We have extricated the top five companies that have the blessings of two of the best value investors in business today, Donald Yacktman (pictured) and Warren Buffett. The two fund managers are in acquiescence regarding the bright future prospects of these companies, since they stand firmly near the top of the public equity holdings of their respective firms, Yacktman Asset Management and Berkshire Hathaway. The list includes The Coca-Cola Co (NYSE:KO), Procter & Gamble Co (NYSE:PG), U.S. Bancorp (NYSE:USB), Wal-Mart Stores, Inc. (NYSE:WMT), and Bank of New York Mellon Corp (NYSE:BK).
Mr. Warren Buffett needs no introduction. There are hardly any investors who have been in the investing business for as long as him and Buffett didn’t just survive, he thrived, delivering returns that most investors only dream of, and all that came by following the principles of ‘value investing’, a philosophy that Yacktman is also an avid supporter and practitioner of. They both head sizable investment firms, though the $107.13 billion market value of Berkshire Hathaway’s public equity portfolio at the end of March dwarfs the $21.71 billion value of Yacktman Asset Management’s own public equity portfolio.
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Professional investors like Buffett and Yacktman spend considerable time and money conducting due diligence on each company they invest in, which makes them the perfect investors to emulate. However, we also know that the returns of hedge funds on the whole have not been good for several years, underperforming the market. We analyzed the historical stock picks of these investors and our research revealed that the small-cap picks of these funds performed far better than their large-cap picks, which is where most of their money is invested and why their performances as a whole have been poor. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic the best ideas of the best fund managers on your own? A portfolio consisting of the 15 most popular small-cap stock picks among the funds we track has returned more than 142% and beaten the market by more than 83 percentage points since the end of August 2012, and by 4.6 percentage points in the first quarter of this year (see the details).
Berkshire’s holding in The Coca-Cola Co (NYSE:KO) is comprised of 400.0 million shares valued at $16.22 billion, while $173.11 billion beverage giant was also Yacktman Management’s third-largest equity holding, with the fund owning 38.93 million shares valued at $1.58 billion. Together, the two firms hold about 10% of The Coca-Cola Co (NYSE:KO)’s outstanding stock. Although down by about 6.0% year-to-date, Coca Cola’s stock is possibly on the verge of seeing better days. BMO Capital recently upgraded the company to ‘Outperform’ and hiked its price target to $48, citing that as the cost savings measures start to kick in, the company’s margins will start to improve on the longterm horizon. After these two money managers, Boykin Curry‘s Eagle Capital Management is the third largest stockholder of The Coca-Cola Co (NYSE:KO) within our database, holding some 22.31 million shares valued at $904.48 million.
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Yacktman added some 175,900 shares of Procter & Gamble Co (NYSE:PG) to his fund’s portfolio during the first quarter to take the total stake to 28.54 million shares valued at $2.34 billion. Berkshire’s holding in the company remained unchanged at 52.79 million shares valued at $4.33 billion. Between the two of them, they own about 3% of Procter & Gamble Co (NYSE:PG)’s outstanding common shares. Shares of the $213.58 billion provider of consumer packaged goods are down by more than 14% year-to-date. Andy Brown‘s Cedar Rock Capital is the third-largest stockholder of the company among the funds that we track, with 7.80 million shares valued at $639.50 million.
Yacktman Management and Berkshire hold respective stakes in U.S. Bancorp (NYSE:USB) of 11.83 million shares valued at $516.58 million and 83.77 million shares valued at $3.66 billion as of the end of March. The combined holding comprises over 5% of the company’s outstanding common stock. Jean-Marie Eveillard’s First Eagle Investment Management is the third-largest shareholder of U.S. Bancorp (NYSE:USB) within our database, owning some 11.73 million shares valued at $512.10 million.
Neither Buffett nor Yacktman have lost hope in the $233 billion retail giant, Wal-Mart Stores, Inc. (NYSE:WMT), even though the stock has slid by nearly 16% so far this year. Yacktman trimmed his fund’s holding in the company by 4% during the first quarter to 3.14 million shares valued at $257.93 million, while Berkshire stayed put with its stake of 60.39 million shares valued at $4.97 billion. The combined holding represents about 3% of Wal-Mart Stores, Inc. (NYSE:WMT)’s outstanding shares. After Berkshire, Michael Larson’s Bill & Melinda Gates Foundation Trust is the largest stockholder of the company in our database with 11.60 million shares valued at $954.35 million.
Yacktman Management’s stake in Bank of New York Mellon Corp (NYSE:BK) is comprised of 7.55 million shares valued at $303.66 million while Berkshire held 20.68 million shares valued at $832.18 million after trimming its stake in the company by 4% during the first quarter. So far this year, Bank of New York Mellon Corp (NYSE:BK)’s stock has appreciated by 6.83%. Nelson Peltz’s Trian Partners is the largest stockholder of the company among the funds that we track, holding 30.23 million shares valued at $1.22 billion.
Disclosure: None
