Friday, April 27, 2012

Yacktman 1st Quarter 2012 Update

Below is the 10-year performance through 03/31/12 of the funds that Donald Yacktman and his team manage:

The Yacktman Fund (YACKX) had a cumulative 10-year return of 180.24%.*

The Yacktman Focused Fund (YAFFX) did even better returning a cumulative 197.09% over the past 10 years.

For a comparison, the S&P 500 was up 49.72% over the same time frame.

These funds are very similar but the more concentrated of the two funds, as the name suggests, is the Yacktman Focused Fund.

Top 5 Holdings of The Yacktman Focused Fund
1 Procter & Gamble (PG)
2 News Corp (NWSA)
3 Pepsi (PEP)
4 Microsoft (MSFT)
5 Sysco (SYY)

Approximately 41 percent of the Yacktman Focused Fund portfolio is in the top 5 stocks. 

Top 5 Holdings of The Yacktman Fund
1 Pepsi (PEP)
2 News Corp (NWSA)
3 Procter & Gamble (PG)
4 Microsoft (MSFT)
5 Cisco (CSCO)

Approximately 34 percent of the Yacktman Fund portfolio is in the top 5 stocks.

From their 1st Quarter 2012 Letter:

Consumer Staples
We think the combination of predictability, quality, and valuation of companies like Procter & Gamble, PepsiCo, Clorox, and Coca Cola is especially important in a time when we perceive many significant risks in the world.   

Old Tech
Microsoft [was] the top contributor to fund results in the first quarter, appreciating more than 20%, though we believe the stock remains inexpensive at less than 10 times our expectation of 2012 earnings when adjusting for net of the cash on the balance sheet. While HP struggled, we think the shares are remarkably inexpensive and the management team has improved significantly since Meg Whitman became CEO.

In this Barron's interview from a little over a year ago, Donald Yacktman had this to say about the investing business:

This business boils down to what you buy and what you pay for it. The market level is incidental to us.

In the interview, he also talks about how inexpensive high-quality companies are compared to what he's seen over the years.

Unfortunately some (though certainly not all) of the high-quality companies he is referring to are much more expensive now.

I've mentioned this before, but it's worth noting again that the annual turnover of the portfolios managed by Yacktman and his team is typically under 10 percent.

In fact, they are often well under that 10 percent number.

According to Morningstar, lately it has been more like 2 to 3 percent.

Impressively low.

It's always good to see someone producing above average returns by paying the right price for sound businesses that compound over time in value.

I'll take that approach over some special aptitude for trading any day.

Adam

Established long positions in PG, PEP, KO, and MSFT at much lower prices. Have no intention to buy any of these near current prices. Also, have established a position in HPQ near its recent price.

* From the letter: The performance data quoted for The Yacktman Fund and The Yacktman Focused Fund represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that the investor's shares, when redeemed, may be worth more or less than their original cost. The current performance may be higher or lower than the performance data quoted.
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