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Chuck Akre's Capital Management Q2 Portfolio Update.

Henry Tan

Henry Tan

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Akre Capital Management is an investment management firm located in Middleburg, VA. Founded in 1989, the fund is currently led by namesake founder Charles T. Akre. Akre is a graduate of American University with a BA in English Literature. Akre’s professional background originates from Johnston, Lemon & Co, a full-service brokerage firm. As of Q2 of 2011, Akre Capital Management owns 33 equities with a total market value of $558 million.

Akre Capital seeks companies that generate consistent earnings, high ROE, growth in book value, and a potential to reinvest profits at high rates of return. Due diligence is conducted via conferences with management, competitors, suppliers, industrial specialists, the investment community, and through earning calls. Furthermore, a premium is placed upon companies with a management team that not only protects shareholder value, but maximizes it. They look for competent leaders who are both dynamic, yet honest with their clients and shareholders. If the aforementioned analysis yields a call to purchase, they seek a conservative margin of safety in their point of entry. Positions are eliminated when they no longer satisfy the aforementioned criteria, or a more attractive opportunity appears.

Akre Capital Management’s top holdings as of Q2 can be seen in the following charts:

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The following changes are the most notable as of Q2 of 2011:

Positions Initiated

1. Assured Guaranty LTD (AGO)

Assured Guaranty is a holding company that provides credit protection to their clients via their financial guaranty direct and financial guaranty reinsurance segments. Assured Guaranty currently trades at $11.50 with a market capitalization of $2.12 billion. Their earnings for the year were $.46 with a dividend yield of 1.57%.

AGO was the newest and largest addition to Akre’s portfolio, at 200,000 shares with a market value of $3.77 million. AGO currently comprises .006% of the aggregate portfolio.

2. Primo Water Corp (PRMW)

Primo Water Corporation provides purified bottle water and dispensers to their customers. Their shares trade at $4.71 with a market capitalization of $93.88 million. Primo Water posted a loss of approximately $1.08 per share for the year.

Akre initiated a purchase of 75,000 shares with a market value of $1 million. PRMW currently comprises .001% of the aggregate portfolio.

GuruFocus rated PRMW with the business predictability rank of 1 star.

3. Diamond Hill Investment Group (DHIL)

The Diamond Hill Investment Group provides investment advisory and fund administration services to their clients. Their shares trade at $75.57 with a market capitalization of $227 million. Earnings were reported at $5.37 for the year.

Akre Capital purchased 2,456 shares with a market value of $2.45 million. DHIL currently comprises .004% of the aggregate portfolio.

GuruFocus rated DHIL with the business predictability rank of 1 star.

Positions Added

1. Aeropostale (ARO)

Aeropostale sells casual apparel and accessories to their consumers via their storefront properties. ARO trades at $11.89 with a market capitalization of $959.84 million. ARO’s earnings for the year were $2.23 per share.

Akre increased his holdings of ARO by 325% with the purchase of 325,000 shares. ARO now comprises 1.33% of the aggregate portfolio.

2. CSX Corporation (CSX)

The CSX Corporation provides transportation services via rail. Their shares currently trade at $22.60 with a market capitalization of $24.75 billion. Earnings were reported at $1.55 per share with a dividend yield of 2.12%.

Akre increased his holdings of CSX by 200% with the purchase of 35,536 shares. CSX now comprises .25% of the aggregate portfolio.

GuruFocus rated CSX with the business predictability rank of 2.5 stars.

3. CarMax (KMX)

CarMax is a retailer of used cars via it storefront properties and vehicle auction operations. CarMax trades at $28 with a market capitalization of $6.34 billion. Their earnings for the year were $1.77 per share.

Akre increased his holdings of CarMax by 61.84% with the purchase of 305,383 shares. CarMax comprises 4.73% of the aggregate portfolio.

GuruFocus rated KMX with the business predictability rank of 1 star.

4. Lamar Advertising (LAMR)

The Lamar Advertising Company sells advertising via billboards, buses, shelters, benches and logo plates. Their shares trade at $19.69 with a market capitalization of $1.83 billion. LAMR posted a loss of approximately $.09 per share for the year.

Akre increased his holdings of LAMR by 26.42% with the purchase of 332,232 shares. LAMR comprises 7.8% of the aggregate portfolio.

GuruFocus rated LAMR with the business predictability rank of 3.5 stars.

5. O’Reilly Automotive (ORLY)

O’Reilly Automotive sells automotive parts, tools, supplies, equipments and accessories to their consumers. Their shares trade at $60.23 with a market capitalization of $8.19 billion. Earnings for the year were posted at $3.24 per share.

ORLY’s position increased by 21% from 504,345 shares to 610,235 shares held. ORLY comprises 7.15% of the aggregate portfolio.

GuruFocus rated ORLY with the business predictability rank of 5 stars.

6. MasterCard (MA)

MasterCard provides a payment platform for consumers and merchants via their credit and debit cards. MA trades at $328.07 with a market capitalization of $41.68 billion. MA posted earnings of $16.13 for the year, with a dividend yield of .18%.

MasterCard’s holdings were increased by 16.51%, with the purchase of 26,295 shares. MA now comprises 10% of the aggregate portfolio.

Positions Eliminated

1. Tradestation Group (TRAD)

The Tradestation Group was an online-broker dealer and provider of trading platforms. Tradestation was acquired by the Monex Group in 2011.

2. OptionsXpress Holdings (OXPS)

The optionXpress company provides online brokerage and educational services to their clients. Their shares trade at $12.43 with a market capitalization of $715.61 million. Their dividend yield is 4.50% with earnings reported at $.82 for the year.

Akre liquidated 630,853 shares with a market value of $11.5 million from Q1 to Q2.

3. Kimberly-Clark Corporation (KMB)

The Kimberly Clark Corporation provides personal care and tissue products to their customers. Their shares trade at $65.14 with a market capitalization of $25.52 billion. Their dividend yield stands at 4.30% with earnings at $4.23 per share.

Akre Capital Management eliminated 30,000 shares with a market value of approximately $1.95 million.

GuruFocus rated KMB with the business predictability rank of 2.5 stars.

Positions Reduced

1. American Tower Corporation (AMT)

AMT is a holding company providing communication services from leasing antenna space to zoning and acquisitions. Their shares trade at $50.20 with a market capitalization of $19.87 billion. Their earnings for the year were $.96.

Akre Capital culled 4.21% of their holdings of AMT at 58,485 shares sold.

GuruFocus rated AMT with the business predictability rank of 1 star.

2. Berkshire Hathaway Class A (BRK.A)

Berkshire Hathaway is an insurance provider and the holding company of legendary investor Warren Buffett. Buffet utilizes the “float” of Berkshire Hathaway to finance his investments, which has evolved from share acquisitions to outright purchases of businesses deemed valuable by Buffet. Class A shares of Berkshire closed at $107,600 with a market capitalization of $178.06 billion.

Akre Capital sold 2 shares of BRK.A, reducing their net position by 2.86%.

GuruFocus rated BRK.A with the business predictability rank of 1 star.



For more information regarding Chuck Akre’s latest stock picks, please visit:

http://www.gurufocus.com/ListGuru.php?GuruName=Chuck+Akre


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