Donald Yacktman has submitted several fourth
quarter updates for the Yacktman Fund . For the three months ending Dec.
31, the fund returned 0.01 percent, beating the S&P 500's -0.38
percent fourth quarter return.
In the full year of 2012, the Yacktman Fund delivered 11.47 percent, according
to the fund's fourth quarter overview.
Totaling 8 transactions, Yacktman's fourth quarter update
consisted of 1 new buy, 4 stake increases, 2 stake reductions and 1
sale of Yacktman's entire stake in a company.
Among them, the transaction that made the largest impact to his
portfolio was his 1,909 percent stake increase in networking
solutions company, Cisco Systems ( CSCO )
.
From 22.5 million shares in the third quarter, the Yacktman Fund easily upgraded to 429.5 million
shares in the next quarter, averaging $18.64 per share. The
transaction also allowed Cisco to advance as the Yacktman Fund's
fourth largest holding, right after News Corp. ( NWSA ), Procter &
Gamble ( PG ) and
PepsiCo ( PEP
).
This incredibly bullish move on Cisco by Yacktman has been
prevalent since the fourth quarter of 2010, when the Yacktman Asset
Management Co, was seen consecutively increasing to Cisco after
buying over 5 million shares of the stock at $21.24, on
average.
In a GuruFocus interview with Yacktman in August, the Guru said he
prefers his large positions in companies like Cisco, in part
because of their balance sheets:
"Cisco has more than $5 per share in net cash and generates
approximately $1.50 per share in free cash flow. The stock is at
17, so less the $5 per share in cash, you are paying about $12 per
share for the business. With a 12.5% free cash flow yield (net of
the cash) Cisco does not even need to grow for us to have a solid
investment."
Since the interview, Cisco has risen from $17 to $21.10 in trading
price. Additionally its free average cash flow growth has been 12
percent in the last 12 months, while its average EBITDA growth rate
was 33.2 percent, according to 10-Year Financials.
When it comes to tech shares like Cisco, Yacktman says "it's
almost all about the price," according to his fourth quarter
letter. He seems to gravitate his focus toward valuation more so
than future growth prospects.
Although Cisco's market price has descended 13 percent over the
past five years, it increased by 7 percent in the last year,
currently exhibiting a positive trend line. Its fair value is
$24.08, according to the GuruFocus DCF Calculator. It maintains a
dividend yield of 2.1 percent.
GuruFocus ranks Cisco 3 stars in Business Predictability, 7 in
Financial Strength and 8 in Profitability and Growth.
Also with a 3-star Business Predictability rank on GuruFocus among
Yacktman's fourth quarter updates, is fellow tech stock,
Dell Inc. ( DELL ) ,
which is the Yackman Fund's only new buy for 2012 fourth
quarter.
At $13.03 per share, Yacktman's new holding consists of 6.4
million shares.
Dell's price trend is somewhat similar to Cisco's in that it is on
track for a market price pick-up. In the weeks following its
mid-November three-year low (of $9), the stock has been seeing a
slow but steady rise, dipping into the new year. Since 2013
started, Dell's price has gained 32 percent.
While down 1.03 percent this afternoon, Dell's market price is
currently $13.03. With a dividend payout ratio of 1.2 percent, Dell
is ranked 7 is Financial Strength and 6 in Profitability and
Growth. Its fair value on the GuruFocus DCF Calculator is
$15.06.
Besides Cisco, the Yacktman Fund's fourth quarter stake increases
include adding 25.64 percent to Stryker Corp. ( STK ) , adding
21.69 percent to Coca-Cola ( KO ) and adding
10.53 percent to Avon Products ( AVP ) .
Yacktman reduced 38.46 percent to his H&R Block ( HRB ) stake
and 47.99 percent to his Research in Motion ( RIMM )
stake.
Finally for the Yacktman Fund, the Guru completely sold his shares
in Liberty Ventures (LVNTA) .
*View more details about Yacktman's fourth quarter updates in
Yacktman Fund Stock Picks. Also view the fund's undervalued stocks,
high-yield companies and top growth stocks.
**Yacktman also updated his other fund, the Yacktman Focused Fund,
for the fourth quarter. To read about his new purchases for this
fund , visit Yacktman Focused Fund Buys Dell, Intel, Janus Capital,
PepsiCo, Coca-ColaAbout GuruFocus: GuruFocus.com tracks the stocks
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