After selling out in the fourth quarter of 2015, the AMG Yacktman Focused Fund (Trades, Portfolio) established a new holding in Unilever NV (UN, Financial) during the final quarter of 2016.
Donald Yacktman (Trades, Portfolio) founded Yacktman Asset Management in 1992 where he served as a portfolio manager until stepping down into an advisory role in 2016. His son, Stephen Yacktman, now serves as chief investment officer, partner and portfolio manager. The fund seeks long-term capital appreciation through a disciplined, bottom-up investment strategy that combines features of both growth and value investing. When evaluating companies, the investment team looks for good businesses, shareholder-friendly management and a low purchase price.
The fund purchased 600,000 shares of Unilever for an average price of $41.38 per share. The investment expanded the fund’s portfolio by 0.7%. It now holds 0.02% of the company’s outstanding shares.
Unilever is a supplier of consumer goods. It has a diverse portfolio of well-known brands including Dove, Hellmann’s, Lipton, Knorr and many others. The London-based company has a market cap of $125.14 billion and an enterprise value of $122.9 billion. Its shares were trading around $41.37 Thursday with a price-earnings (P/E) ratio of 22.5, a forward P/E ratio of 18.5, a price-book (P/B) ratio of 7.7 and a price-sales (P/S) ratio of 2.1.
The Peter Lynch chart below suggests the stock is trading above its intrinsic value.
GuruFocus ranked the company’s financial strength 6 of 10. The Piotroski F-Score of 7 and Altman Z-Score of 3.8 indicate the company is in good business condition and is financially strong. The company has no debt. Unilever is creating value as it grows because its return on invested capital (ROIC) is outperforming its weighted average cost of capital (WACC).
Unilever’s profitability and growth was ranked 8 of 10 by GuruFocus. It has an operating margin of 14.3% and a net margin of 9.4%. The return on equity (ROE) and return on assets (ROA) outperform 92% and 80% of other companies in the global household and personal products industry. The return on capital (ROC) outperforms 92% of competitors.
Tom Russo (Trades, Portfolio) holds the largest position in Unilever among the gurus. He holds 0.5% of its outstanding shares, which represents 5.5% of his total assets managed. In all, 10 gurus hold a position.
In addition, the AMG Yacktman Fund (Trades, Portfolio), which is also managed by Yacktman Asset Management, increased its position in Unilever by 30.8% in the fourth quarter.
The Focused Fund holds four other consumer packaged goods companies in its portfolio. They are Procter & Gamble Co. (PG, Financial), Avon Products Inc. (AVP, Financial), Hengan International Group Co. Ltd. (HKSE:01044, Financial) and Qinqin Foodstuffs Group Co. Ltd. (HKSE:01583, Financial). The fund’s portfolio has a 32.5% weight in the consumer defensive sector.
Disclosure: I do not own any stocks mentioned in the article.
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