Wally Weitz is out with his Q4 letters for his various value mutual fund. Weitz’s oldest fund is the Partners fund, which was started in 1983. Weitz discusses two equity positions which have been in the headlines lately. One is SandRidge Energy, where there has been a nasty fight between the board/management and an activist hedge fund. Weitz is still bullish on HPQ, which Jim Chanos has called the ultimiate value trap. Unfortunately, no comments are provided which explain why he still likes the company. Weitz is not the only value investor who is long HPQ, Seth Klarman has a position in the company, as do some other famous investors. Below is a brief excerpt from the letter:
Our energy stocks detracted moderately from results in an otherwise solid quarter. SandRidge Energy (-9%) inked a deal to sell its cash-flowing Permian Basin assets, surprising investors with another shift in strategic direction. The company is focusing more heavily on the Mississippi Lime formation, where recent drilling results have been solid yet ‘less good’ than initial lofty expectations. We continue to think that SandRidge’s assets are worth substantially more than the share price would indicate. An activist investor is pushing for a restructuring or sale of the company, so stay tuned for additional developments in the New Year.
Portfolio activity was fairly light during the fourth quarter. We continued to build the Fund’s positions in DIRECTV and Coinstar at more attractive prices. We also “averaged down” on Hewlett-Packard after re-checking our assumptions, as the shares fell farther out of favor. While we did not add any new stocks, we did close out three highly successful investments. Eagle Materials and Texas Industries both hit our value estimates as perceptions of housing-related stocks quickly shifted from trash to treasure. Finally, we sold long-time holding Comcast at significant gains as cable stocks benefited from voracious investor appetite for steady cash flows and dividend streams. Some sales are harder than others, and we would like to thank Brian Roberts for his stewardship over the years. We would gladly partner with Brian and his capable team again at the right price.
Electron Capital returned 3.1% for October, bringing its year-to-date return to 8.3%. The MSCI ACWI gained 6% for October, raising its year-to-date return to -22.3%, while the S&P 500 returned 8% in October for a year-to-date loss of 18.8%. The MSCI World Utilities Index was up 2.7% for October but remains down 13.5% year to Read More
Full letter here.