AGCO ANAT AVT AXP AZO BAX BIDU BK BRK.A BRK.B CKX CMCSA CNHI COP CSCO CTWS DEO DVN EMR Games GOOG GOOGL GSK HAL HSBC JNJ John Vincent KOF MA MMM MRC MRK NSRGY NVS NWLI PSX RDS.A RDS.B RHHVF SAFRF SAFRY SHEN TBCUX TBGVX TBHDX TMK TOT TWEBX UL UN UNF UNP USB VZ WFC WPP

Tracking Tweedy Browne Portfolio – Q3 2018 Update

Tracking Tweedy Browne Portfolio - Q3 2018 Update

This text is a part of a collection that gives an ongoing evaluation of the modifications made to Tweedy Browne’s 13F portfolio on a quarterly foundation. It’s based mostly on Tweedy Browne’s regulatory 13F Type filed on 11/14/2018. Please go to our Tracking Tweedy Browne Portfolio collection to get an concept of their funding philosophy and our earlier replace for the fund’s strikes throughout Q2 2018.

This quarter, Tweedy Browne’s 13F portfolio worth elevated ~three% from $three.22B to $three.32B. The variety of holdings elevated from 44 to 45. The most important place is Cisco Methods at ~13% of the portfolio. Largest 5 particular person inventory positions are Cisco Methods, Berkshire Hathaway, Baidu Inc., Alphabet, and Johnson & Johnson. Mixed, they’re at ~50% of the portfolio. 30 of the 45 13F stakes are considerably giant (over ~zero.5% of the 13F portfolio every) and they’re the main target of this text. Tweedy Browne (TBGVX) (TWEBX) (TBHDX) (TBCUX) has launched various funding analysis papers through the years and that may be a helpful useful resource for anybody trying to study from their worth investing philosophy. Additionally, Christopher Browne authored the e-book, “The Little Book of Value Investing”, a fantastic introduction.

Observe: Tweedy Browne’s flagship Tweedy Browne International Worth Fund (TBGVX) has a worldwide orientation with non-US allocation at ~76% of the portfolio and money at ~10%. The highest 5 holdings are Safran SA (OTCPK:SAFRY) (OTCPK:SAFRF), Roche Holding AG (OTCPK:RHHVF), Nestle (OTCPK:NSRGY), Novartis (NVS), and Complete SA (TOT). Collectively, they’re at ~18% of the fund. Per Q3 2018 Commentary, the fund returned 2.35% for 2018 YTD in comparison with 2.94% for MSCI EAFE. Since inception (1993), annualized returns are at 9.29% in comparison with 6.22% for MSCI EAFE.

New Stakes:

None.

Stake Disposals:

None.

Stake Will increase:

Baidu Inc. (BIDU): BIDU is a prime three ~10% portfolio stake bought in Q1 2017 at costs between $168 and $186 and the inventory is now at ~$183. There was marginal improve this quarter. For buyers trying to comply with, BIDU is an effective choice to think about for additional analysis.

Word: Tweedy Browne’s purchase thesis on BIDU is on the concept 50% margins within the firm’s core Search enterprise is being masked by cash-dropping subsidiaries.

Stake Decreases:

Cisco Methods (CSCO): CSCO place was first bought in 2011. It’s presently their largest 13F stake at ~13% of the portfolio. The majority of the present place was bought in 2012 at costs between $15.50 and $21. Q1 2016 noticed a ~45% stake improve at costs between $22.50 and $28.50. The inventory presently trades at $46.12. Final ten quarters noticed a ~36% discount at costs between $26.50 and $49. They’re harvesting good points.

Berkshire Hathaway (BRK.A) (BRK.B): Berkshire Hathaway is a really lengthy-time period stake that has been within the portfolio since earlier than the monetary disaster. It’s presently their second-largest place at ~10% of the portfolio. Again in 2009, it was a really small zero.60% of the portfolio place. The majority of the present stake was bought in 2010 and 2012 at costs between $65 and $90. Q3 2016 noticed a ~42% discount at costs between $142 and $151 whereas the sample reversed subsequent quarter: ~37% improve at costs between $143 and $167. The inventory at present trades at ~$213. There was a ~12% promoting in This fall 2017 and that was adopted with minor trimming during the last three quarters.

