As of Sept. 30, 2013, the Longleaf Partners Fund, advised by Mason Hawkins’s Southeastern Asset Management, averaged an annual return of 24.13% over one year.
In his third quarter 2013 letter to Longleaf shareholders, value investor Mason Hawkins
offered a condensed summary on the quality of his selected companies: "The businesses we own should be able to deliver higher free cash flow over the next three years, thereby building intrinsic values. First, a number of our holdings that are headquartered in more developed markets such as Abbott, Cheung Kong, DirecTV, Lafarge, Mondelez, Philips, and Vodafone have large portions of their revenues in faster growing geographies. Second, the strength of our companies’ competitive positions and/or brands is enabling many to increase top line via pricing increases including Abbott, Cemex, DirecTV, Everest Re, FedEx, Ferrovial, Lafarge, Loews, Martin Marietta, Melco, Mondelez, News Corp, Scripps Networks, Texas Industries, Travelers, Washington Post, Vail, and Vulcan. Third, a number of our management teams are continuing to extract costs from their businesses to address slower growth and gain increased efficiencies. Material cost reductions are occurring at Abbott, Aon, Bank of New York Mellon, Cemex, Chesapeake, FedEx, Guinness Peat, Hochtief, Lafarge, Legg Mason, Level 3, Mondelez, Nitori, Philips, TNT Express, Washington Post, and Wendy’s. Fourth, in contrast to oft-stated concerns about peak margins, operating margins across our holdings are approximately one-third less than the overall market’s margins, with most of our companies operating closer to their 10-year average margins than their peaks
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