Tweedy Browne Global Value Q4 Portfolio Updates

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Feb 06, 2015
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The Tweedy Browne (Trades, Portfolio) Global Value fund follows the Ben Graham value-oriented approach, and invests primarily in foreign securities, though U.S. stocks are included on a limited basis if opportunities are attractive.

As of Dec. 31, the fund had about $8.7 billion in assets under management. According to the fourth quarter shareholder letter, the consumer, financials, and materials sectors held up the best during the quarter. Oil and gas, banks, and machinery companies underperformed in the quarter.

The majority of the assets are held in British companies at 14.15%, followed by Switzerland at 13.59%, and France at 11%.

During the quarter, Tweedy Browne (Trades, Portfolio) purchased one new holding and sold out of two others.

New buy

AGCO Corp (AGCO, Financial)

Tweedy Browne purchased 126,965 shares of AGCO at an average price of $44.27 per share.

AGCO manufactures and distributes agricultural equipment such as tractors, combines, hay tools, etc. Its products are distributed through about 3,100 independent dealers and distributors in more than 140 countries.

Over the past year, the stock has been down 4%. When comparing the price with the Peter Lynch earnings line, the company appears to be undervalued.

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GuruFocus rates AGCO’s business predictability as 4 out of 5-stars. While the stock currently trades at $49.00, the DCF model projects a fair value of $64.02, giving a 24% margin of safety.

Though the operating margin saw a slight decline in FY 2013, the margin has expanded by more than 9% over the past five years.

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AGCO has a current P/E ratio of 10, which is better than the Farm and Construction industry average of 18.7.

Other gurus who own stock in AGCO include FPA Capital Fund (Trades, Portfolio), Manning & Napier Advisors, and Ray Dalio (Trades, Portfolio).

Sold out

Banco Santander Brasil SA (BSBR, Financial)

Tweedy Browne sold its 20,758,777 shares of Brazilian bank Banco Santander for an average price of $5.67 per share.

Over the past five years, the bank struggled to increase its revenue and earnings growth, as indicated by the figures in the chart below. In addition, free cash flow per share is estimated to be $-44.92 for the trailing 12 months, according to preliminary data.

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The current dividend yield is 4.4%, and the payout ratio is a very high 98%, indicating the dividend may be unsustainable with little room for growth.

Takata Corporation (TSE:7312, Financial)

The fund also sold its 503,900 share holding of Takata for an average price of ¥1,549.70 per share.

Takata sells automotive safety systems such as airbags, seatbelts, steering wheels, and other interior parts. The company has been embroiled in a series of recalls in which Takata airbags deployed with too much force, released metal fragments, and caused injuries and at least six deaths.

Over the past year, the stock has declined 56%. For the trailing 12 months, diluted EPS was ¥-299.05.

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The company’s current P/S ratio is 0.19.

View the latest stock picks from the Tweedy Browne (Trades, Portfolio) Global Value Fund here. Not a Global or Premium Member of GuruFocus? Try it free for 7 days.