PARAP - Tracking Tweedy Browne Portfolio - Q3 2022 Update

Summary

• Tweedy, Browne’s 13F portfolio value decreased from $2.45B to $2.27B this quarter.
• They increased Concentrix Corp while decreasing Fox Corporation and Comcast.
• Berkshire Hathaway at ~18% of the portfolio is the largest position.

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 11/15/2022. 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 Q2 2022.

This quarter, Tweedy, Browne's 13F portfolio value decreased ~7% from ~$2.45B to ~$2.27B. The number of holdings increased from 45 to 46. The largest position is Berkshire Hathaway at ~18% 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 ~57% of the portfolio. 28 of the 46 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 ( TBGVX ) has a global orientation with non-US allocation at ~80% of the portfolio and cash at ~4%. The top five holdings are Nestle ( OTCPK:NSRGY ), Diageo plc ( DEO ), TotalEnergies ( TTE ), GSK plc ( GSK ), and Roche Holding AG ( OTCQX:RHHBY ). Together, they are at ~19% of the fund. Per Q3 2022 Commentary, the fund returned Negative 5.75% for Q3 2022 compared to Negative 2.81% for MSCI EAFE (Hedged to US$). Since inception (1993), annualized returns are at 7.99% compared to 5.92% for MSCI EAFE.

Stake Increases:

FMC Corporation ( FMC ): FMC is a large (top five) 5.76% of the portfolio position established in Q3 2021 at prices between ~$88 and ~$109. There was a ~20% stake increase the next quarter at prices between ~$88 and ~$110. The stock currently trades at ~$129. There was a minor ~4% stake increase this quarter.

Autoliv Inc. ( ALV ): The 3.27% ALV position was established in Q1 2020 at prices between ~$40 and ~$82 and the stock currently trades at $78.70. The last ten quarters have seen only minor adjustments.

Concentrix Corp ( CNXC ): The 2.48% of the portfolio stake in CNXC was built this quarter at prices between ~$110 and ~$137. The stock is now at $138.40.

FedEx Corp ( FDX ) and Paramount Global ( PARA ): The 1.24% FDX stake was purchased last quarter at prices between ~$197 and ~$243 and the stock currently trades at ~$190. There was a minor ~3% stake increase this quarter. The 0.56% PARA stake was purchased last quarter at prices between ~$24 and ~$38 and it is now well below the low end of that range at $19.55. There was a minor ~3% 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 ~18% 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 the next quarter: ~37% increase at prices between $143 and $167. The five quarters through Q3 2021 had seen a ~15% selling at prices between ~$200 and ~$292. The stock currently trades at ~$315. There was minor trimming in the last four quarters.

Alphabet Inc. ( GOOG ) ( GOOGL ): GOOG is currently the second largest 13F stake at ~17% of the portfolio. It was first purchased in 2012 at much lower prices compared to the current price of ~$89. Q3 2016 saw a ~9% trimming at prices between ~$35 and ~$39. That was followed with a ~10% trimming in Q3 2021. The last three quarters have also seen minor trimming.

Note: the prices quoted above are adjusted for the 20-for-1 stock split in July 2022.

Johnson & Johnson ( JNJ ): JNJ is a large (top three) position in the portfolio at ~11%. 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. The share count is now at ~1.49M. The stock currently trades at ~$176. Tweedy, Browne is harvesting long-term gains from this position.

Coca-Cola FEMSA ( KOF ): The ~6% KOF stake was built over the three quarters thru Q2 2020 at prices between $38 and $65. Since then, the activity has been minor. Last quarter saw a ~9% trimming at prices between ~$53 and ~$60. This quarter also saw a ~4% trimming. The stock currently trades at ~$68.

Note: Regulatory filings from earlier this month show them owning 1.93M shares (3.68% of business) of Coca-Cola FEMSA. This is compared to ~2.34M shares in the 13F report.

Ionis Pharma ( IONS ) and Thor Industries ( THO ): IONS is a fairly large ~5% of the portfolio position purchased in Q1 2022 at prices between ~$30 and ~$37 and the stock currently trades just above that range at $37.25. There was a ~7% trimming last quarter and a marginal reduction this quarter. The small 0.60% of the portfolio THO stake was established in Q1 2022 at a cost-basis of ~$94 per share. The stock is now trading at $89.90. There was a ~15% trimming last quarter and a marginal reduction this quarter.

AutoZone ( AZO ): AZO is a 4.60% 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 ~$2442. Q1 2019 saw a one-third selling at prices between $810 and $1000. Since then, the stake was reduced by another ~60% at prices between ~$728 and ~$2254. Tweedy, Browne is harvesting gains.

Wells Fargo ( WFC ): WFC is a 2.75% 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 last three years saw another ~23% selling at prices between ~$22 and ~$58. That was followed with a similar reduction last quarter at prices between ~$37.50 and ~$49.50. The stock is now at $42.39. This quarter also saw a ~5% trimming.

Bank of New York Mellon ( BK ): BK is a 2.53% 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 last quarter. The stock currently trades at $48.14. There was a minor ~2% trimming this quarter.

Bank of America ( BAC ) and Truist Financial ( TFC ): BAC is a 2.32% of the portfolio position established in H2 2020 at prices between ~$23 and ~$30 and it is now at $33.89. The 1.54% TFC stake was purchased in H2 2020 at prices between ~$33.50 and ~$49 and the stock currently trades at $45.80. Both positions have seen minor selling in the last two quarters.

Cisco Systems ( CSCO ): CSCO position was first purchased in 2011. It is currently a 1.87% 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 thru 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 six quarters also saw a ~75% reduction at prices between ~$40 and ~$63. The stock currently trades at $48.58. They are harvesting gains.

US Bancorp ( USB ): The 1.63% USB position had seen a ~45% increase over the first three quarters of 2020 at prices between ~$29 and ~$59. The stock is now at $46.61. The last two years saw a ~23% selling at prices between ~$37 and ~$63.

Intel Corp ( INTC ): INTC is a 1.39% of the portfolio stake established in H2 2020 at prices between ~$44 and ~$61. There was a stake doubling over the two quarters through Q1 2022 at prices between ~$44.50 and ~$56. The stock is now well below those ranges at $29.31. The last two quarters have seen only minor adjustments.

Fox Corporation ( FOX ) : The FOX stake was a minutely small position established in Q2 2019. The next quarter saw the stake build at prices between $31.50 and $38. There was a ~15% stake increase in Q4 2019 and that was followed with a ~72% increase next quarter at prices between ~$20 and ~$38.50. Since then, the activity had been minor. Last quarter saw a ~24% selling at prices between ~$29 and ~$36.50. That was followed with a one-third reduction this quarter at prices between ~$28 and ~$34. The stock currently trades at ~$29.40, and the stake is at 1.38% of the portfolio.

Comcast Corporation ( CMCSA ): CMCSA is a very long-term stake that has been in the portfolio since before the financial crisis. Recent activity follows: 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. Q2 2020 saw an about turn: ~140% stake increase at prices between $32.50 and $43. There was a ~63% reduction this quarter at prices between ~$29 and ~$48. The stock is now at $37.55, and the stake is now very small at 0.50% of the portfolio.

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

American Express ( AXP ), CNH Industrial ( CNHI ), Carlisle Companies ( CSL ), Diageo plc ( DEO ), Fresenius Medical Care ( FMS ), Morgan Stanley ( MS ), Progressive Corp ( PGR ), Union Pacific ( UNP ), Unilever ( UN ) ( UL ), 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 a large stake in Diageo held in LSE.

The spreadsheet below highlights changes to Tweedy, Browne's 13F stock holdings in Q3 2022:

Source: John Vincent. Data constructed from Tweedy, Browne's 13F filings for Q2 2022 and Q3 2022.

For further details see: