Yacktman Fund Buys Olin Corp, Curbs Position In Top Holding

Summary

• The fund entered a new position in Olin
  OLN
  Corp.
• The Booking Holdings stake was reduced.
• It also sold out of Hengan International Group.

The Yacktman Fund (Trades, Portfolio) disclosed its second-quarter equity portfolio earlier this month.

Part of Austin, Texas-based Yacktman Asset Management (Trades, Portfolio), the fund is managed by Stephen Yacktman and Jason Subotky. It seeks to achieve long-term capital appreciation and current income by combining elements of both growth and value investing strategies. When picking stocks, the portfolio managers focus on good businesses with shareholder-oriented management teams that are trading at a discount.

With these criteria in mind, NPORT-P filings for the three months ended June 30 show the firm entered one new position, sold out of two stocks and reduced a handful of other existing investments. Notable trades included a new position in Olin Corp. (OLN, Financial), a reduced bet on Booking Holdings Inc. (BKNG, Financial) and the divestment of Hengan International Group Co. Ltd. (HKSE:01044, Financial)

Investors should be aware that portfolio updates for mutual funds do not necessarily provide a complete picture of a guru’s holdings. The data is sourced from the quarterly updates on the website of the fund(s) in question. This usually consists of long equity positions in U.S. and foreign stocks. All numbers are as of the quarter’s end only; it is possible the guru may have already made changes to the positions after the quarter ended. However, even this limited data can provide valuable information.

Olin

The fund picked up 2.20 million shares of Olin (OLN, Financial), dedicating 1.52% of the equity portfolio to the stake. The stock traded for an average price of $53.22 per share during the quarter.

The Clayton, Missouri-based basic materials company, which manufactures chlorine and sodium hydroxide along with ammunition, has a $7.11 billion market cap; its shares were trading around $55.01 on Thursday with a price-earnings ratio of 7.31, a price-book ratio of 2.85 and a price-sales ratio of 0.90.

The GF Value Line
VALU
suggests the stock is fairly valued currently based on its historical ratios, past financial performance and analysts’ future earnings projections.

At 78 out of 100, the GF Score indicates the company is likely to have average performance going forward. While it received high ratings for profitability and momentum, the growth, financial strength and value ranks are more moderate.

Of the gurus invested in Olin, Hotchkis & Wiley has the largest stake with 4.18% of its outstanding shares. Richard Pzena (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Paul Tudor Jones (Trades, Portfolio), Keeley-Teton Advisors, LLC (Trades, Portfolio), Mario Gabelli (Trades, Portfolio) and several other gurus also have positions in the stock. During the quarter, the Yacktman Focused Fund (Trades, Portfolio) also established a new holding.

Booking Holdings

Yacktman curbed its Booking Holdings (BKNG, Financial) position by 17.65%, selling 15,000 shares. The transaction had an impact of -0.55% on the equity portfolio. Shares traded for an average price of $2,641.83 each during the quarter.

It now holds 70,000 shares in total, which occupy 2.54% of the equity portfolio as the 10^th-largest holding. GuruFocus estimates the fund has gained 41.33% on the investment so far.

Headquartered in Norwalk, Connecticut, the company, which owns and operates a number of online travel agencies, including Booking.com, Kayak, Priceline.com and OpenTable, has a market cap of $109.27 billion; its shares were trading around $2,958.46 on Thursday with a price-earnings ratio of 29.01, a price-book ratio of 102.51 and a price-sales ratio of 6.40.

According to the GF Value Line, the stock is modestly undervalued currently.

The GF Score of 84 implies the company has good performance potential on the back of high profitability, value and momentum ratings as well as more moderate ranks for growth and financial strength.

With a 2.24% stake, Dodge & Cox is Booking’s largest guru shareholder. Other top guru investors include Ken Fisher (Trades, Portfolio), Steve Mandel (Trades, Portfolio), Baillie Gifford (Trades, Portfolio), Pzena and Bill Nygren (Trades, Portfolio). The firm’s Focused Fund also reduced its investment by 25% during the quarter.

Hengan International Group

The fund exited its 6.93 million-share stake in Hengan International (HKSE:01044, Financial), impacting the equity portfolio by -0.45%. During the quarter, the stock traded for an average per-share price of 35.06 Hong Kong dollars ($4.49).

GuruFocus found Yacktman lost 57.40% on investment over its lifetime.

The Chinese consumer goods company, which manufactures diapers and other hygiene products, has a HK$35.62 billion market cap; its shares were trading around HK$30.45 on Thursday with a price-earnings ratio of 15.99, a price-book ratio of 1.63 and a price-sales ratio of 1.37.

Based on the GF Value Line, the stock appears to be significantly undervalued currently.

The GF Score of 84 means the company has good outperformance potential, driven by high ratings for profitability, value and momentum as well as more moderate growth and financial strength ranks.

The iShares MSCI ACWI ex U.S. ETF (Trades, Portfolio) currently is the only guru invested in Hengan International with 0.01% of its outstanding shares.

Additonal trades and portfolio performance

During the quarter, the fund managers also sold out of Rinnai Corp. (TSE:5947, Financial) and slimmed the Brenntag SE (XTER:BNR, Financial), Weatherford International PLC (WFRD, Financial), Associated British Foods PLC (LSE:ABF, Financial) and Bollore SSE (XPAR:BOL, Financial) holdings.

Yacktman’s $7.45 billion equity portfolio, which is composed of 57 stocks, is largely invested in the communication services, consumer defensive, energy and technology sectors.

GuruFocus data shows the fund outperformed the S&P 500 Index in 2022 with a return of -7.37%. The benchmark posted a -18.11% return.

Disclosures

I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours.