In the rapidly rising market of the second quarter,
bought only one new stock, Oracle (
). In the third quarter, he found no new investment ideas, but
reported a new top holding in 21st Century Fox Corp. (
), the spin-off company of his former top holding, News Corp. (
Yacktman Focused Fund
managers also bought more shares of the hotly contested Dell (
), which seven fellow guru investors sold out of and two -
and Paul Singer - increased their positions in by more than 2,000%.
At Sept. 30, 2013, Austin, Texas-based Yacktman Asset Management LP
had $12.6 billion in assets under management. They describe their
investment approach as:
"Yacktman employs a disciplined investment strategy, buying
growth companies at what it believes to be low prices. Yacktman
believes this approach combines the best features of "growth" and
"value" investing. When they purchase stocks they generally search
for companies they believe to possess one or more of the following
three attributes: (1) good business; (2) shareholder-oriented
management; or (3) low purchase price."
Century Fox (
In the third quarter, Yacktman Asset Management reported owning
31.4 million shares of Twenty-First Century Fox Inc. Class-A
shares, which compose 10.6% of their long portfolio. The shares
came from the June 28 separation of News Corp. into two
independent, publicly traded companies. News Corp changed its name
Century Fox and created a new News Corp, and shareholders received
one share of the new News Corporation Class-A or Class-B stock for
every four shares of the old News Corp - or 21
Century Fox - they held.
While the Yacktman Fund held 31.75 million shares of News Corp in
the second quarter, that was reduced to 5,547,000 shares of the new
News Corp in the third quarter.
Yacktman commented on the holdings in his second quarter letter:
"News Corp. and Viacom were also strong contributors to the results
during the quarter. At the end of June, News Corp. completed its
spin-off. As a result, we now own shares in both 21st Century Fox
("Fox"), which owns an attractive collection of cable, broadcast,
film and cable and satellite properties around the world and in
News Corp. (retaining the old name), which largely consists of
newspapers, book publishing and a collection of Australian assets.
By far our larger investment going forward is in the Fox shares,
which we think will be one of the fastest growing media companies.
Fox is extremely well positioned for growth, especially
internationally, and in the next few months will launch Fox Sports
1, a national sports network which we think could be a significant
new growth opportunity domestically."
The Yacktman Fund's holding of Dell Inc. increased by 2,835,000
shares in the third quarter, the first new addition since it was
established in the fourth quarter of 2012. At the end of the third
quarter the position stood at 9,272,000 shares, or 1.3% of the
portfolio. This makes the fund one of the smaller players to enter
the fray since founder Michael Dell issued a bid to take the
company private. Fellow gurus Carl Icahn and Mason Hawkins'
Southeastern Asset Management are top one and two institutional
shareholders with 8.7% and 4%, respectively, of shares outstanding.
Yacktman commented in his shareholder letter:
"Dell's shares fell modestly as the stock had been trading above
the Dell Management takeover price and no new bidders appeared. We
think the proposed management buyout is unattractive and are voting
against it. Recently, we went on record supporting Carl Icahn and
Southeastern Asset Management's proposal to replace the board and
offer a tender to shareholders who wish to sell.
Management at Dell has done a poor job at both business execution
and capital allocation. It is sad that having frustrated investors
with overpriced acquisitions, ill-timed share repurchase, poor
corporate strategy and an accounting scandal that led to a
settlement with the SEC, management jumped in to purchase the
entire company, with the stock not far from a recent low. We
believe other outside proposals would be of much greater benefit to
shareholders. We recommend others reject the acquisition proposal
and support the Icahn/Southeastern proposal."
Eventually, on Sept. 12, Michael Dell was successful in buying out
the company in partnership with global technology investment firm
Silver Lake for $25 billion after shareholders voted in their favor
at a special meeting. Shareholders of Dell will receive $13.75 in
cash for each of their Dell shares, in addition to a cash dividend
of $0.13 per share.
Yacktman's fourth quarter 2012 average price was $9.78, giving him
a modest profit on the holding. In addition, because the holding
does not meet the 5% threshold for mid-quarter reporting to the
SEC, it is unknown whether he disposed of any shares after the
Icahn/Southeastern proposal did not pan out.
Yacktman also made sizable additions to his stake in PepsiCo Inc. (
) (up 25.54%), Coke (
) (up 49.53%) and Oracle Corp. (
) (up 46.78%) during the third quarter.
For more Donald Yacktman stocks, go to his portfolio here. Also
check out the Undervalued Stocks, Top Growth Companies and High
Yield stocks of Donald Yacktman.
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