David Winters´ Wintergreen Advisers: More Focused on Consumer Goods and Financial Companies; Cuts Exposure to Tobacco

Last Friday, David Winters’ Wintergreen Advisers filed its 13F form at the U.S. Securities and Exchange Commission, disclosing its long equity positions as of the end of the fourth quarter of 2013.

We have found that the most popular small cap stocks among hedge funds outperformed the market by 18 percentage points even though we started measuring the returns a couple of weeks after 13Fs have been made public. It can also be productive to treat individual 13Fs as free recommendations from fund managers- not necessarily to be followed, but to be considered briefly and then researched further if they seem appealing.

David Winters

In this article I will analyze the fund´s most interesting moves reported for Q4. This fundamentally-oriented fund holds market value of $904 million. Its investments are principally focused on the consumer goods and financial sectors.

Over Q4, the fund did not acquire any new stocks, but it increased its stakes in four of its preexisting holdings. It also reduced its position in four other companies and sold out three of them.

The fund´s largest position remained the same, although slightly reduced. I´m talking about Berkshire Hathaway Inc. (NYSE:BRK.B), which saw Wintergreen lessen its participation by 1%, to 1.22 million shares. This position, worth almost $140 million, comprises 16% of the fund’s fourth quarter equity portfolio. Warren Buffett’s famed conglomerate holding company has a market cap of $267 billion and boasts margins and returns way above its industry’s averages. Analysts expect the company to grow at industry average rates over the next five years, but still recommend buying its stock, mainly in account of its below-average valuation at 14 times the firm’s earnings. However, Warren Buffett’s ultimate departure is expected to put a cap on Berkshire’s returns longer term. One way or another, it looks to me like Mr. Winter sold some of this stock to make some cash, taking advantage of the slight price increase that the stock experienced over Q4.

Another interesting case is that of The Coca-Cola Company (NYSE:KO), the beverages king. By the end of Dec. 2013, the fund declared owning 2.48 million shares of the company, up 18% in relation to the previous quarter. This holding worth roughly $92 million comprises about 11% of the fund’s Q4 equity portfolio. Understanding this investment is not at all complicate: The Coca-Cola Company (NYSE:KO)’s global brands and distribution network will remain unrivaled for several years still. Although analysts expect it to deliver below-average long-term EPS growth rates, these are, for sure, sustainable and could be easily beat. Fundamentally, The Coca-Cola Company (NYSE:KO) also looks good: it boasts above-average margins and returns and pays out 3% of the current stock price in the form of quarterly dividends, making the wait for an upside worthwhile.

Back to sales, Wintergreen decided to substantially cut its exposure to tobacco over the fourth quarter of 2013. The fund sold out its stakes in two of the world-leading tobacco companies: Philip Morris International Inc. (NYSE:PM) and Lorillard Inc. (NYSE:LO). However, it maintained its stakes Reynolds American, Inc. (NYSE:RAI), which looks to me as the least attractive option of them all. However, these sales can be comprehended in terms of value: while Reynolds American, Inc. (NYSE:RAI)´s stock price was quite flat over the past year, Lorillard Inc. (NYSE:LO)´s price rose substantially, opening an alluring opportunity for sellers. On the other hand, Philip Morris International Inc. (NYSE:PM)´s price fell considerably, and the fund seems to have decided to sell its participation in the company before in continued to plunge; limited growth prospects and thin margins make it an unattractive pick from the fundamental point of view. In addition, the wider tobacco industry, as all of you already know, is experiencing a marked decline around the world, as people become conscious of the adverse effects of smoking.

Disclosure: Javier Hasse holds no position in any stocks mentioned

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 34 Smartest Countries in the World

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!