Donald Yacktman Talks Procter & Gamble and Coca-Cola

Donald Yacktman, one of my favorite investors once you get past the list of usual suspects that everyone knows, conducted an interview with Consuelo Mack a month or two ago that explained the rationale for his old-fashioned investing style (his portfolio typically owns large chunks of Procter & Gamble, Coca-Cola, and PepsiCo). My favorite quote from the episode is when he recalls a dinner conversation with his son in which his son explained the Yacktman investing style: “Basically, what you are saying is, if you buy above average businesses at below average prices, then on average, it is going to work” (That quote starts a little after the 14:30 mark).

The largest holdings in the Yacktman Fund currently are: Twenty-First Century Fox, PepsiCo, Procter & Gamble, Coca-Cola, Cisco, Microsoft, C.R. Bard, Sysco, Viacom, and Johnson & Johnson. Yacktman has spent most of his career owning these types of blueblooded companies, … Read the rest of this article!

Estee Lauder Stock: Price Really Matters

Estee Lauder sells $15 billion worth of beauty products per year, with approximately half of the revenues coming from makeup and half coming from skin care. It has increased in value from $1,000 in 1946 to $58 billion today, for an annual compounding rate of 24.7%. You would have been better off finding Estee and Joseph Lauder a year after WWII ended and demanding that you could join them as an investor in their company than you’d have been finding Warren Buffett at any point in his life and demanding the same.

The reason why great fortunes can be made in the beauty sector is because the profit margins are extreme once a desirable brand is created. As you know, the purpose of a successful is that you can create pricing power for yourself to charge more for a chemical combination of elements X, Y, and Z because of the … Read the rest of this article!