The Tweedy Browne (Trades, Portfolio) Global Value Fund, which invests in both U.S. and foreign equity securities, said Monday that it bought shares in three non-U.S. companies in the fourth quarter.
The $8.2 billion firm invested in several of its favored countries, buying U.K.-based Babcock International Group PLC (LSE:BAB, Financial), Japan’s Zeon Corp. (TSE:4205, Financial) and France’s Bollore (XPAR:BOL, Financial). At fourth quarter-end, the largest country allocations in the Global Value strategy were the U.K. at 18.06%, France at 15.69% and Switzerland at 14.81%. Japan composed only 1.63% of holdings.
The fund ended the quarter with 91 stocks valued at $7.46 billion, down from $8.49 billion in the third quarter.
In fund documents, portfolio managers describe their investing approach as similar to that of Ben Graham, the founder of value investing. They seek primarily “securities trading at discounts from the adviser’s assessment of intrinsic value.”
In a third-quarter discussion of how the firm’s investing approach has evolved since its founding in the late 1950s, management wrote:
“The key take away is that we still operate with a strong valuation discipline, but we have increasingly incorporated the qualitative aspects of a business into our analysis. While ‘compounders’ have played an increasing role in our Fund portfolios over time, we are still quite happy to buy statistically cheap ‘cigar butt’ value stocks when available.”
That philosophy garnered the fund managers an 8.8% annualized return since its inception in 1993, versus a 4.76% annualized gain in its benchmark MSCI EAFE and 5.64% for the MSCI EAFE hedged to the U.S. dollar.
As its largest positions, Tweedy Browne (Trades, Portfolio) Global Value has Safran SA (XPAR:SAF), Roche Holding AG (XSWX:ROG, Financial) and Nestle SA (XSWX:NESN, Financial).
New buys
Babcock International Group PLC (LSE:BAB, Financial)
Tweedy Browne (Trades, Portfolio) Global Value purchased 2,434,770 shares of Babcock International Group PLC in the fourth quarter, giving it 0.20% portfolio weight. The stock’s fourth-quarter share price averaged €6.
Babcock International Group PLC has a market cap of €2.66 billion; its shares were traded around €5.25 with a price-earnings ratio of 10.95 and price-sales ratio of 0.57. The trailing 12-month dividend yield of Babcock International Group PLC stocks is 5.66%. The forward dividend yield of Babcock International Group PLC stocks is 5.66%. Babcock International Group PLC had an annual average earnings growth of 6.20% over the past 10 years. GuruFocus rated Babcock International Group PLC the business predictability rank of 2.5-star.
Japan’s Zeon Corp. (TSE:4205, Financial)
The fund purchased 1,801,700 shares of the company, giving it 0.22% portfolio weight. The stock’s fourth-quarter price averaged 1,112 Japanese yen per share.
Zeon Corp. has a market cap of 227.89 billion yen; its shares were traded around 1,086.00 yen with a price-earnings ratio of 17.37 and price-sales ratio of 0.69. The trailing 12-month dividend yield of Zeon Corp. stocks is 1.73%. The forward dividend yield of Zeon Corp. stocks is 1.92%. Zeon Corp. had an annual average earnings growth of 5.3% over the past 10 years.
The fund purchased 11,392,920 shares of Bollore, giving it 0.61% portfolio weight. The stock’s fourth-quarter price averaged €4 per share.
Bollore SA has a market cap of €10.38 billion; its shares were traded around €3.56 with a price-earnings ratio of 22.28 and price-sales ratio of 0.56. The trailing 12-month dividend yield of Bollore SA stocks is 1.68%. The forward dividend yield of Bollore SA stocks is 1.68%. Bollore SA had an annual average earnings growth of 12.60% over the past 10 years. GuruFocus rated Bollore SA the business predictability rank of 2.5-star.
See the Tweedy Browne (Trades, Portfolio) Global Value Fund’s portfolio here.
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