Yacktman Funds Bet on IT Companies

The funds invested in Cognizant Technology, Infosys in 2nd quarter

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Jul 19, 2017
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The Yacktman Focused Fund (Trades, Portfolio) and the Yacktman Fund (Trades, Portfolio) initiated holdings in Cognizant Technology Solutions Corp. (CTSH, Financial) and Infosys Ltd. (INFY, Financial) during the second quarter.

Managed by Stephen Yacktman and Jason Subotky, the two funds emphasize long-term capital appreciation and current income. The Focused Fund’s current portfolio is composed of 20 stocks and is valued at $3.2 million. The Yacktman Fund’s portfolio is composed of 37 stocks and is valued at $6.2 million. Stocks in the technology and consumer defensive sectors have the heaviest weighting in both portfolios.

In Cognizant, the managers established a holding of 330,000 shares for the Focused Fund and a holding of 630,000 shares for the fund. The average price per share paid was $63.41, and the holdings were each given 0.67% portfolio space.

The information technology services provider has a market cap of $40.5 billion; its shares were trading around $68.79 on Wednesday with a price-earnings (P/E) ratio of 25.11, a price-book (P/B) ratio of 4.06 and a price-sales (P/S) ratio of 3.03.

The Peter Lynch chart below shows the stock is trading above its fair value.

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GuruFocus ranked Cognizant’s financial strength 8 of 10 and its profitability and growth 8 of 10. The trailing dividend yield is 0.22% and the forward dividend yield is 0.87%.

With 1.14% of outstanding shares, Richard Pzena (Trades, Portfolio) is the company’s largest shareholder among the gurus. A total of 18 gurus hold the stock.

The Focused Fund purchased a 612,120-share position in Infosys while the fund bought a 1.13 million-share stake. Paying $14.97 per share, the holdings were given respective portfolio weightings of 0.28% and 0.27%.

The IT company has a market cap of $34.7 billion; its shares were trading around $15.42 on Wednesday with a P/E ratio of 15.43, a P/B ratio of 3.26 and a P/S ratio of 3.25.

According to the Peter Lynch chart below, the stock is trading about evenly with its fair value.

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GuruFocus ranked Infosys’ financial strength 10 of 10 and its profitability and growth 8 of 10. The trailing dividend yield is 2.54% and the forward dividend yield is 2.96%.

Ken Fisher (Trades, Portfolio) is the company’s largest guru shareholder with 1.03% of outstanding shares. In all, nine gurus own the stock.

During the quarter, the Focused Fund exited its Unilever NV (UN, Financial) stake and the Fund divested of its C.R. Bard Inc. (BCR, Financial) and DXC Technology Co. (DXC, Financial) holdings.

Disclosure: I do not own any stocks mentioned in the article.