Omaha-based Weitz Funds, managed by its president and founder,
, recently updated its portfolio with a total of 18 third quarter
transactions, 9 of which were reductions.
The three reductions within the quarter that made the most impact
to Weitz's portfolio were Google Inc. (
), Eagle Materials Inc. (
) and Comcast Corp. (
Having been in business for almost three decades, the Weitz Funds
relies highly on the renowned investment terms such as "margin of
safety" and "circle of competence." Familiarity with the company
or industry is key when Weitz analysts seek prospective stocks as
well as determining a company's value through its estimated
future free cash flows.
In the Weitz Funds' third quarter shareholder letter, which was
penned by Weitz and fellow fund portfolio manager Bradley Hinton,
the following statement expressed one aspect of the fund's
valuation methods: "Our selling is driven by valuation levels,
a "market timing" call... this exposes our funds to the risk of
under-performing the market over the near term, but we believe
that being disciplined and price-sensitive is an important part
of our investment process."
Besides a stock's market price, Weitz makes sure to forecast a
company's cash flow for several years because it shows "how
wisely management re-invests the capital" that the business
generates, according to its website philosophy description.
As of Sept. 30,
owns 62 stocks with a total value of $2.1 million. These are
the sector weightings
of the firm's portfolio:
Oil & Gas
In addition to the nine reductions,
's portfolio updates included complete sells of all current
shares with five companies, one add and three new buys.
Google Inc. (
Wallace Weitz reduced 28.92 percent of his stake of Google inc. (
) in the third quarter. The impact to their portfolio due to this
sale was 0.98 percent, and left Wallace Weitz with a total
holding of 91,189 shares.
Google is currently selling at $663.81 per share, and has a
market cap of $216.83 billion, a P/E (ttm) ratio of 20.5, a P/S
ratio of 5.7 and a P/B ratio of 3.2. Its P/S ratio is close to
its one-year high.
Expanding search-engine site Google has a Business Predictability
rank of 2.5 out of 5 stars, a Financial Strength of 9 out of 10
and a Profitability and Growth rank of 9 out of 10 on GuruFocus.
Eagle Materials Inc. (
Dallas-based Eagle Materials Inc. (
) is a company that manufactures building materials including
Portland cement, concrete and aggregates, gypsum wallboard and
Wallace Weitz reduced its shares of Eagle Materials by 90.99
percent, which impacted its portfolio by 1.27 percent.
Eagle Materials has a Business Predictability rank of 1 out of 5
stars, reflective of its unsteady revenue over the past couple of
Wallace Weitz first introduced the stock to his portfolio since
the third quarter of 2007 starting off with a little over 25,000
shares. After this recent transaction, Weitz now sits with 72,000
With a stock dividend yield of 0.8 percent, Eagle Materials is
close to its five-year low. Its market price of $52.68 is at its
five-year high; its P/E, P/B and P/S ratios are all experiencing
highs as well.
Comcast Corp. (
In Wallace Weitz's third quarter shareholder letter, it stated:
"Investors do not want to be "left out" of a rising market.
In fact, many professional money managers face 'career risk' if
they under-perform their benchmark as a result of being less than
fully-invested. As a result, they often turn to the most
"conservative" stocks that are available to them. We have seen
signs of this as consumer staples and other 'defensive' stocks
have generally out-performed the more cyclical and leveraged
issues. Anheuser-Busch (
) (beer), Diageo (
) (spirits), and Comcast (CCS) (cable TV and NBC Universal) have
been beneficiaries of this phenomenon and as a result their
stocks have moved above 90% of our base case valuations. These
are great companies, but to paraphrase Ben Graham, 'At too high a
price, even the stock of a great business becomes a
CMCSK data by GuruFocus.com
Broadband cable, e-commerce and television programming company
Comcast Corp. (
) is selling close to its 10-year high. Its market price is
$35.39 per share, with consistently growing revenue and operating
margin, as well as a P/E and P/S ratio close to its two- and
With a Business Predictability rank of 4 out of 5 stars, Comcast
has a Profitability and Growth rank of 9 out of 10 and a
Financial Strength rank of 5 out of 10.
View the rest of Wallace Weitz's third quarter portfolio updates
here. Also view Weitz's current portfolio details as well as
other Wallace Weitz articles in GuruFocus' archives.About
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