This article is part of a series that provides an ongoing analysis of the changes made to Tweedy Browne’s 13F portfolio on a quarterly basis. It is based on Tweedy Browne’s regulatory 13F Form filed on 08/11/2020. Please visit our Tracking Tweedy Browne Portfolio series to get an idea of their investment philosophy and our previous update for the fund’s moves during Q1 2020.

This quarter, Tweedy Browne’s 13F portfolio value increased ~16%, from $2.15B to $2.51B. The number of holdings decreased from 46 to 43. The largest position is Alphabet at ~14% of the portfolio. The five largest individual stock positions are Alphabet (GOOG, GOOGL), Berkshire Hathaway (BRK.A, BRK.B), Johnson & Johnson (JNJ), Cisco Systems (CSCO), and Baidu (BIDU). Combined, they are at ~55% of the portfolio. 28 of the 43 13F stakes are significantly large (over ~0.5% of the 13F portfolio each), and they are the focus of this article.

Tweedy Browne has released a number of investment research papers over the years, and that is a valuable resource for anyone looking to learn from their value investing philosophy. Also, Christopher Browne authored the book The Little Book of Value Investing, a great introduction.

Note: Tweedy Browne’s flagship Tweedy Browne Global Value Fund (TBGVX) has a global orientation, with non-US allocation at ~90% of the portfolio and cash at ~6%. The top five holdings are Nestle (OTCPK:NSRGY), Roche Holding (OTCQX:RHHBY), Diageo plc (DEO), Heineken (OTCQX:HKHHF), and Novartis (NVS). Together, they are at ~24% of the fund. Per the Q2 2020 commentary, the fund returned -13.58% for H1 2020, compared to -9.58% for MSCI EAFE (EFA). Since inception (1993), annualized returns are at 8.26%, compared to 5.79% for MSCI EAFE.

New Stakes

Morgan Stanley (MS) and AbbVie Inc. (ABBV): These are the two new positions this quarter. The small 0.89% MS stake was purchased at prices between $31.50 and $50.50, and the stock currently trades at $52.38. ABBV is a 0.81% of the portfolio position established at prices between $73 and $99, and it is now at $95.51.

Stake Disposals

Delta Air Lines (DAL): DAL was a 1.23% of the portfolio stake purchased last quarter at prices between ~$21 and ~$62. The position was eliminated this quarter at prices between $19 and $37. The stock currently trades at $29.09.

MRC Global (MRC): The 0.66% MRC stake was purchased in Q3 and Q4 2015 at prices between $11 and $16. In recent activity, Q4 2019 saw a ~20% selling at prices between $10.80 and $15.15. The disposal this quarter was at prices between $3.50 and $8.11. The stock is now at $6.26.

WPP plc (WPP): The minutely small ~0.5% stake in WPP as of Q4 2019 was sold over the last two quarters.

Stake Increases

Berkshire Hathaway: Berkshire Hathaway is a very long-term stake that has been in the portfolio since before the financial crisis. It is currently their second-largest position at ~13.5% of the portfolio. Back in 2009, it was a very small 0.60% of the portfolio position. The bulk of the current stake was purchased in 2010 and 2012 at prices between $65 and $90. Q3 2016 saw a ~42% reduction at prices between $142 and $151, while the pattern reversed next quarter: a ~37% increase at prices between $143 and $167. Since then, the activity has been minor. The stock currently trades at ~$213.

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Baidu Inc.: BIDU is a large 6.70% portfolio stake purchased in Q1 2017 at prices between $168 and $186, and the stock is now well below the low end of that range at ~$126. The position was increased by roughly two-thirds in Q2 2019 at prices between $108 and $185. Next quarter saw an about-turn: a 40% selling at prices between $94 and $119. There was a ~15% stake increase in Q4 2019 at prices between $99.50 and $129. Last quarter saw similar selling at prices between ~$83 and ~$145. This quarter saw a ~4% stake increase.

Coca-Cola FEMSA (KOF): The fairly large 4.80% KOF was built over the last three quarters at prices between $38 and $65. The stock currently trades at ~$43. For investors attempting to follow, KOF is a good option to consider for further research.

Comcast Corporation (CMCSA): CMCSA is a very long-term stake that has been in the portfolio since before the financial crisis. In recent activity, there was a two-thirds reduction in Q4 2017 at prices between $35 and $41. Q4 2018 also saw a ~23% selling at prices between $33 and $39.50. This quarter saw an about-turn: a ~140% stake increase at prices between $32.50 and $43. The stock is now at $43.34 and the stake is at 1.76%.

Note: The prices quoted above are adjusted for the 2-for-1 stock split in February 2017.

American Express (AXP), U.S. Bancorp (USB), and Unilever (UN, UL): These small positions (less than ~1.5% of the 13F portfolio each) were increased during the quarter.

Stake Decreases

Alphabet Inc.: GOOG is currently the largest 13F stake at ~14% of the portfolio. It was first purchased in 2012 at much lower prices compared to the current price of ~$1507. Q3 2016 saw a ~9% trimming at prices between $692 and $787. Since then, the activity has been minor.

Johnson & Johnson: JNJ is a large (top-three) position in the portfolio at ~10%. It is a long-term stake. The position was built from 400K shares to just over 4.3M shares between 2009 and 2012 at prices between $48 and $72. Since then, the stake had seen minor selling in most quarters. Q4 2016 saw a ~20% reduction at prices between $111 and $120, and that was followed with minor trimming over the last three years. The share count is now at ~1.84M. The stock currently trades at ~$150. Tweedy Browne is harvesting long-term gains from this position.

