20 Jul 2011 Tweedy Browne Funds - Q2 2011 Commentary ( Portfolio )
As the markets became more volatile over the last three to six months, it was the more traditionally defensive stocks that held up best and produced the best returns in our mutual fund portfolios, i.e., the beverage, tobacco, and healthcare holdings. This included companies such as Coca Cola Femsa, Diageo, British American Tobacco, Roche, and Johnson & Johnson. A number of our industrial holdings also performed well including Kone, the Finnish elevator company, and Krones, the German beverage equipment manufacturer.

As concerns about the Southern European debt crisis and uncertainty surrounding the raising of the debt ceiling in the U.S. resurfaced, the financials began to contract, especially a number of our insurance stocks, such as Zurich Financial, Munich Re, and Berkshire Hathaway. Our media holdings were also down during the quarter, led by Axel Springer and Mediaset Espana. Also, oil & gas stocks were impacted by a decline in oil prices, and by what appeared to be slowing economic growth rates. ConocoPhillips, Devon Energy and Total declined in price during the quarter.

Portfolio activity was once again relatively modest during the quarter with no noteworthy new purchases and sales. We did add to a number of our positions and trimmed a number of others as pricing opportunities presented themselves. Among the securities that we added to were Zurich Financial, Total, Wells Fargo, Metcash and Novartis among others. We trimmed our positions in Jardine Strategic, Kone, Linde, Nestle, Philip Morris International, and Henry Schein.

While it is always impossible to know how markets will perform in the near term, we continue to feel that our portfolios are well positioned, and are cautiously optimistic for their prospects going forward.