This article is part of a series that provides an ongoing analysis of the changes made to Mason Hawkins’s US stock portfolio on a quarterly basis. It is based on Hawkins’s regulatory 13F Form filed on 05/15/2017. Please visit our Tracking Mason Hawkins’s Southeastern Asset Management Portfolio series to get an idea of his investment philosophy and our previous update for the fund’s moves during Q4 2016.
This quarter, Hawkins’s US long portfolio decreased ~5% from $10.36B to $9.84B. The number of holdings in the portfolio decreased from 30 to 28. The top three holdings are at ~39%, while the top five are at ~55% of the US long assets. The largest holding by far is Level 3 Communications, which has been in the portfolio since 2003 and now accounts for 16.16% of the US long portfolio.
Southeastern is best known for its investor-friendly attributes. The mutual funds in the Longleaf family are Longleaf Partners Fund (MUTF:LLPFX) incepted in 1987, Longleaf Small-Cap Fund (MUTF:LLSCX) incepted in 1989, Longleaf International Fund (MUTF:LLINX) incepted in 1998, and the Longleaf Global Fund (MUTF:LLGLX) incepted in 2012. The flagship Longleaf Partners Fund had an outstanding 20.71% return for 2016 (~$3.5B AUM). In Q1 2017, it was up 3.90%. Although the fund is focused on US mid-and-large cap businesses, the current allocation has three non-US companies in the top ten: CK Hutchison (OTCPK:CKHUY), LafargeHolcim Ltd. (OTCPK:HCMLF), and Cheung Kong Property Holdings (OTCPK:CHKGF). They believe values in Asia and Europe are superior compared to US. Also, cash allocation is now at ~24%.
Although their mutual funds are well known among retail investors, it should be noted that the vast majority of Southeastern’s AUM is attributable to separately managed accounts. The characteristics that make the fund family distinct are elaborated in David Swensen’s (Yale Endowment) book “Unconventional Success: A Fundamental Approach to Personal Investment.”