Mason Hawkins founded Tennessee-based Southeastern Asset Management in 1975. Southwestern manages roughly $32 billion, with locations in Tennessee, London, Singapore, Sydney and Tokyo. For the last 20 years, Southeastern has managed an average annual return of 10.31%, while the S&P 500 returned 7.81% annually over the same time. Hawkins was heavily influenced by Ben Graham’s writings on value investing, and this guides the investment philosophy of his funds.
Southeastern recently filed its 13F disclosure for Q4 of 2012 with the SEC. By reviewing 13F disclosures from hedge funds, investors can see what stocks hedge fund managers are buying. While the portfolios are from several weeks ago, there are still a few ways for investors to use this information. We have found, for example, 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 (check out the details here). It can also be productive to treat individual 13Fs as free recommendations from fund managers. We have picked out the recent new acquisitions and increased positions from Mason Hawkins and Southeastern Asset Management.
Hawkins and Southeastern initiated a large position in Mondelez International Inc (NASDAQ:MDLZ). Mondelez is a manufacturer of snack food and beverage products, and operates internationally. The Company changed its name from Kraft Foods, Inc. after a spin-off from Kraft Foods Group, Inc. in 2012. Southeastern initiated a position of over 34 million shares in Q4 of 2012. Mondelez has a current P/E ratio of 15.03, and a dividend yield of 1.84%. The Company’s share price is up 10.84% YTD, and is trading well above its 50 day and 200 day SMA. Mondelez International Inc (NASDAQ:MDLZ) recently announced that its Board of Directors has authorized a stock repurchase of up to 40 million shares, or $1.2 Billion, which may be a bullish sign.
Another major new position made by Hawkins was in Abbott Laboratories (NYSE:ABT). Southeastern initiated a purchase of 7.7 million shares according to its most recent 13F filing, though we cannot pin down exactly when this occurred in the fourth quarter. Nonetheless, the pharma giant has been an interesting play, as it recently broke off AbbVie (ABBV)—its R&D arm—into a separate corporate entity. Abbott Laboratories (NYSE:ABT) reported 4th quarter earnings per share of 66 cents, with full-year EPS of $3.72; the Company pays a current dividend yield of 1.61%. Abbott’s share price is up 12.84% YTD, and over 30% over the past year. Hawkins appears to have made a good call initiating a position here; read more about Abbott’s recent spin-off.
Hawkins initiated another large position in Legg Mason, Inc. (NYSE:LM) with an acquisition of 2.6 million shares in Q4 of 2012. The Company is a global asset management operation with over $600 billion in assets under management. Legg Mason, along with its affiliate Permal, recently completed an acquisition of Fauchier Partners, a leading European-based manager of hedge funds. The Company was quite busy in 2012, buying back its debt from a private equity firm, as well as authorizing $1 billion for a stock repurchase program. Legg Mason, Inc. (NYSE:LM)’s share price has skyrocketed over 19% YTD, with a large uptick of over 5% in the past week alone. Mario Gabelli, another noted value investor, recently reiterated his buy recommendation on the Company. (See Gabelli’s other top picks.)
Let’s see another pick from Hawkins, and one company in which Southeastern increased its holdings.
Southeastern created a new position in CNH Global NV (ADR) (NYSE:CNH), with a purchase of 1.4 million shares in Q4 of 2012. The company’s Board of Directors recently approved a merger plan into NewCo, a subsidiary of Fiat Industrial (FIATY). CNH reported net sales revenue of $19.4 billion for 2012, an increase of 8% versus the prior year. A whopping 81% of sales were from agricultural equipment, with the remaining 19% coming from construction equipment. The Company further paid a special dividend of $10 per common share on December 18, 2012; upon announcement of this payment, its stock price fell by nearly 20% in one day. Still, the price has recovered somewhat and is up over 9% YTD, but it has dropped from highs of over $48 in January, to near the $44 mark of late. This price just broke below the 50 day SMA, which may be a bearish sign. Price action has also been volatile as of late, with a beta of 2.55. Thus, investors might want to weigh the volatile nature of CNH before opening a position.
A final company in which Southeastern substantially increased its holdings in was Murphy Oil Corporation (NYSE:MUR). Hawkins now holds over 6.1 million shares, an increase in its position of 1029% over Q3 of 2012. Murphy Oil is an oil and gas exploration and production company with refining and marketing operations in the United States and the UK. The Company recently released earnings, reporting a profit of $158.7 million, or 82 cents a share, versus a loss in the same quarter one year earlier of $113.9 million, or 59 cents a share. Revenue also increased from $7.4 billion to $6.8 billion year-over-year. The Company’s share price is up a modest 3.6% since the beginning of 2013, and is hovering slightly above its 50 day SMA, which appears to be providing support.
Investors looking to make longer term investments may do well to continue to monitor Southeastern’s future 13F filings to see what the firm is holding; it’s always worth paying attention to the smart money.
Disclosure: none
