Yacktman Fund's Strategic Moves: Booking Holdings Inc. Exits with -1.7% Impact

Yacktman Asset Management, a prominent investment firm led by Stephen Yacktman, recently submitted its 13F filing for the second quarter of 2024, revealing strategic moves in its portfolio, including a significant reduction in its position in Booking Holdings Inc. (BKNG). The fund reduced its stake by 25%, resulting in a -1.7% impact on the portfolio. This article explores the reasons behind this move and its alignment with the fund's investment philosophy and risk management approach.

Yacktman Asset Management is known for its value-oriented investment approach, focusing on long-term capital appreciation and capital preservation. The fund's low turnover ratio (1%) indicates a long-term investment horizon, with the preservation of capital being a key strategy. The fund's strategic move to reduce its position in BKNG aligns with its overall investment philosophy and risk management approach.

The fund's reduction in BKNG shares may be attributed to several factors, including the company's recent financial performance, valuation, and long-term growth prospects. In the first quarter of 2024, BKNG's revenue of $1.84 billion beat analyst forecasts by $204 million but declined by 24% year over year. This decline appears to be cyclical, as management discussed the decrease in the prices of caustic soda during the earnings call. However, the fund may have been concerned about the company's ability to maintain its growth trajectory and market share in the face of increasing competition and changing consumer preferences.

Additionally, the fund may have been concerned about BKNG's valuation. As of the second quarter of 2024, BKNG's stock price had increased significantly, and the fund may have believed that the stock was overvalued relative to its fundamentals. The company's price-to-earnings ratio was around 30, which is higher than the industry average and may have indicated that the stock was overpriced.

In conclusion, Yacktman Fund's reduction in its position in Booking Holdings Inc. may have been driven by concerns about the company's recent financial performance, valuation, and long-term growth prospects. The fund's value-oriented investment approach and focus on capital preservation may have contributed to this decision. The fund's strategic moves align with its overall investment philosophy and risk management approach, demonstrating a commitment to long-term capital appreciation and capital preservation.