KOF - Tracking Tweedy Browne Portfolio - Q4 2022 Update

Summary

• Tweedy, Browne’s 13F portfolio value decreased from $2.27B to $1.88B this quarter.
• They increased Ionis Pharmaceuticals while reducing most of the other stakes.
• Berkshire Hathaway at ~20% 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 2/9/2023. 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 Q3 2022.

This quarter, Tweedy, Browne's 13F portfolio value decreased ~17% from ~$2.27B to $1.88B. The number of holdings remained steady at 45. The largest position is Berkshire Hathaway at ~20% of the portfolio. The largest five individual stock positions are Berkshire Hathaway, Alphabet, Johnson & Johnson, Ionis Pharmaceuticals, and FMC Corp. Combined they are at ~62% of the portfolio. 31 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 ( 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 ), TotalEnergies ( TTE ), Diageo plc ( DEO ), Safran SA ( OTCPK:SAFRY ), and Berkshire Hathaway. Together, they are at ~21% of the fund. Per Q4 2022 Commentary, the fund returned Negative 7.53% for 2022 compared to Negative 4.60% for MSCI EAFE (Hedged to US$). Since inception (1993), annualized returns are at 8.27% compared to 6.20% for MSCI EAFE.

Stake Increases:

Ionis Pharmaceuticals ( IONS ): IONS is now a large (top five) ~7% of the portfolio position. It was purchased in Q1 2022 at prices between ~$30 and ~$37. The stock currently trades just above that range at $39.36. There was a ~30% stake increase this quarter at prices between ~$37 and ~$47.

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 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. That was followed with a ~20% reduction this quarter at prices between ~$264 and ~$319. The stock currently trades at ~$307.

Alphabet Inc. ( GOOG ) ( GOOGL ): GOOG is currently the second largest 13F stake at ~16% of the portfolio. It was first purchased in 2012 at much lower prices compared to the current price of $95.46. Q3 2016 saw a ~9% trimming at prices between ~$35 and ~$39. That was followed with a ~10% trimming in Q3 2021 and another ~12% trimming this quarter.

Johnson & Johnson ( JNJ ): JNJ is a large (top three) position in the portfolio at ~12%. 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 this quarter at prices between ~$160 and ~$180. The share count is now at ~1.23M. The stock currently trades at ~$161. Tweedy, Browne is harvesting long-term gains from this position.

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 the next quarter at prices between ~$88 and ~$110. This quarter saw a ~15% reduction at prices between ~$106 and ~$134. The stock currently trades at ~$129.

Coca-Cola FEMSA ( KOF ): The ~7% KOF stake was built over the three quarters thru Q2 2020 at prices between $38 and $65. Since then, the activity had been minor. Q2 2022 saw a ~9% trimming at prices between ~$53 and ~$60. Last quarter also saw a ~4% trimming. That was followed with an ~18% reduction this quarter at prices between ~$58 and ~$70. The stock currently trades at ~$71.

Autoliv Inc. ( ALV ): The ~4% ALV position was established in Q1 2020 at prices between ~$40 and ~$82 and the stock currently trades at $91.60. There was a ~10% trimming this quarter.

AutoZone ( AZO ): AZO is a 2.90% 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 ~80% at prices between ~$728 and ~$2579. The stock currently trades at ~$2490. Tweedy, Browne is harvesting gains.

Cisco Systems ( CSCO ): the 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 seven quarters also saw a ~80% reduction at prices between ~$40 and ~$63. The stock currently trades at $46.73. They are harvesting gains.

Wells Fargo ( WFC ): WFC is a 2.13% 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 next three years 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. This quarter saw another ~38% selling at prices between ~$40 and ~$48. The stock is now at $47.57.

Concentrix Corp ( CNXC ): The ~2% of the portfolio stake in CNXC was built last quarter at prices between ~$110 and ~$137. The stock is now at ~$147. There was a ~45% reduction this quarter at prices between ~$112 and ~$134.

Bank of New York Mellon ( BK ): BK is a 1.94% 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. This quarter saw another ~50% reduction at prices between ~$37 and ~$46. The stock currently trades at $51.57.

FedEx Corp ( FDX ) and Paramount Global ( PARA ): The 1.57% FDX stake was purchased in Q2 2022 at prices between ~$197 and ~$243 and the stock currently trades at ~$209. There was a ~10% trimming this quarter. The PARA stake was purchased in Q2 2022 at prices between ~$24 and ~$38 and it is now well below the low end of that range at $21.79. This quarter saw the stake sold down by ~42% to a very small 0.34% portfolio stake at prices between ~$15.50 and ~$20.50.

U.S. Bancorp ( USB ): The 0.88% USB position saw a ~45% increase over the first three quarters of 2020 at prices between ~$29 and ~$59. The stock is now at $48.77. Last nine quarters saw a ~68% selling at prices between ~$36 and ~$63.

American Express ( AXP ), Bank of America ( BAC ), Comcast Corporation ( CMCSA ), CNH Industrial ( CNHI ), Diageo plc ( DEO ), Fresenius Medical Care ( FMS ), Fox Corporation ( FOX ), Intel Corp ( INTC ), National Western Life ( NWLI ), Progressive Corp ( PGR ), TotalEnergies (TOT), Truist Financial ( TFC ), Unilever ( UN ) ( UL ), 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 Q4 2022:

Source: John Vincent. Data constructed from Tweedy, Browne's 13F filings for Q3 2022 and Q4 2022.

For further details see: