When talking about the most prolific investors with long and prosperous careers, Donald Yacktman is always at the top of the list. He along with Warren Buffett was one of the first who properly understood lessons from Benjamin Graham and his value investing principles. Donald Yacktman’s portfolio holdings are currently valued at $11 billion and are divided into 69 holdings.
In Q4 2023 Yacktman fund had a lot of activities, and their current biggest holding is Canadian National Resources Ltd closely followed by Microsoft. Other major holdings include U-Haul Holding Company, News Corp, and PepsiCo Inc.
Yacktman’s successful investing career started at Stein, Roe & Farnham after he graduated from Harvard in 1968. He founded Yacktman Asset Management in 1983 and never looked back. He has been delivering strong performance throughout most of his career, while in recent years his fund was constantly beating the S&P 500. For more information about Yacktman and his long and productive career, stay with us.
Key Holdings
- Canadian Natural Resources Ltd (TSE:CNQ) with 8.85% of the portfolio
Yacktman has been trading their shares for three years, and it proved to be a carefully executed investment. When he started trading their shares piled up the position while the share price was below $35. He started trimming the holding in 2022 and 2023 when the prices were above $55. He currently owns 14.9 million stocks which makes him the biggest stake owner in the company. Yacktman’s holding is valued at $975 million, which translates to gains of 107%.
- Microsoft Corporation (NASDAQ:MSFT) with 6.1% of the portfolio
Microsoft is one of Yacktman’s favorite investments, and he has been trading it for more than 20 years. He bought the bulk of their shares until 2011 when their price was below $30. Since then he has been slowly selling their stocks above $100. In 2023 he sold on three occasions for prices between $313 and $355 generating massive returns.
After these trimmings, he owns 1.64 million shares valued at $672 million. He invested a mere $45 million in Microsoft resulting in a gain of 1366% so far.
- Alphabet Inc Class C (NASDAQ:GOOG) with 5% of the portfolio
The value of Alphabet’s 3.81 million shares in Yacktman’s portfolio is $553 million. He started 2023 by buying 900 thousand shares at $96 while its current price is above $140. When we look at the trading history of Alphabet stocks, Yacktman invested $226 million in five years, which generated a gain of 144%.
- U-Haul Holding Company Series N (NYSE:UHAUL.B) with 4.27% of the portfolio
Another new holding in Yacktman’s portfolio which has to still prove its mettle. Since Q4 2022 he has been increasing this position reaching a total of 7.4 million stocks. Their price fluctuated between $55 and $70 and still didn’t make significant gains. His total investment in this holding is $407 million while its current value is at $470 generating a gain of 16%.
- News Corp Class A (NASDAQ:NWSA) with 4% of the portfolio
News Corp is not a stranger in Yacktman’s portfolio going back to 2013. Since then the company increased its value and brought solid returns. Yacktman invested $227 million in this holding which is now valued at $442 million.
At one moment Yacktman was worried because News Corp wanted to buy Sky which ultimately failed. Instead, they opted to buy back some of their stocks which proved to be a much better deal. It also propelled their development, eventually raising the value of the company. From this investment, Yacktman got 95% gains so far.
- PepsiCo Inc (NASDAQ:PEP) with 3.91% of the portfolio
PepsiCo is one of those companies that have a low fixed-assets component with low cyclicality. For Yacktman it works as an AAA bond. It is a well-developed and mature business and he looks at it like a sort of a cash cow.
He has been trading PepsiCo since 1999 and he now owns a massive sake of 2.54 million shares. Yacktman invested $182 million with the current value of $430 million, generating a return of 136%.
Recent Activity
Donald Yacktman’s funds were very active in 2023 with conducting more than 50 trades in Q4 alone. The majority of the trades were sales, but we will take a look at the most important both buys and sales.
Recent Buys
- Kenvue Inc (NYSE:KVUE). A new holding with 5.41 million shares. This entire holding has been bought during Q3 and Q4 2023
- SPDR S&P 500 ETF Trust (NYSEARCA:SPY). In Q4 the fund increased its position in this holding fund by adding 50 thousand shares bought for $445 apiece
- Diamondback Energy Inc (NASDAQ:FANG). Another relatively new holding. Yacktman has been increasing this position since he started trading it in Q4 2022. He bought an additional 65.5 thousand shares in Q4 and rose its holding to 1.52 million shares
- EOG Resources Inc (NYSE:EOG). Since Yacktman started trading this stock in 2022 he has been increasing this position. In Q4 he acquired an additional 82 thousand stocks, raising his stake to 1.79 million stocks
- Masco Corp (NYSE:MAS). Yacktman did trade Masco stocks two decades ago but he closed this holding in 2004. He again started trading it in 2023 strengthening his positions in Q3 and Q4. His stake is now at 475 thousand stocks.
Recent Sells
- Weatherford International Plc(NASDAQ:WFRD). Tacktman has been trimming this holding hard while its value is on the rise. In 2023 their stock saw a massive increase which Yacktman capitalized on. His current gain on this holding is 514%
- Microsoft Corporation. In 2023 Yacktman sold Microsoft stocks in every quarter. In the last two quarters, he sold 280 thousand stocks while the price was on the rise
- Alphabet Inc Class C. Google stocks saw a rise in late 2023 which Yacktmn saw and sold 312 thousand stocks for an average of $135. In Q1 when the price was $96 he piled up additional 900 thousand stocks
- Booking Holdings Inc (NASDAQ:BKNG). 2023 was for Yacktman a year for trimming Booking holding. During the year he sold about 105 thousand stocks leaving him with 46.6 thousand stocks in this position. The price was on the constant rise from the lower $1.650 to $3.115 so these sales brought him solid gains.
- Pioneer Natural Resources Co (NYSE:PXD). Another new Yacktman holding dating to Q3 2022. He piled up their stocks until Q4 2023 when he reached a total of 1.25 million. In Q4 he did his first sale of 161 thousand stocks for $234. This is a slight increase from the buy price which varied between $210 and $230.
Sector
Yacktman’s portfolio is heavily diversified among several sectors, with Energy, Technology, and Consumer Staples leading the way. His current sector allocation is divided into:
- Energy with 20.1% of the portfolio valued at $2.21 billion
- Technology with 19.3% of the portfolio valued at $2.12 billion
- Consumer Staples with 16.6% of the portfolio, are valued at $1.83 billion
- Finance with 14.6% of the portfolio valued at $1.6 billion
- Industrials with 10.6% of the portfolio valued at $1.17 billion
- Telecommunications with 7.7% of the portfolio valued at $850 million
- Materials with 5.6% of the portfolio valued at $620 million
- Healthcare with 2.2% of the portfolio valued at $245 million
- Companies fall into the other category with 3.2% of the portfolio valued at $350.
Donald Yacktman Investment Strategy
Donald Yacktman often uses the analogy of the triangle, with a focus on good businesses bought at decent prices, and managed by good managers.
He does prefer to have a margin of safety so he is willing to dig deep and find the right undervalued companies. He prefers companies that have products or services that consumers have a constant need for. Those companies do not fall under heavy cyclical influenced businesses and have a relatively constant cash flow.
One of the crucial factors when choosing a business is its business model. Yacktman’s career focus was on businesses with models that have low capital requirements and that are not under the influence of cyclical demand.
Once they have that they have a product or service that is sustainable in the long run. When you add a large market share into a mix you get a business that will hardly break down any time soon.
The next important piece of the puzzle is the management team. There are several ways you can use to reinvest the cash flow, and that is up to the management. Good management knows how to properly allocate the capital.
Reinvesting into marketing, mass production or distribution can add value to an already successful business, and that is how Yacktman recognizes good management teams.
The final crucial element of every successful business Yacktman wants to invest in is economic moats. He assesses these moats by checking the market share of the company. The bigger the share, the wider the moat.
Also, he prefers firms that aim to improve their products and, and that way become competitive. Trying to compete with lower prices is something that he doesn’t prefer, and sticks to the quality of the brand.
Yacktman, like most successful value investors, understands the importance of patience and discipline. Looking at short-term market fluctuations can only mess with people’s heads. But, if you know that you invested in a company that has strong fundamentals, you know that it is just going through a phase.
Keeping yourself from selling early, and sticking with your thesis can be a difficult feat to achieve, but that separates a successful and unsuccessful value investor. He also takes a lot from experience and points out the importance of learning from mistakes. Those will happen, but if you do not get anything from them, you will end up repeating them.
Take A Look At Don Yacktman “the Beach Ball Investor” Strategy and Philosophy:
Donald Yacktman Performance Analysis
Historical Performance Evaluation
With historical data available dating to 2013 we can see that Yacktman Asset Management generated returns of 262%, translating to 26% annual returns. Reported returns for 2023 were 22%.
At the same time frame, the S&P 500 index generated 339%, while an average hedge fund managed to produce a gain of 40%. The fund went through a rough 2020 and 2021, but the last two years show promise regarding its future outlook.
Portfolio Risk Assessment
Yacktman managed to diversify his portfolio into several major sectors, which lowered the overall risk of a market downturn. Also, while buying with a margin of safety he is already hedging his investments.
From his portfolio, we can see that he is not too fond of everybody’s favorite Magnificent 7 tech stocks. He owns only two out of the seven, with Alphabet and Microsoft being part of his portfolio for some time.
Yacktman’s constant focus is on finding strong companies with long-term potential while keeping off from current market trends.
Future Outlook
Donald Yacktman has a highly diversified portfolio filled with companies from the Consumer Staples and Energy sectors. When we look at his current portfolio, most of the big holdings are in a good position with the rise in the price of stocks.
Regarding any changes in his approach that seems highly unlikely. Yacktman is keen on doing business with companies that have a constant demand for their products and services, and that still seems to be his aim.
FAQs
Who Owns Yacktman Asset Management?
The ownership of Yacktman Asset Management is divided between the company’s partners:
- Chief Investment Officer Stephen Yacktman
- Founder Donald Jacktman
- Chief Financial Officer Keith Thatcher
- General Counsel John O’Neill
- President Molly Pieroni and
- Portfolio Managers Jason Subotky, Adam Sues, and Russell Wilkins.
Final Thoughts
Having a long and successful career in the investment world is one of the toughest tests for a professional. Donald Yacktman achieved it. Throughout his career, he was able to find the approach that suited him best and to implement it to near perfection.
His take on investing with a focus on affordable, good companies, with strong economic moats has brought him constant solid returns for decades. But it doesn’t end there. He managed to make Yacktman Asset Management a company for the future.
He made it a family business with input from regarded and loyal professionals. A strong track record shows that this company has a lot in it and that we should keep an eye on their strategies and approaches to success.
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