An example of an out-of-the-spotlight company in the Portfolio is Lafarge (XPAR:LG
), a global cement, concrete and aggregates producer with operations throughout North America, Western Europe and emerging markets. Emerging markets account for about two-thirds of the company’s earnings and may be a key driver of long-term growth. While Lafarge does business around the globe, its operations in specific local markets often enjoy a significant barrier to competition. Transporting its products over long distances is costly and impractical and, as a result, competition is limited to firms that operate in a specific region. From a financial perspective Lafarge in our view is still earning below its potential largely as a result of the recent recession, which may make the company’s stock even less expensive than it appears. Key to our investment is that some 35% of its shares are controlled by Groupe Bruxelles Lambert and the investor Nassef Sawiris, which we view as a significant long-term advantage. Lafarge recently announced its intention to merge with the Swiss-based cement company Holcim (XSWX:HOLN
). If the merger is completed, the combined entity will be the largest cement company in the world and well positioned to benefit from global growth for decades to come.
From Chris Davis
)’ Davis International Fund 2015 Annual Review
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