Billionaire Donald Yacktman’s Hedge Fund Trims Exposure to Consumer Staples, Energy

The Coca-Cola Co (NYSE:KO)

 – Shares Held by Yacktman Asset Management (as of June 30): 16.87 million

 – Value of Holding (as of June 30): $765 million

Moving on, a 2.3% drop in its stock price coupled with Yacktman Asset Management reducing its stake in the company by 8% during the second quarter led to its The Coca-Cola Co (NYSE:KO) holding dropping three spots to seventh-largest in the fund’s equity portfolio as of the end of June. Shares of the beverage giant are currently trading flat for the year, following the large drop they suffered after the company reported its second quarter results. Analysts were expecting Coca-Cola to report EPS of $0.58 on revenue of $11.55 billion, and The Coca-Cola Co (NYSE:KO) largely obliged, with EPS of $0.60 on revenue of $11.54 billion. Several analysts who track the stock feel that the greater than 3% annual dividend yield that the stock sports currently is perhaps the only reason to buy or hold The Coca-Cola Co (NYSE:KO) at present levels. On August 1, analysts at Independent Research GmbH reiterated their ‘Sell’ rating on the stock and set a price target of $38 on it, which represents a potential decline of 12.3%. Ken Fisher‘s Fisher Asset Management upped its stake in The Coca-Cola Co by 2% to 10.52 million shares during the second quarter.

PepsiCo, Inc. (NYSE:PEP)

 – Shares Held by Yacktman Asset Management (as of June 30): 10.61 million

 – Value of Holding (as of June 30): $1.12 billion

PepsiCo, Inc. (NYSE:PEP) was the stock in which Yacktman Asset Management reduced its stake the most significantly during the second quarter, by 21% to 13.40 million shares. However, despite such a large cut and its stock remaining flat during the second quarter, the confectionary and beverage company continued to remain Yacktman Asset Management’s second-largest equity holding at the end of June. Unlike The Coca-Cola Co, shares of PepsiCo, Inc. (NYSE:PEP) have continued their upward journey this year, being up by 7.24% year-to-date and very close to their lifetime high of $110.94. Most analysts who track the stock continue to remain upbeat on the company even at its current levels, including analysts at Argus, who reiterated their ‘Buy’ rating on the stock on July 13, while raising their price target on it to $124 from $116, which represents potential upside of 14%. Hedge funds that boosted their stake in the company during the second quarter included Nigel Greig and Kenneth Cowin’s Pittencrieff Partners – Gabalex Capital, which increased its holding by 15% to 200,000 shares.

Procter & Gamble Co (NYSE:PG)

 – Shares Held by Yacktman Asset Management (as of June 30): 18.77 million

 – Value of Holding (as of June 30): $1.59 billion

Though Yacktman Asset Management reduced its stake in Procter & Gamble Co (NYSE:PG) by 12% during the second quarter, the stock continued to remain the fund’s largest equity holding at the end of June. Procter & Gamble Co (NYSE:PG)’s stock has recouped a large amount of the losses it suffered last year by appreciating by over 8.5% this year. On August 2, the company surprised Wall Street by declaring EPS of $0.79 on revenue of $16.1 billion for its fourth quarter of fiscal year 2016, while analysts were expecting EPS of $0.74 on revenue of $15.83 billion. Trading at a trailing P/E of 27.40 and a price-to-book multiple of almost 4, most analysts believe that Procter & Gamble’s stock is fairly priced at current levels, but expect it to continue moving upward if the broader market continues its rally. Procter & Gamble was another stock in which Fisher Asset Management increased its stake during the second quarter, by 2% to 8.09 million shares.

Disclosure: None