Yacktman Asset Management's Q2 2025 Portfolio Strategy: Value Investing in a Shifting Market Landscape

In the second quarter of 2025, global markets grappled with a confluence of macroeconomic headwinds, including Trump-era tariff escalations, fiscal tightening under DOGE-driven policies, and persistent inflationary pressures. Amid this turbulence, Yacktman Asset Management’s portfolio strategy emerged as a case study in disciplined value investing. By prioritizing defensive sectors, capitalizing on volatility, and leveraging long-term competitive advantages, the firm navigated a volatile landscape with a focus on resilience and capital preservation.

Portfolio Composition: A Focus on Durable Cash Flows

Yacktman’s Q2 2025 portfolio, valued at $7.44 billion, was anchored by concentrated positions in companies with robust cash flow generation and structural advantages. Canadian Natural Resources Ltd (CNQ) led with a 9.33% allocation, followed by Microsoft (MSFT) at 7.39% and Charles Schwab (SCHW) at 5.60% [1]. These holdings reflect a strategic tilt toward energy, technology, and financials—sectors historically resilient during periods of macroeconomic uncertainty.

The energy sector, in particular, showcased Yacktman’s emphasis on capital efficiency and shareholder returns. ConocoPhillips (CNQ) delivered adjusted earnings per share (EPS) of $1.42 in Q2 2025, exceeding forecasts, while generating $4.7 billion in operating cash flow [2]. The firm’s decision to divest noncore assets, such as its Anadarko Basin holdings, and raise its dividend to $0.78 per share underscored its commitment to optimizing capital returns [2]. Similarly, Microsoft’s 747.5% return in Q2 2025 highlighted the firm’s ability to capitalize on technological tailwinds, even as broader markets faltered [3].

Strategic Shifts: Defensive Rebalancing and Sector Rotation

Yacktman’s strategic adjustments in Q2 2025 were driven by a recalibration of risk. The firm exited its position in L’Oreal, citing concerns over the beauty sector’s eroding competitive barriers [1]. Proceeds from this exit were reinvested in the aggregates industry, a sector characterized by localized monopolistic tendencies and stable demand. Aggregates producers like CRH plc and Vulcan Materials Company were viewed as long-term value plays, given their high network effects and pricing power [1].

This shift mirrored broader industry trends. For instance, Bill Nygren of Oakmark leveraged Q2’s volatility to reposition one-third of its portfolio, favoring defensive names like Nike and Amazon [4]. Similarly, Ariel Fund’s John Rogers maintained a bottom-up approach, adding to positions in companies with strong fundamentals despite macroeconomic noise [4]. Yacktman’s strategy, however, stood out for its emphasis on structural durability—prioritizing businesses with low capital intensity and high margins, such as Charles Schwab, which saw a 4.86% price increase in July 2025 [3].

Macroeconomic Context: Navigating Stagflationary Pressures

The macroeconomic backdrop in Q2 2025 was defined by a fragile balance between inflation and growth. Real GDP growth was projected at 1.4% for 2025, with core CPI stubbornly at 2.9% year-over-year [5]. The Federal Reserve maintained a hawkish stance, keeping the federal funds rate at 4.25–4.50% in July, while signaling potential rate cuts by year-end as labor market cooling became evident [5].

Yacktman’s portfolio adjustments aligned with these dynamics. Defensive sectors, such as utilities and consumer staples, gained prominence, while cyclical industries faced scrutiny. For example, the firm’s reduced exposure to discretionary sectors like media (evidenced by the Fox Corp holding) reflected caution over consumer spending under rising tariffs and inflation [1]. Meanwhile, its energy holdings benefited from a resilient commodities market, with oil prices stabilizing above $50 per barrel, a level that supported ConocoPhillips’ breakeven cost structure [2].

Conclusion: A Blueprint for Value Investing in Uncertainty

Yacktman Asset Management’s Q2 2025 strategy exemplifies the adaptability required in a shifting macroeconomic landscape. By focusing on durable cash flow generators, defensive sectors, and disciplined capital allocation, the firm positioned itself to weather near-term volatility while capitalizing on long-term value. As central banks navigate the delicate task of balancing inflation and growth, such strategies are likely to remain relevant—particularly in an environment where structural advantages and operational efficiency are paramount.

Source:
[1] Yacktman Asset Management LP 13F Stock Portfolio, [https://www.insidearbitrage.com/holdings/0000905567/YACKTMAN%20ASSET%20MANAGEMENT%20LP/?filter_by=All._of_report=2025-03-31&sortBy=absolute_change&sortDir=desc]
[2] ConocoPhillips announces second-quarter 2025 results, [https://www.conocophillips.com/news-media/story/conocophillips-announces-second-quarter-2025-results-and-quarterly-dividend/]
[3] Donald Yacktman 13F Portfolio, [https://hedgefollow.com/funds/Yacktman+Asset+Management]
[4] Bill Nygren: How We Navigated 2025's Shortest Bear Market Ever, [https://acquirersmultiple.com/2025/07/bill-nygren-how-we-navigated-2025s-shortest-bear-market-ever/]
[5] Q2 2025: Thoughts on the Investment Markets, [https://corient.com/insights/articles/q2-2025-thoughts-on-the-investment-markets]