As one of our top-followed Gurus, GuruFocus has started to
track another of
's portfolios, his
Yacktman Focused Fund
. Yacktman aims in this fund to purchase shares of high-quality
growth companies at low prices, combining "the best features of
'growth and value investing,'" according to his website. He also
wants the companies to have good businesses, shareholder-oriented
management and low purchase prices. The return of the
Yacktman Focused Fund
is 10.57 year to date, compared to 16% for the S&P index, and
10.95% over the past 10 years, compared to 7.1% for the S&P.
Of the 44 stocks in the $6.41 billion valued portfolio, these are
the largest holdings: Procter & Gamble (
), News Corp. (
), PepsiCo (
) and Cisco Systems (
Procter & Gamble (
Procter & Gamble comprises 13% of the Focused Fund, with 12.3
million shares included.
PG's stock has been increasing almost 17% over the past three
years, after a sharp sell-off in 2009.
Founded in 1837, the company has a portfolio of consumer brands
that and a $199.5 billion market cap.
In the past three years, both PG's return on equity and return on
assets declined annually, along with net income. Meanwhile,
revenue increased to $83.7 billion in 2012.
Yacktman commented on the lagging performance in his fourth
quarter letter, noting that the company only returned 17%
compared to the S&P 500's 40% from Aug. 30, 2010, to Jan. 14,
2013. "We believe that this underperformance relative to the
broader market is more a result of investor sentiment than
results and should lead to better than average performance from
these companies going forward. We especially like these staples
positions because the rates of return we expect over time are
especially attractive given the consistency and quality of these
PG also returns significant capital to shareholders. After
raising dividends annually over the past decade, it paid $2.17
per share to shareholders in 2012.
PG data byGuruFocus.com
After several years of underperformance, PG has implemented a
growth and cost savings strategy that was so effective in its
first half that it raised its sales, earnings and share
repurchase outlook for fiscal year 2013.
PG has a P/E of 18.3, P/B of 3 and P/S of 2.5.
News Corp. (
The Yacktmans have placed 12.1% of the Focused portfolio into
News Corp, with a position size of 30.5 million shares.
A global media company owned by Rupert Murdoch, News Corp.
operates in cable television, film, television, satellite
broadcasting, publishing and other industry segments.
Newscorp since 2009 has raised revenue and returned to
profitability, earning $1.18 billion in net income. It has also
produced steady free cash flow for the past decade. Its more
recent quarterly results have been dragged down by
underperformance in its publishing division.
On Dec. 21, the company filed a registration statement to
separate into two independent, publicly traded companies. The two
companies would consist of a new News Corp, operating newspapers,
information services, publishing and related matters, and a media
and entertainment company named Fox Group.
The market welcomed the news and sent shares soaring. Yacktman
commented in his fourth quarter letter:
"In 2012, News Corp was the biggest contributor to fund returns,
appreciating more than 40%. Business execution was strong,
especially in the cable content division, and the company
continued its shareholder friendly behavior, both repurchasing a
significant amount of stock and announcing that it would be
splitting the company into two separate entities. We think the
split could help the shares continue to deliver strong results as
the market more fully appreciates what we see, which is a fast
growing cable content division that has had its extraordinary
growth obscured by declining newspaper results."
News Corp has a P/E of 23.8, P/B of 2.4 and P/S of 2.
Holding 9.3 million shares, Yacktman has placed 9.9% of the
Focused Fund in PepsiCo Inc.
PepsiCo is a beverage, snack and food company operating in six
global segments. After a shock in 2008, PepsiCo stock has gained
5.08% over the past five years.
Over the same period, it has seen robust growth: average annual
revenue increased at a rate of 14.8%, EBITDA at 10.6%, free cash
flow at 17.4% and book value at 10.2%.
The company has five priorities that are driving growth:
investing aggressively in its brands, accelerating innovation,
focusing on execution of its productivity agenda and returning
cash to shareholders.
With a decade of annually increasing dividends, PepsiCo expects
to return $6 billion to shareholders in dividends and share
repurchases in fiscal 2012.
PepsiCo has a P/E of 18.8, P/B of 5.2 and P/S of 1.7.
Cisco Systems (
Yacktman owns 19.998 million Cisco Systems shares, equivalent to
6.1% of his portfolio.
Cisco is a global networking company, whose shares have declined
13% over the past five years.
It is in the midst of navigating transitions in cloud, mobility
and video markets, and faces more changes ahead in the Internet,
which it is attempting to capitalize on.
The company has exhibited moderate growth over the past five
years. Average annual revenue increased 7.8%, EBITDA at 6.5%,
free cash flow at 1.8% and book value at 13.6%.
Yacktman acknowledges the slow growth in his fourth quarter
"Cisco's shares performed satisfactorily in 2012. The shares
continue to be inexpensive as investors generally are avoiding
'old tech' shares, though not to the same extent as PC-related
stocks. Our investments in technology companies are more a result
of valuation than strong future growth prospects. As we often
say, 'It's almost all about the price.'"
Its valuation includes a P/E ratio of 13.4, P/B of 2.1 and P/S of
To see more holdings in Yacktman's Focused Fund, go here. Also
check out his Undervalued Stocks, Top Growth Companies and High
Yield stocks.About GuruFocus: GuruFocus.com tracks the stocks
picks and portfolio holdings of the world's best investors. This
value investing site offers stock screeners and valuation tools.
And publishes daily articles tracking the latest moves of the
world's best investors. GuruFocus also provides promising stock
ideas in 3 monthly newsletters sent to