Tweedy, Browne Company LLC, an investment management firm, published its “International Value Fund” third quarter 2021 investor letter – a copy of which can be downloaded here. A portfolio quarterly return of ‐2.43% was recorded by the fund for the third quarter of 2021, while its benchmark, the MSCI EAFE Index, by comparison, returned 1.47% for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Tweedy, Browne Company, in its Q3 2021 investor letter, mentioned Industrias Bachoco, S.A.B. de C.V. (NYSE: IBA) and discussed its stance on the firm. Industrias Bachoco, S.A.B. de C.V. is a Celaya, Mexico-based poultry processing company with a $2.0 billion market capitalization. IBA delivered a -10.54% return since the beginning of the year, while its 12-month returns are down by -8.65%. The stock closed at $40.40 per share on December 09, 2021.
Here is what Tweedy, Browne Company has to say about Industrias Bachoco, S.A.B. de C.V. in its Q3 2021 investor letter:
“Industrias Bachoco, the Mexican poultry company, founded in 1952, is a roughly $2B market cap company that operates poultry production and distribution facilities primarily throughout Mexico, where it breeds, processes, and markets chicken, which accounts for the overwhelming bulk of its sales. It is the number one chicken producer and the number two egg producer in Mexico, with 35% and 5% market shares, respectively. While the chicken business is notoriously cyclical, with profitability varying significantly year-to-year based on the volatility of chicken prices, the company’s volumes steadily grow, and even in the company’s worst years, it has not lost money. Over the last decade, the company has been able to compound its tangible book value per share including dividends by between 11% and 12% per year on average. At purchase, Bachoco had net cash constituting roughly 45% of its market cap (32.5 pesos per B share) and was trading at 8 times current P/E, 6 times normalized EBIT, around tangible book value, with a dividend yield of a little under 2%. It also had a normalized owner earnings yield above 12%. In August, a U.S.-based poultry company, Sanderson Farms, was acquired by a joint venture company put together by Cargill/Continental Grain in a 100% cash transaction. Other than having different geographic locations, Sanderson and Bachoco are directly comparable poultry businesses with similar long term records. In thinking about the value of Bachoco, if one were to extrapolate the multiples paid for Sanderson, it would imply an estimated intrinsic value for Bachoco that is more than double the average price the Funds paid for their shares.”
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Based on our calculations, Industrias Bachoco, S.A.B. de C.V. (NYSE: IBA) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. IBA was in 2 hedge fund portfolios at the end of the third quarter of 2021, compared to 2 funds in the previous quarter. Industrias Bachoco, S.A.B. de C.V. (NYSE: IBA) delivered a -9.68% return in the past 3 months.
Just last month, we also shared hedge funds’ views on IBA in another article. You can find more than 100 investor letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q3 page.
Disclosure: None. This article is originally published at Insider Monkey.