Johnson & Johnson (JNJ): JNJ is a big (prime 5) place within the portfolio at eight.91%. It’s a lengthy-time period stake. The place was constructed from 400Okay shares to only over four.3M shares between 2009 and 2012 at costs between $48 and $72. Since then, the stake had seen minor promoting in most quarters. This fall 2016 noticed a ~20% discount at costs between $111 and $120 and that was adopted with minor trimming during the last seven quarters. The share rely is now at ~2.14M. The inventory presently trades at ~$143. Tweedy Browne is harvesting lengthy-time period positive factors from this place.

Financial institution of New York Mellon (BK): BK is a big 6.50% stake first bought in 2010 within the mid-$20s worth vary. Q1 2016 noticed a ~40% stake improve at costs between $32.50 and $38. There was a ~11% promoting in Q3 2016 at costs between $37 and $42. The inventory at present trades at $51.37. This fall 2016 noticed a ~four% improve whereas final seven quarters noticed minor trimming.

Wells Fargo (WFC): WFC is a pretty big place at ~5% of the 13F portfolio. The preliminary stake was established in 2010 with the majority of the present place bought in 2011 at costs between $25 and $34. Q3 2016 noticed a ~12% discount at costs between $44 and $51 and that was adopted with one other ~14% promoting the next quarter at costs between $43.50 and $57.50. Final seven quarters have additionally seen minor promoting. The inventory is now at $53.19.

AutoZone (AZO): AZO is a four.16% place bought in Q3 2017 at costs between $493 and $595 and elevated by ~75% final quarter at costs between $596 and $693. The inventory presently trades properly above these ranges at ~$835. This quarter noticed marginal trimming.

Word: On AZO, Tweedy Browne believed valuations had grow to be depressed on account of unreasonable fears that Amazon may disrupt the marketplace for retail auto elements.

ConocoPhillips (COP): COP was a minutely small place in 2007. The bulk of the present ~1.7M share stake (three.66% of portfolio) was bought in 2009 at costs between $22 and $40. The inventory presently trades at $65.28. The three quarters by way of Q3 2016 had seen minor reductions. This fall 2016 noticed a ~14% promoting at costs between $40.50 and $53. Final yr noticed one other comparable trimming at costs between $43 and $56. Tweedy Browne is harvesting lengthy-time period positive aspects. There was a ~9% discount final quarter and marginal trimming this quarter.

Word: The figures quoted above are adjusted for the Might 1, 2012 COP spinoff of Phillips 66 whereby COP shareholders acquired one share of Phillips 66 for each 2 shares of COP.

MRC International (MRC): The three.20% MRC stake was bought in Q3 and This fall 2015 at costs between $11 and $16. Q3 2016 noticed a ~22% promoting at costs between $12.50 and $16.50 and that was adopted with a ~6% trimming in Q1 2017. Q3 2017 noticed a ~15% improve at costs between $15.40 and $17.50. The inventory is now at $15.88. Final 4 quarters have seen minor promoting.

Word: Tweedy Browne controls ~5% of MRC International.

3M Firm (MMM): MMM is a 2.47% lengthy-time period stake first bought in 2008 at low costs. The 5 quarters by means of Q2 2017 had seen a mixed ~46% discount at costs between $165 and $213. The inventory is now at ~$201. Tweedy Browne is harvesting big lengthy-time period good points. There was an ~eight% promoting in This fall 2017 and that was adopted with an ~18% discount subsequent quarter at costs between $215 and $259. There was a marginal ~2% trimming final quarter and a ~5% discount this quarter.

Devon Power (DVN): DVN is a 2.36% of the 13F portfolio place. The majority of the stake was bought in 2012 when round 2.2M shares have been acquired at costs between $51 and $75. Q3 2016 noticed an ~11% discount at costs between $36 and $45 and that was adopted with a ~9% promoting in Q1 2017 at costs between $38.50 and $49. There was one other ~11% trimming the next quarter at costs between $30 and $43. The inventory presently trades at $26.61. Final quarter noticed a ~24% discount at costs between $30 and $43 and that was adopted with a ~5% promoting this quarter.

Emerson Electrical (EMR): EMR is an extended-time period 2.24% stake. The place was first bought in 2008 and doubled the next yr at a price-foundation within the low-$30s. Round 40% of that unique place was bought in 2010 within the low-$50s worth-vary. It had since been additional decreased. This fall 2016 noticed a ~20% promoting at costs between $49 and $58 and that was adopted with a ~20% discount during the last yr at costs between $56 and $70. The inventory presently trades at $66.75. Final three quarters have seen one other ~15% promoting at costs between $66 and $78.

Halliburton Firm (HAL): HAL is a 1.89% of the portfolio stake. It was established in 2012 at costs between $27.50 and $38.50. Q3 2016 noticed a ~20% discount at costs between $41 and $47. Final quarter noticed one other ~53% discount at costs between $44.50 and $54 and that was adopted with marginal trimming this quarter. The inventory at present trades at $31.88.

Comcast Company (CMCSA): CMCSA is a really lengthy-time period stake that has been within the portfolio since earlier than the monetary disaster. The stake was decreased by ~11% in This fall 2015 at costs between $28 and $31.50. Q3 2016 noticed one other ~16% promoting at costs between $32.50 and $34. There was a two-thirds discount in This fall 2017 at costs between $35 and $41. The inventory is now at $38.36 and the stake is at zero.67%. Tweedy Browne is harvesting good points. Final three quarters noticed marginal trimming.

Notice: The costs quoted above are adjusted for the two-for-1 inventory-cut up in February 2017.

WPP plc (WPP): The zero.49% of the portfolio stake in WPP was established in This fall 2017 and elevated by round two-thirds subsequent quarter at costs between $77 and $103. The inventory at present trades at $55.19. Final two quarters noticed minor trimming.

Notice: Tweedy Browne’s Q1 2018 letter mentioned this place: they believed the CEO misconduct allegations had prompted the shares to be undervalued. Martin Sorrell, the CEO resigned in April.

American Categorical (AXP), Avnet Inc. (AVT), Diageo plc (DEO), Mastercard Inc. (MA), Nationwide Western Life (NWLI), Phillips 66 (PSX), Complete SA (TOT), Unilever (UN) (UL), Union Pacific (UNP), and Verizon Communications (VZ): These small positions (lower than ~1.5% of the 13F portfolio every) noticed minor reductions this quarter.

Word: The agency has a big stake in Diageo, though the 13F place could be very small. The remainder of the shares are held within the native UK market which is outdoors the realm of 13F filings.

Stored Regular:

Alphabet Inc. (GOOG) (GOOGL): GOOG is a prime-5 ~9% place first bought in 2012 at a lot decrease costs in comparison with the present buying and selling worth of $1044. Q3 2016 noticed a ~9% trimming at costs between $692 and $787. Final six quarters had additionally seen minor promoting.

AGCO Company (AGCO): AGCO was a minutely small stake as of Q3 2015. The next quarter noticed a ~90% improve at costs between $43.50 and $51.50 and that was adopted with one other ~50% improve in Q1 2016 at costs between $44 and $53.50. The subsequent three quarters had seen one other roughly one-third improve at costs between $46.50 and $60. Q3 2017 noticed an about flip: ~7% trimming. That was adopted with a one-third discount the next quarter at costs between $65.50 and $75. The inventory is presently at $58.29 and the place is at 1.18% of the 13F portfolio.

Coca-Cola FEMSA (KOF) and US Bancorp (USB): These are very small (lower than ~1% of the portfolio every) stakes stored regular this quarter.

Different minutely small (lower than zero.5% of the 13F portfolio every) positions within the 13F portfolio embrace American Nationwide Insurance coverage (ANAT), Baxter Worldwide (BAX), CKX Lands (CKX), CNH Industrial (CNHI), Connecticut Water Service (CTWS), GlaxoSmithKline (GSK), HSBC Holdings (HSBC), Merck & Firm (MRK), Novartis AG (NVS), Royal Dutch Shell (RDS.A) (RDS.B), Shenandoah Telecommunications (SHEN), Torchmark Corp. (TMK), and UniFirst Company (UNF).

Observe: GlaxoSmithKline, HSBC, Novartis AG, Royal Dutch Shell, and Complete SA are prime positions within the agency. Shares in these European companies are primarily held of their native markets and so are outdoors the realm of US 13F filings.

The spreadsheet under highlights modifications to Tweedy Browne’s 13F inventory holdings in Q3 2018:

Christopher H Browne - Tweedy Browne - Q3 2018 13F Report

Disclosure: I/we have now no positions in any shares talked about, and no plans to provoke any positions inside the subsequent 72 hours.

I wrote this text myself, and it expresses my very own opinions. I’m not receiving compensation for it (aside from from Looking for Alpha). I’ve no enterprise relationship with any firm whose inventory is talked about on this article.

Editor’s Word: This text discusses a number of securities that don’t commerce on a serious U.S. change. Please concentrate on the dangers related to these shares.

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