Though
Warren Buffett
runs an insurance conglomerate and
Donald Yacktman
a mutual fund, they have similar, value-oriented approaches to
investing. Both seek profitable, undervalued companies they can
hold for a long period of time. In the first quarter of 2012,
they held 12 stocks in common. The top three are: Coca-Cola (
KO
), Wells Fargo (
WFC
) and American Express (
AXP
). See stocks two or more gurus have in common at
GuruFocus' Aggregated Portfolio Screener here
.
Warren Buffett
owns 200,000,000 shares of
The Coca-Cola Company (
KO
)
, the world's largest beverage company, valued as $14.8 billion
as of March 31, 2012, which accounts for 19.7% of his equity
portfolio. Donald Yacktman owns 7,017,876 shares of KO, valued as
$519 million as of March 31, 2012, which accounts for 3.5% of his
equity portfolio.
Coca Cola sells more than 1.7 billion beverages per day in more
than 200 countries. It is also continuing to grow worldwide. It
introduced its 15
th
billion-dollar brand in 2011 with the addition of Del Valle, and
incremental organic volume sales grew by 1 billion unit cases in
2011. It had growth in developed markets such as North America,
Germany and Japan, as well as double-digit growth in emerging
markets such as China and India. Even in the uncertain economic
environment of Europe, it delivered 4 percent operating income
growth and 2 percent unit case volume growth.
The giant company has invested $30 billion over the next five
years to support growth in China, India, the Middle East, Russia
and elsewhere.
Coca Cola has the long-term record that Buffett and Yacktman look
for. Over the last ten years, Coca Cola has grown revenue at an
annual rate of 9.2 percent, EBITDA at 8 percent, and free cash
flow at 6.5 percent. It also has a relatively strong return on
equity which has remained between 24.8 percent and 37.7 percent
in the last ten years.
Coca Cola Co has a market cap of $165.52 billion; its shares were
traded at around $73.35 with a P/E ratio of 18.8 and P/S ratio of
3.6. The dividend yield of Coca Cola stocks is 2.8%. Coca Cola
had an annual average earnings growth of 8% over the past 10
years. GuruFocus rated Coca Cola the business predictability rank
of 3.5-star.
Warren Buffett is a far bigger fan of Wells Fargo than Donald
Yacktman. He owns 394,334,928 shares of
Wells Fargo (
WFC
)
, valued as $13.5 billion as of March 31, 2012, which accounts
for 17.9% of his equity portfolio. Donald Yacktman owns 19,200
shares of WFC, valued as $1 million as of March 31, 2012, which
accounts for 0.0045% of his equity portfolio. That is after
selling almost half of his shares in the first quarter of 2012.
Over the last ten years, Wells Fargo has grown revenue at a rate
of 9.3 percent and EBITDA at 2.2%. Its 2011 return on equity and
return on assets reached their highest point since 2008 at 11.4
percent and 1.2 percent, respectively.
Wells Fargo & Company is a diversified financial services
company providing banking, insurance, investments, mortgage and
consumer finance services through stores, its Internet site and
other distribution channels across North America as well as
internationally.
Wells Fargo has a market cap of $159.17 billion; its shares were
traded at around $30.54 with a P/E ratio of 10.4 and P/S ratio of
1.8. The dividend yield of Wells Fargo stocks is 2.9%. Wells
Fargo had an annual average earnings growth of 2.2% over the past
10 years. GuruFocus rated Wells Fargo the business predictability
rank of 2-star.
Buffett also likes
American Express (
AXP
)
, a financial services company, more than Yacktman. He owns
151,610,700 shares, valued as $8.8 billion as of March 31, 2012,
which accounts for 11.6% of his equity portfolio. Donald Yacktman
owns 261,500 shares, valued as $15 million as of March 31, 2012,
which accounts for 0.1% of his equity portfolio.
American Express has produced an annual rate of revenue growth of
4.5 percent and free cash flow of 6.9 percent over the last 10
years. EBITDA declined at a rate of 1.7 percent over the last 10
years.
In the first quarter of 2012 the company reached record
first-quarter earnings and revenues, due largely to 12 percent
higher spending by card holders, excellent credit metrics and
good management of expenses.
The company was also able to raise its dividend 11 percent after
it ranked among the highest financial companies in a Federal
Reserve stress test in the first quarter. The Fed approved the
dividend hike and shares repurchases. American Express had $18
billion in cash and securities at the end of the first quarter.
American Express has a market cap of $62.42 billion; its shares
were traded at around $53.94 with a P/E ratio of 12.7 and P/S
ratio of 2.2. The dividend yield of American Express stocks is
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