EnerSys (ENS) had been on our watchlist for about a year before the Fund initiated a position this past quarter at a valuation approximating 10 times earnings and free cash flow. If past is prologue, management should continue compounding value at above-average rates through thoughtful acquisitions and organic growth, supported by growing demand for backup power systems and a continuing shift from combustion engines to electric motors for environmental and total cost of ownership reasons, particularly in developing markets. Meanwhile, a healthy balance sheet, the company's free cash flow, and an undemanding valuation create a significant "margin of safety" and protection on the downside.
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