IONS - Tracking Tweedy Browne Portfolio - Q1 2023 Update

2023-05-31 11:30:49 ET

Summary

• Tweedy Browne's 13F portfolio value decreased by 2% from $1.88B to $1.84B in Q1 2023, with the number of holdings decreasing from 45 to 44.
• The largest position is Berkshire Hathaway, accounting for 20% of the portfolio, followed by Alphabet, Johnson & Johnson, Coca-Cola FEMSA, and FMC Corp.
• The fund's top five holdings make up 61% of the portfolio, with 26 of the 45 13F stakes being significantly large (over 0.5% of the 13F portfolio each).

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 5/15/2023. 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 Q4 2022.

This quarter, Tweedy Browne’s 13F portfolio value decreased ~2% from $1.88B to $1.84B. The number of holdings decreased from 45 to 44. The largest position is Berkshire Hathaway at ~20% of the portfolio. The largest five individual stock positions are Berkshire Hathaway, Alphabet, Johnson & Johnson, Coca-Cola FEMSA, and FMC Corp. Combined they are at ~61% of the portfolio. 26 of the 45 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 International Value Fund Other ( TBGVX ) has a global orientation with non-US allocation at ~83% of the portfolio and cash at ~5%. The top five holdings are Nestle ( OTCPK:NSRGY ), Safran SA ( OTCPK:SAFRY ), TotalEnergies ( TTE ), Diageo plc ( DEO ), and BAE Systems ( OTCPK:BAESY ). Together, they are at ~21% of the fund. As of 4/30/2023, the fund returned 9.27% for the year compared to 11.06% for MSCI EAFE (Hedged to US$). Since inception (1993), annualized returns are at 8.50% compared to 6.51% for MSCI EAFE.

Stake Increases:

Autoliv, Inc. ( ALV ): The 5.45% ALV position was established in Q1 2020 at prices between ~$40 and ~$82 and the stock currently trades at the top of that range at ~$82. There was a ~10% trimming last quarter while this quarter there was a ~7% increase.

Truist Financial ( TFC ): The 1.70% TFC stake saw a ~170% increase this quarter at prices between ~$31 and ~$50. The stock currently trades at the bottom of that range at ~$31.

Bank of America ( BAC ): The very small 0.77% stake in BAC saw a marginal increase this quarter.

Stake Decreases:

Berkshire Hathaway ( BRK.A ) ( BRK.B ): Berkshire Hathaway is a very long-term stake that has been in the portfolio since before the financial crisis. It is currently their largest position at ~20% 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: ~37% increase at prices between $143 and $167. The five quarters through Q3 2021 saw a ~15% selling at prices between ~$200 and ~$292. That was followed with a ~20% reduction last quarter at prices between ~$264 and ~$319. The stock currently trades at ~$322. There was marginal trimming this quarter.

Alphabet Inc. ( GOOG ) ( GOOGL ): GOOG is currently the second largest 13F stake at ~15% of the portfolio. It was first purchased in 2012 at much lower prices compared to the current price of ~$125. There was a one-third reduction over the last two quarters at prices between ~$83 and ~$110.

Johnson & Johnson ( JNJ ): 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 has seen minor selling in most quarters. Q4 2016 saw a ~20% reduction at prices between $111 and $120. That was followed with a ~17% selling last quarter at prices between ~$160 and ~$180. The share count is now at ~1.23M. The stock currently trades at ~$154. Tweedy Browne is harvesting long-term gains from this position. There was marginal trimming this quarter.

Coca-Cola FEMSA ( KOF ): The 8.43% KOF stake was built over the three quarters through Q2 2020 at prices between $38 and $65. Since then, the activity had been minor. The last quarter saw a ~18% reduction at prices between ~$58 and ~$70. The stock currently trades at ~$84. There was marginal trimming this quarter.

FMC Corporation ( FMC ): FMC is a large (top five) ~7% of the portfolio position established in Q3 2021 at prices between ~$88 and ~$109. There was a ~20% stake increase next quarter at prices between ~$88 and ~$110. The last quarter saw a ~15% reduction at prices between ~$106 and ~$134. The stock currently trades at ~$104. This quarter saw marginal trimming.

Ionis Pharmaceuticals ( IONS ): IONS is now a large 6.89% of the portfolio position. It was purchased in Q1 2022 at prices between ~$30 and ~$37. The stock currently trades at $40.55. There was a ~30% stake increase last quarter at prices between ~$37 and ~$47. This quarter saw marginal trimming.

AutoZone ( AZO ): AZO is a 2.88% position purchased in Q3 2017 at prices between $493 and $595 and increased by ~75% in Q2 2018 at prices between $596 and $693. Q1 2019 saw a one-third selling at prices between $810 and $1000. Since then, the stake was reduced by another ~82% at prices between ~$728 and ~$2579. The stock currently trades at ~$2455. Tweedy Browne is harvesting gains.

Cisco Systems ( CSCO ): CSCO position was first purchased in 2011. It is currently a 2.41% of the portfolio stake. The bulk of the original 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 position has seen selling since. 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. The last seven quarters also saw a ~80% reduction at prices between ~$40 and ~$63. The stock currently trades at ~$50. They are harvesting gains. There was marginal trimming this quarter.

FedEx Corp ( FDX ): The 2.11% FDX stake was purchased in Q2 2022 at prices between ~$197 and ~$243 and the stock currently trades at ~$226. There was a ~10% trimming last quarter and that was followed with marginal trimming this quarter.

Wells Fargo ( WFC ): WFC is a ~2% 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. H2 2016 saw a ~30% reduction at prices between $44 and $58. The next two years had also seen minor selling. Q1 2019 saw a ~15% further reduction at prices between $46 and $52. The three years through Q1 2022 saw another ~23% selling at prices between ~$22 and ~$58. That was followed with a similar reduction in Q2 2022 at prices between ~$37.50 and ~$49.50. The last quarter saw another ~38% selling at prices between ~$40 and ~$48. The stock is now at ~$41. There was marginal trimming this quarter.

Bank of New York Mellon ( BK ): BK is a ~2% 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. The three quarters through Q2 2021 had seen a ~50% reduction at prices between ~$34 and ~$52. That was followed with a ~14% selling in Q2 2022. The last quarter saw another ~50% reduction at prices between ~$37 and ~$46. The stock currently trades at $40.69. There was a minor ~3% trimming this quarter.

Concentrix Corp ( CNXC ): The 1.83% of the portfolio stake in CNXC was built during Q3 2022 at prices between ~$110 and ~$137. The stock is now well below that range at ~$88. There was a ~45% reduction last quarter at prices between ~$112 and ~$134. This quarter saw marginal trimming.

American Express ( AXP ), Comcast Corporation ( CMCSA ), CNH Industrial ( CNHI ), Diageo plc ( DEO ), Fox Corporation ( FOX ), Intel Corp ( INTC ), National Western Life ( NWLI ), TotalEnergies (TTE), Unilever ( UN ) ( UL ), U.S. Bancorp ( USB ), and Union Pacific (UNP) These small positions (less than ~1.5% of the 13F portfolio each) were reduced during the quarter.

The spreadsheet below highlights changes to Tweedy Browne’s 13F stock holdings in Q1 2023:

Source: John Vincent. Data constructed from Tweedy Browne's 13F filings for Q4 2022 and Q1 2023.

For further details see: