VRTX - Tracking Tweedy Browne Portfolio - Q3 2023 Update

2023-11-30 00:50:33 ET

Summary

• Tweedy, Browne's 13F portfolio value decreased by 2% to $1.87B this quarter.
• The largest position in the portfolio is Berkshire Hathaway, followed by Alphabet, Johnson & Johnson, Ionis Pharma, and Coca-Cola FEMSA.
• Tweedy, Browne made new stakes in Vertex Pharma, increased stakes in FMC Corporation and Sealed Air, and decreased stakes in Berkshire Hathaway, Alphabet, Johnson & Johnson, Ionis Pharmaceuticals, and Coca-Cola FEMSA.

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 11/13/2023. 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 Q2 2023.

This quarter, Tweedy, Browne’s 13F portfolio value decreased ~2% from $1.91B to $1.87B. The number of holdings increased from 46 to 47. The largest position is Berkshire Hathaway at ~22% of the portfolio. The largest five individual stock positions are Berkshire Hathaway, Alphabet, Johnson & Johnson, Ionis Pharma, and Coca-Cola FEMSA. Combined they are at ~65% of the portfolio. 25 of the 47 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 ~85% of the portfolio and cash at ~3%. The top non-US holdings not in the 13F are Nestle (NSRGY), TotalEnergies (TTE), Safran SA (SAFRY), BAE Systems plc (BAESF), Heineken (HKHHF), Roche (RHHBY), and United Overseas Bank (UOVEY). As of 9/30/2023, the fund returned 6.40% for the year compared to 13.16% for MSCI EAFE (Hedged to US$). Since inception (1993), annualized returns are at 8.28% compared to 6.48% for MSCI EAFE.

New Stakes:

Vertex Pharmaceuticals ( VRTX ) : The 1.40% VRTX position was established this quarter at prices between ~$338 and ~$363. The stock currently trades near the middle of that range at ~$351.

Stake Increases:

FMC Corporation ( FMC ) : FMC is a large 5.17% 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. Q4 2022 saw a ~15% reduction at prices between ~$106 and ~$134. There was a 43% stake increase this quarter at prices between ~$65 and $105. The stock currently trades well below the low end of its purchase price ranges at $52.68.

Sealed Air ( SEE ) : The 1.43% stake in SEE was purchased last quarter at prices between ~$38 and ~$48. There was a ~50% stake increase this quarter at prices between ~$31 and ~$47. The stock is now near the low end of its purchase price ranges at $33.16.

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 ~22% 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 during Q4 2022 at prices between ~$264 and ~$319. The stock currently trades at ~$359. There was minor trimming in the last three quarters.

Alphabet Inc. ( GOOG ) : GOOG is currently the second largest 13F stake at ~18% of the portfolio. It was first purchased in 2012 at much lower prices compared to the current price of ~$136. There was a one-third reduction over the two quarters through Q1 2023 at prices between ~$83 and ~$110. That was followed by a marginal reduction in the last two quarters.

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 during Q4 2022 at prices between ~$160 and ~$180. The share count is now at ~1.14M. The stock currently trades at ~$152. Tweedy, Browne is harvesting long-term gains from this position. There was minor trimming in the last three quarters.

Ionis Pharmaceuticals ( IONS ) : IONS is now a large (top five) 8.52% of the portfolio position. It was purchased in Q1 2022 at prices between ~$30 and ~$37. The stock currently trades at $49.41. There was a ~30% stake increase during Q4 2022 at prices between ~$37 and ~$47. The last three quarters saw marginal trimming.

Coca-Cola FEMSA ( KOF ) : The 6.65% KOF stake was built over the three quarters through Q2 2020 at prices between $38 and $65. Since then, the activity had been minor. Q4 2022 saw a ~18% reduction at prices between ~$58 and ~$70. That was followed by a ~13% selling this quarter at prices between ~$74 and ~$87. The stock currently trades at $83.86.

Autoliv, Inc. ( ALV ) : The 5.25% ALV position was established in Q1 2020 at prices between ~$40 and ~$82 and the stock currently trades at ~$103. There was a ~10% trimming during Q4 2022 while in the next quarter, there was a ~7% increase. This quarter saw marginal trimming.

U-Haul Holding ( UHAL.B ) : U-Haul is a 1.17% of the portfolio position established last quarter at prices between ~$45 and ~$59 and the stock currently trades at ~$54. There was a minor ~3% trimming this quarter.

AutoZone (AZO), American Express (AXP), Bank of America (BAC), Bank of New York Mellon (BK), Cisco Systems (CSCO), Concentrix Corporation (CNXC), CNH Industrial (CNHI), Diageo plc (DEO), FedEx Corporation (FDX), National Western Life (NWLI), THOR Industries (THO), Truist Financial (TFC), U.S. Bancorp (USB), and Wells Fargo (WFC): These small (less than ~2.5% of the portfolio each) stakes were reduced during the quarter.

The spreadsheet below highlights changes to Tweedy, Browne’s 13F stock holdings in Q3 2023:

Source: John Vincent. Data constructed from Tweedy, Browne's 13F filings for Q2 2023 and Q3 2023.

For further details see: