The Tweedy Browne (Trades, Portfolio) Global Value Fund recently disclosed its 13F portfolio updates for the fourth quarter of 2021, which ended on Dec. 31.
The fund operates as part of New York-based value investing firm Tweedy, Browne Co. LLC. The portfolio managers aim to invest in a diverse range of companies in developing countries, with an emphasis on undervalued securities, in order to achieve long-term capital growth. Though it invests primarily in non-U.S. marketable equity securities, the fund does own shares of some U.S.-listed securities if the portfolio managers perceive an attractive enough growth opportunity.
During the quarter, the fund’s most significant moves were the sales of its entire stake in CNP Assurances (XPAR:CNP, Financial) and part of its CNH Industrial NV (CNHI, Financial) position. Its top buys were additions to its holdings in Alibaba Group Holding Ltd. (HKSE:09988, Financial) and Lassonde Industries Inc. (TSX:LAS.A, Financial).
CNP Assurances
The fund sold out of its 5,798,647-share holding in CNP Assurances (XPAR:CNP, Financial), which previously took up 1.49% of the equity portfolio. During the quarter, shares traded for an average price of 19.70 euros ($22.49).
CNP Assurances is a major French insurance company headquartered in Paris. It is France’s leading personal insurer, providing life insurance, pension, personal risk insurance, health insurance and more. It also has operations throughout other European countries and Brazil.
CNP Assurances is in the process of being acquired by La Banque Postale, which is trying to squeeze out minority shareholders. The French bank major was paying 21.90 euros per share for the stock in mid-December, which is why the stock shot up to around that price in early November and has hovered around that level ever since.
CNH Industrial
The fund trimmed its CNH Industrial (CNHI, Financial) investment by 0.47%, leaving a remaining holding of 14,718,898 shares. Shares traded for an average price of $15.32 in the three months through the end of December.
Based in the U.K, CNH Industrial is an American-Italian agricultural machinery company. The company designs, manufactures and sells agricultural machinery, construction equipment, trucks, commercial vehicles and buses, as well as powertrains for industrial and marine applications.
On Jan. 14, shares of CNH Industrial traded around $16.47 for a market cap of $22.31 billion. According to the GF Value Line, the stock is significantly overvalued.
The company has a financial strength rating of 4 out of 10 and a profitability rating of 6 out of 10. Warning signs include declining margins, while positive signs include a high Piotroski F-Score of 7 out of 9. The return on invested capital is consistently higher than the weighted average cost of capital, showing profitability.
Alibaba Group Holding
The fund upped its stake in Alibaba (HKSE:09988, Financial) by 24.41% for a total of 7,958,990 shares. The stock traded for an average price of 142.29 Hong Kong dollars ($18.28) per share during the quarter.
Alibaba is a Chinese multinational conglomerate with holdings in e-commerce, retail, internet and technology assets, among many others. By volume, Alibaba is the largest e-commerce company in the world, with millions of merchants and hundreds of millions of users.
On Jan. 14, shares of Alibaba traded around HK$129.30 for a market cap of HK$2.87 trillion. According to the GF Value Line, the stock is significantly undervalued.
The company has a financial strength rating of 7 out of 10 and a profitability rating of 8 out of 10. It receives a business predictability rating of three out of five stars from GuruFocus. Warning signs include declining margins, while positive signs include growing revenue. The company has a three-year revenue per share growth rate of 38.2% and a three-year Ebitda per share growth rate of 16.8%.
Lassonde Industries
The fund more than doubled its Lassonde Industries Inc. (TSX:LAS.A, Financial) position, resulting in a total holding of 251,390 shares. During the quarter, the stock traded around 163.59 Canadian dollars ($130.22) per share.
Lassonde is a Canadian food products company with a brand profile that includes Oasis, Rougemont, Allen's, Canton, Dublin's Pub and many others. It primarily produces fruit juices, broths, soups, sauces, snacks and wines.
On Jan. 14, shares of Lassonde traded around CA$155 for a market cap of CA$1.07 billion. According to the GF Value Line, the stock is modestly undervalued.
The company has a financial strength rating of 6 out of 10 and a profitability rating of 7 out of 10. It receives a business predictability rating of three out of five stars from GuruFocus. The company has one warning sign for a declining operating margin, while positive signs include a strong Altman Z-Score of 3.55 and a dividend yield close to a 10-year high at 2.12%. The ROIC is far above the WACC, showing strong value creation for shareholders.
Portfolio overview
As of the end of the quarter, the Fund’s latest 13F reported holdings in 86 stocks valued at a total of $6.19 billion. The turnover for the quarter was 1%.
The top holdings were Nestle SA (XSWX:NESN, Financial) with 5.72% of the equity portfolio, Diageo PLC (LSE:DGE, Financial) with 5.16% and CNH Industrial with 4.61%.
In terms of sector weighting, the firm was most invested in consumer defensive, industrials and financial services.