Cisco Systems: CSCO position was first purchased in 2011. It is currently their fourth-largest 13F stake at ~10% of the portfolio. The bulk of the position was purchased in 2012 at prices between $15.50 and $21. Q1 2016 saw a ~45% stake increase at prices between $22.50 and $28.50. The stock currently trades at $48.10. The three years through Q1 2019 saw a ~44% reduction at prices between $41 and $54. Next quarter saw another ~25% selling at prices between $51 and $57.50. They are harvesting gains. The last four quarters have also seen minor trimming.

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Bank of New York Mellon (BK): BK is a large ~6% stake first purchased in 2010 in the mid-20s price range. Q1 2016 saw a ~40% stake increase at prices between $32.50 and $38. There was an ~11% selling in Q3 2016 at prices between $37 and $42. Since then, the activity has been minor. The stock currently trades at ~$38.

AutoZone (AZO): AZO is a 4.44% position purchased in Q3 2017 at prices between $493 and $595, and increased by ~75% in Q2 2018 at prices between $596 and $693. The stock currently trades well above those ranges at ~$1188. Q1 2019 saw a one-third selling at prices between $810 and $1000, and that was followed with an ~11% trimming next quarter. Tweedy Browne is harvesting gains. There was minor trimming in the last four quarters.

Autoliv Inc. (ALV): The 2.94% ALV position was established last quarter at prices between ~$40 and ~$82, and the stock currently trades at $72.37.

Fox Corporation (FOX): The FOX stake was a minutely small position established in Q2 2019. Next quarter saw the stake built at prices between $31.50 and $38. There was a ~15% stake increase in Q4 2019, and that was followed with a ~72% increase last quarter at prices between ~$20 and ~$38.50. The stock currently trades at $25.21, and the stake is at 2.73% of the portfolio.

Note: Tweedy Browne’s third-quarter commentary said that they purchased FOX at a price estimated to be at 8% earnings yield. Also, they mentioned the focus on live programming, profitability of Fox News, and insider buying as attractive attributes.

ConocoPhillips (COP): COP was a minutely small position in 2007. The majority of the current 1.6M share stake (2.29% of portfolio) was purchased in 2009 at prices between $22 and $40. The three quarters through Q3 2016 had seen minor reductions. Q4 2016 saw a ~14% selling at prices between $40.50 and $53. 2017 saw another similar trimming at prices between $43 and $56. There was a ~9% reduction in Q2 2018 and minor trimming over the last two years. The stock currently trades at $41.66. Tweedy Browne is harvesting long-term gains.

Note: The figures quoted above are adjusted for the May 1, 2012 COP spinoff of Phillips 66, whereby COP shareholders received one share of Phillips 66 for every 2 shares of COP.

Wells Fargo (WFC): WFC is a 2.52% of the 13F portfolio position. The initial stake was established in 2010, with the bulk of the current position purchased in 2011 at prices between $25 and $34. Q3 2016 saw a ~12% reduction at prices between $44 and $51, and that was followed with another ~14% selling the following quarter at prices between $43.50 and $57.50. The next two years had also seen minor selling. Q1 2019 saw a ~15% further reduction at prices between $46 and $52. The stock is now at $25.19. There was minor trimming over the last five quarters.

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3M Company (MMM): MMM is a 2.39% long-term stake first purchased in 2008 at low prices. The five quarters through Q2 2017 had seen a combined ~46% reduction at prices between $165 and $213. There was an ~8% selling in Q4 2017, and that was followed with an ~18% reduction next quarter at prices between $215 and $259. The five quarters through Q3 2019 had also seen a ~15% combined selling at prices between $160 and $220. Last quarter saw a ~12% stake increase, while this quarter, there was minor trimming. The stock is now at ~$164.

Emerson Electric (EMR): EMR is a long-term 1.49% stake. The position was first purchased in 2008, and doubled the following year at a cost basis in the low-$30s. Around 40% of that original position was sold in 2010 in the low-$50s price range. It has since been further reduced. Q4 2016 saw a ~20% selling at prices between $49 and $58, and that was followed with a ~20% reduction in 2017 at prices between $56 and $70. Next year saw another ~35% selling at prices between $55 and $80. The stock currently trades at $71.79. The last six quarters have also seen minor trimming.

Diageo plc, Goldman Sachs (GS), National Western Life (NWLI), Novartis AG, Phillips 66 (PSX), Union Pacific (UNP), and Verizon Communications (VZ): These small positions (less than ~1.5% of the 13F portfolio each) were reduced during the quarter.

Note: Although the 13F position is small, the firm has large stakes in Diageo and Novartis. The rest are held in their native markets, which are outside the realm of 13F filings.

Kept Steady

None.

Other minutely small (less than 0.5% of the 13F portfolio each) positions in the 13F portfolio include Alcon Inc. (ALC), American National Group (ANAT), Applied Industrial Technologies (AIT), Baxter International (BAX), CKX Lands (CKX), CNH Industrial (CNHI), GlaxoSmithKline (GSK), HSBC Holdings (HSBC), Merck & Company (MRK), Royal Dutch Shell (RDS.A, RDS.B), Shenandoah Telecommunications (SHEN), Total SA (TOT), and UniFirst Corporation (UNF).

Note: GlaxoSmithKline, HSBC, Royal Dutch Shell, and Total SA are top positions in the firm. Shares in these European businesses are primarily held in their native markets, and so, are outside the realm of US 13F filings.

The spreadsheet below highlights changes to Tweedy Browne’s 13F stock holdings in Q2 2020:

Tweedy Browne

Disclosure: I am/we are long ABBV, BRK.B, GOOGL, GSK, WFC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.



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