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Morningstar FundInvestor
December
2015
Vanguard Dividend Growth VDIGX: This isn’t
equity income.
Many of this fund’s purchases are in the blend
or growth sections, and it really drives home the
difference between dividend growth and equity
income. Equity-income funds prioritize yield above
everything else, and that leads them to value
names with limited growth potential such as utilities.
But simply changing the emphasis to companies
with the potential to raise their dividends means you
refocus on companies with earnings growth and
strong balance sheets. Thus, we can see that, in the
second quarter, Donald Kilbride was adding names
like
Johnson & Johnson
JNJ
and
Oracle
ORCL
.
AMG Yacktman YACKX: Managing redemptions.
There are a lot more red dots than blue in this picture
because about one third of this fund’s assets
under management walked out the door over the past
12
months. The fund often lags when growth is
in favor, and it is currently in one of those droughts.
To manage this, Yacktman is spreading its sales
through
14
of its names during the quarter. Interest-
ingly, the managers did so in very even numbers.
All but two of the stocks were sold in units divisible by
100
,
000
shares. (I haven’t seen that before.) Among
Stephen Yacktman and Jason Subotky’s bigger sales
were
Cisco Systems
CSCO
and
Coca-Cola
KO
, each
of which were trimmed by
2
.
4
million shares. Because
they own mostly large-cap stocks, they aren’t likely
to have a big market impact as they sell. Still, it is a
tricky business, as managers need to keep looking
for good new ideas even if most of what they are
doing is selling. And, in fact, these managers did add
shares of
Twenty-First Century Fox
FOX
and Oracle.
Vanguard Primecap VPMCX: The hunt for
fallen growth.
While momentum managers look for companies with
surging earnings and rising stock prices, other
growth managers like to buy on dips when a company
hits a speed bump so they can get a little more
price protection. To buy on bad news, however, you
need a lot of conviction, and that requires a lot of
research. That’s what Primecap does. As you can see,
there’s a preponderance of buys in the blend zone
Valuation
Value
Blend
Growth
Market Capitalization
Small
Mid
Large
1
Buys
1
Sells
Vanguard
Div Growth VDIGX
Valuation
Value
Blend
Growth
Market Capitalization
Small
Mid
Large
1
Buys
1
Sells
Vanguard
Primecap VPMCX
Valuation
Value
Blend
Growth
Market Capitalization
Small
Mid
Large
1
Buys
1
Sells
AMG Yacktman
YACKX