News Corp (NWSA), PepsiCo, Inc. (PEP): What’s This Mega-Investor Buying?

Donald Yacktman’s Yacktman Asset Management is one of the top-tier hedge funds we track at Insider Monkey, and because it’s worth tracking the best of the smart money’s best—discover the secrets here—we’re going to take a look at its favorite equity investments for this quarter. With a 13F portfolio in excess of $16 billion, it’s worth paying attention.

Top dog

Yacktman’s top stock pick is News Corp (NASDAQ:NWSA), which advanced in the first quarter to 75,774,270 million class A shares, worth $2.3 billion. In the previous filing, the fund’s position was worth $2.0 billion. News Corp (NASDAQ:NWSA) posted a net income of $1.22 per share for the third quarter of its fiscal 2013, up from $0.38 per share a year ago. At the same time, News Corp (NASDAQ:NWSA) is a popular stock among hedge funds, with over 60 being invested in it at the end of last year. News Corp (NASDAQ:NWSA) is planning to divide itself into two companies on June 28, both of which will be publicly traded; the entertainment/cable spinoff will be named 21st Century Fox.

Up more than 30% this year, investors are clearly bullish on the opportunity to get shares of a post-split News Corp (NASDAQ:NWSA) that can focus on its newspaper and publishing businesses, while 21st Century Fox will likely offer a higher-momentum play.

Procter & Gamble

In The Procter & Gamble Company (NYSE:PG), Yacktman reported a $2.0 billion stake, up from $1.9 billion up from the end of last year. The personal products giant is considering a split into four separate sectors—each focusing on a different division of its business with its own President—though exact details are unknown yet.

The company expects an EPS of between $3.97 and $4.07 for its current fiscal year; versus a core EPS of $3.85 in the previous year, and it also plans to repurchase $5-6 billion worth of shares by the end of this year. The reappointment of A.G. Lafley to The Procter & Gamble Company (NYSE:PG)’s CEO post to take over for is an intriguing move, though like the potential split, it’s too early to tell what the result will be. It’s clear that at 17.7 times forward earnings, Yacktman is betting on better value stimulation moving forward, and the price isn’t overly expensive at the moment. We’ll continue to watch this situation.