Akre Focus Fund 4th Quarter 2013 Commentary
Our positions in MasterCard and Moody's Corp. were the largest contributors to performance over the quarter. MarkWest Energy Partners L.P. and Dollar Tree, Inc. were the most meaningful detractors from performance over the quarter. At the end of the fourth quarter the Fund was approximately 85.3% invested and the portfolio held 29 positions.
The 2013 results were achieved in the manner you have come to expect and which we have continuously practiced from the outset. You know well by now that our goal is to identify truly exceptional businesses (our definition) which have the opportunity and management mindset to potentially compound the shareholders capital at an above average rate. Owning these "Compounders", as we call them, is the central tenet of our investment approach. Importantly, we also recognize that these businesses will not always have their share prices reflect the economic growth taking place within the business. This was the case in 2013 with American Tower, which ended the year with little change in its share price despite what we estimate will have been an approximately 20% increase in free cash flow per share. American Tower continues to be a top-five holding in the portfolio, and we are confident that the economic value is growing at an attractive rate that should eventually be reflected in the share price.
Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance of the fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling (877) 862-9556. The Fund's annual operating expense (gross) for the Retail Class shares is 1.36% and 1.11% for the Institutional Class shares. The Fund imposes a 1.00% redemption fee on shares held less than 30 days. Performance data does not reflect the redemption fee, and if reflected, total returns would be reduced.
As always we thank you for your confidence in our firm's ability to manage your assets. Do know that we treat each dollar as if it were our own, striving to achieve desirable outcomes.
Chuck Akre (Trades, Portfolio)
Mutual fund investing involves risk. Principal loss is possible. The Fund is non-diversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Therefore, the Fund is more exposed to individual stock volatility than a diversified fund. The Fund invests in small and medium capitalization companies, which involve additional risks such as limited liquidity and greater volatility than larger capitalization companies.
The Fund's investment objectives, risks, charges and expenses must be considered carefully before investing. The summary and statutory prospectus contains this and other important information about the investment company and it may be obtained by calling (877) 862-9556 or visiting www.akrefund.com. Read it carefully before investing.
Fund holdings and sector allocations are subject to change at any time and should not be considered a recommendation to buy or sell any security.