Bill Nygren Comments on Diageo PLC

Author's Avatar
Apr 08, 2014

Diageo PLC (DEO - $125)(DEO)
Diageo is the world’s largest spirits manufacturer. Diageo has a portfolio of spirits brands that is among the best in the industry, including a leading scotch franchise that is nearly impossible to replicate. These strong brands are supported by the company’s global scale, which allows for meaningful efficiencies in manufacturing, distribution and marketing. As a result of these advantages, we believe Diageo will maintain its excellent competitive position. At the same time, revenues have grown consistently for years due to a combination of pricing power and emerging markets exposure, and this growth should continue for the foreseeable future. We believe this well-managed company is selling at a large discount to intrinsic value. Further, Diageo has a dividend yield of 2.5%.

From Bill Nygren (Trades, Portfolio)'s Oakmark Fund first quarter 2014 commentary.