One of the World’s Best Crisis Investors is Selling

If Jack Nicklaus gives you a pointer on your golf swing…

If Roger Federer shows you how to hit a forehand…

[ad#Google Adsense 336×280-IA]Or if Michael Jordan shows you how to take a jump shot…

You’d be wise to pay attention.

They’re among the best athletes in history. If you want to compete in their sports, you should listen to what they say, watch what they do, and apply the lessons they teach.

If you’re investing, it’s no different. The world’s best investors and traders have huge research budgets, high-level contacts, and long track records of success.

We’d be fools not to “look over their shoulders” for investment ideas.

Elite investors who manage at least $100 million are required to file forms (called “13Fs”) with the U.S. Securities and Exchange Commission (SEC) every three months. These forms detail which stocks they’ve bought and sold from one quarter to the next… and which stocks they held at the end of the last quarter.

The latest round of 13Fs – for the quarter ending December 31, 2015 – came in a couple of weeks ago. And Donald Yacktman’s filing jumped off the screen…

Yacktman manages about $13 billion using a blend of growth and value investment strategies. He looks to buy good companies trading below intrinsic value. And he focuses on companies with shareholder-friendly management. His funds are known for consistent, strong performance with less volatility than the broad market.

According to GuruFocus (one of the sites I use to track investing greats), Yacktman’s funds have returned an average of 10.2% a year over the last 20 years. That’s a 594% return, which is 213% better than the benchmark S&P 500 Index.

What stands out about Yacktman is his performance during each of the last two market crashes: the tech bubble in the early 2000s and the financial crisis of 2008. From the end of 1998 through the end of 2002, Yacktman generated a 26% return. The S&P 500 fell 25% during those same four years.

In 2008-2009, Yacktman generated a two-year, 18% return for investors while the S&P 500 dropped 20%.

What’s Yacktman doing today?

He’s reducing all of his largest positions.

Here’s a look at the changes in Yacktman’s top 10 holdings during the fourth quarter of 2015:

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This isn’t the first quarter Yacktman has sold core holdings. He has been reducing his exposure to stocks for about a year now. But this past quarter was his heaviest across-the-board selling yet.

When Yacktman didn’t see much value in stocks in mid-2007, he held about 25% of his funds’ assets in cash. When he saw great values, like in late 2008, he held around 5% in cash. As of December 31, 2015, Yacktman’s two funds were 15% and 16% allocated to cash.

This isn’t panic selling. Yacktman isn’t “running for the hills.” But he is raising cash. It’s a clear sign of caution from one of the world’s best crisis investors.

Lots of investors only think about buying a stock, and then, at some point, selling it. But as Yacktman’s actions and track record show, you can reduce overall volatility and increase your returns by “selling some” when conditions aren’t great… and buying more when they are.

Take a look at your asset allocation today. Do you have too much money in stocks? If so, you can follow Yacktman’s lead. You can take advantage of the recent rally by selling some of your holdings, raising cash, and waiting for better opportunities.

They may be just around the corner.

Regards,

Ben Morris

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Source: Growth Stock Wire