Q1 2021 at prices between $222 and $264. It is now a significant ~2% of the portfolio position. The stock currently trades at ~$293. Last five quarters have seen only minor adjustments.

Coca-Cola Company (KO): KO is a very long-term position that has been in the portfolio for over twenty years. During Yacktman’s first 13F filing in Q1 1999, the position consisted of just a few thousand shares. The stake was built up to almost 2.4M shares by Q4 2006. The position size dropped below 1.5M shares in Q4 2008 but since then the stake was consistently increased – the position size doubled in both 2009 & 2010 and increased by ~150% each in 2012 & 2013. The huge stake build-up happened at prices between $21 & $30 and $33.50 & $43 in the 2009-10 & 2012-13 periods respectively. The six quarters thru Q3 2016 saw a ~57% reduction at prices between $38 and $47. The three quarters thru Q1 2020 saw another ~50% selling at prices between $37.50 and $60. There was a similar reduction this quarter at prices between ~$56 and ~$65. The stock currently trades at $59.60, and the position is at 1.60% of the portfolio.

Sysco Corporation (SYY): SYY is a 1.49% of the 13F portfolio position. It was established in 2010 with the bulk purchased in 2011 and 2012 in the high-20s price-range. H2 2015 saw a ~40% reduction at prices between $36 and $42. The three years thru Q4 2018 had seen another ~80% selling at prices between $40 and $68. Q1 2020 saw a ~60% stake increase at prices between $31 and $85.There was a ~25% selling over the last three quarters at prices between ~$68 and ~$90. That was followed with a ~50% reduction this quarter at prices between ~$71 and ~$88. The stock currently trades at $83.42.

Comcast Corporation (CMCSA), Elevance Health (ELV) previously Anthem Inc., First Hawaiian Bank (FHB), Goldman Sachs (GS), Lockheed Martin (LMT), MSC Industrial Direct (MSM), Walt Disney (DIS), and Wells Fargo (WFC): These small (less than ~2% of the portfolio each) stakes were reduced during the quarter.

Kept Steady:

Weatherford International plc (WFRD): WFRD is a ~2% of the portfolio position. Weatherford filed for Chapter 11 bankruptcy protection in July 2019 and emerged that December. Yacktman Asset Management had both debt and equity in the business. The stock got relisted in Nasdaq in June 2021. Shares started trading at $15.75 and currently goes for $43.36.

Note 1: Yacktman’s ownership stake in WFRD is ~8%.

Note 2: Yacktman is known to shy away from investing in banks but has held significant stakes in three banks since the financial crisis: The Bank of New York Mellon (1.60%), US Bancorp (2.09%), and Wells Fargo (1.13%). Also, a 2.32% stake in State Street was added in 2018 and a small 0.51% stake in First Hawaiian Bank was added in 2020.

The spreadsheet below highlights changes to Yacktman’s 13F stock holdings in Q3 2022: