Donald Yacktman’s Latest Portfolio: Top 10 Stock Picks

·7 min read

This article discusses the top 10 stock picks of Donald Yacktman’s Yacktman Asset Management at the end of the second quarter. If you are short on time and want to know only the fund’s top five stock picks, you can skip this and go directly to Donald Yacktman’s Latest Portfolio: Top 5 Stock Picks.

Donald Yacktman is a well-known figure in the investment community. He is revered for his outperformance over the broader market for decades at a stretch and for staying consistent with his value investment philosophy. Mr. Yacktman founded Yacktman Asset Management Co., the predecessor to Yacktman Asset Management LP, in 1992 after leaving Selected Financial Services, where he managed the Selected American equity fund for four years. Morningstar picked him as its Manager of the Year for 1991 when he was still running the Selected American equity fund.

While Mr. Yacktman remains a partner and portfolio manager of Yacktman Asset Management, the fund is now headed by his son Stephen Yacktman who serves as the chief investment officer (CIO), partner, and portfolio manager at Yacktman Asset Management. Mr. Stephen Yacktman received his bachelor’s degree in economics and an MBA from Brigham Young University and joined his father’s firm in the early 1990s. In 1999, Stephen Yacktman and Donald Yacktman became equal economic partners in Yacktman Asset Management.

Yacktman Asset Management’s Portfolio

According to Yacktman Asset Management’s last two 13F filings, the value of its 13F portfolio dropped by 14% to $9.64 billion at the end of June from $11.2 billion at the end of the first quarter. During the second quarter, the fund sold its entire holdings in 3 companies and made additional purchases in 23 stocks. At the end of that period, Yacktman Asset Management portfolio’s largest concentration was in the consumer staples sector, followed by the financial and communication sector. The top 10 holdings of the fund at the end of June included names like PepsiCo, Inc. (NYSE:PEP), The Procter & Gamble Company (NYSE:PG), and Canadian Natural Resources Limited (NYSE:CNQ) and accounted for almost 50% of Yacktman Asset Management’s 13F portfolio value.

Donald Yacktman’s Latest Portfolio: Top 10 Stock Picks
Donald Yacktman’s Latest Portfolio: Top 10 Stock Picks

Donald Yacktman of Yacktman Asset Management Our Methodology At Insider Monkey, we cover the portfolios of over 900 hedge funds, closely tracking the stocks they buy and sell. We selected Donald Yacktman’s top 10 stock picks at the end of June based on Yacktman Asset Management’s most recent 13F filing with the SEC.

Donald Yacktman’s Latest Portfolio: Top 10 Stock Picks

10. The Coca-Cola Company (NYSE:KO)

Yacktman Asset Management’s Stake Value: $347,437,000

Percentage of Yacktman Asset Management’s 13F Portfolio: 3.6%

Number of Hedge Fund Holders(Q1): 64

Beverage giant The Coca-Cola Company (NYSE:KO) was Yacktman Asset Management’s tenth favourite stock pick at the end of June. The fund has been a long-term shareholder of The Coca-Cola Company (NYSE:KO) like Warren Buffett’s Berkshire Hathaway. Yacktman Asset Management disclosed initiating a stake in the company for the first time in a regulatory filing for the fourth quarter of 2001.

The Coca-Cola Company (NYSE:KO) is considered a ‘Dividend Aristocrat’ among the investor community due to its decades-long history of consistently paying dividends. The Coca-Cola Company (NYSE:KO) pays an annual dividend of $1.76 per share and, based on its current stock price, has a dividend yield of 2.78%

9. Sysco Corporation (NYSE:SYY)

Yacktman Asset Management’s Stake Value: $348,400,000

Percentage of Yacktman Asset Management’s 13F Portfolio: 3.61%

Number of Hedge Fund Holders(Q1): 31

Yacktman Asset Management reduced its stake in food behemoth Sysco Corporation (NYSE:SYY) by 11% to 4.11 million shares during the second quarter. Sysco Corporation (NYSE:SYY) has been among the few large-cap stocks that have beaten the broader market trajectory and appreciated this year. The stock is up more than 17% year-to-date and over 65% in the last five years.

On June 9, Barclays analyst, Jeffrey Bernstein, released a research note to investors in which he was extremely bullish on the ‘big three’ foodservice distributors Sysco Corporation (NYSE:SYY), US Foods Holding Corp. (NYSE:USFD), and Performance Food Group Company (NYSE:PFGC), saying:

“With the big three only having a ~35% market share of the segment, we believe gains in the years post-COVID will be meaningful with challenges greatest for the smaller distributors, as the big three further penetrate existing accounts, add new accounts & pursue tuck-in M&A.

Looking beyond top line, the foodservice distributors have been able to pass through the majority of their commodity cost inflation and much of their gas inflation, while seeing improvement in driver/staffing shortage/inefficiencies.”

8. AMERCO (NASDAQ:UHAL)

Yacktman Asset Management’s Stake Value: $350,781,000

Percentage of Yacktman Asset Management’s 13F Portfolio: 3.63%

Number of Hedge Fund Holders(Q1): 29

Smart money’s interest in do-it-yourself moving and storage operator AMERCO (NASDAQ:UHAL) has been on the rise for the past three years. From just 9 hedge funds at the end of the third quarter of 2019, 28 hedge funds we track reported a stake in AMERCO (NASDAQ:UHAL) at the end of March this year. In that period, AMERCO’s (NASDAQ:UHAL) stock fell to sub $250 level at the onset of the pandemic and then witnessed a steady rise to the $770 level.

On August 3, AMERCO (NASDAQ:UHAL) reported its fiscal first quarter 2023 numbers. The company’s earnings per share of $17.03 were lower than the $17.6 reported for the same quarter last year. However, its revenue for the quarter increased to $1.6 billion from $1.47 billion in the previous year.

7. Cognizant Technology Solutions Corp (NASDAQ:CTSH)

Yacktman Asset Management’s Stake Value: $371,376,000

Percentage of Yacktman Asset Management’s 13F Portfolio: 3.85%

Number of Hedge Fund Holders(Q1): 32

Unlike AMERCO (NASDAQ:UHAL), hedge funds have been shunning Cognizant Technology Solutions Corp’s (NASDAQ:CTSH) stock for the past many quarters. From 68 funds tracked by us that disclosed a stake in Cognizant Technology Solutions Corp (NASDAQ:CTSH) at the end of 2017, the number fell sharply to 33 funds at the end of March this year.

The underperformance of Cognizant Technology Solutions Corp’s (NASDAQ:CTSH) stock over the past many years could be one of the reasons that smart money is fleeing from the stock. In the last five years shares of the consulting and technology company have gone nowhere and are still trading in the $70-$80 range.

Analysts also don’t seem to be optimistic about the company’s prospects and stock. For example, on July 28, following the company’s second-quarter earnings release a day earlier,  JPMorgan Chase & Co.’s analyst, Tien-Tsin Huang, downgraded the stock to ‘Neutral’ from ‘Overweight’ and also reduced his price target on it to $77 from $82. In his note to investors, Mr. Huang wrote:

“We are more cautious on revenue production given elevated attrition, making it more difficult to capture client demand, as well as necessary price increases to offset inflation, which could aggravate if demand deteriorates.”

6. Johnson & Johnson (NYSE:JNJ)

Yacktman Asset Management’s Stake Value: $379,392,000

Percentage of Yacktman Asset Management’s 13F Portfolio: 3.93%

Number of Hedge Fund Holders(Q1): 83

Yacktman Asset Management reduced its stake in Johnson & Johnson (NYSE:JNJ) by 1% during the second quarter, yet the company climbed up 3 places and became the fund’s sixth favourite stock pick at the end of that period. Among the funds we cover, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital held the largest stake with 6.65 million shares worth $1.18 billion in Johnson & Johnson (NYSE:JNJ) at the end of the first quarter.

For Q2 2022, the company reported GAAP earnings per share of $1.8 on revenue of $24.02 billion on July 19. Though Johnson & Johnson (NYSE:JNJ) beat analysts’ revenue expectations for that period by $195.47 million, the GAAP EPS was $0.39 lower than what analysts were expecting.

 

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Disclosure: None. Donald Yacktman’s Latest Portfolio: Top 10 Stock Picks is originally published on Insider Monkey.