The market is more turbulent today than when we wrote to you last in October, and there will always be issues throughout the world to make us ill at ease. We continue to make progress in the United States, although not at the pace many would like to see. The U.S. stock market ended 2015 on a positive note, as measured by the S&P 500 TR, up 1.38% despite all the clamoring; the Akre Focus Fund was up 2.53% for Retail shares, and 2.76% for Institutional shares for the year.
The issues that absolutely drive our work and decision making as it relates to individual investments are characterized by our beloved “three-legged stool.” Today’s environment drives home the importance we place on this. We want to own businesses which are growing in real economic value per share, year in and year out. Even in this turbulent environment, we believe the majority of our chosen businesses are growing in this real economic sense!
The one short term blemish in an otherwise strongly performing group of businesses in the fund is Colfax (CFX, Financial). Calendar year 2015 was a year that challenged Colfax significantly. Colfax is a company which we describe as an “asset allocator.” Their model is to acquire critically important industrial businesses which they can improve operationally and reinvest all the excess cash they generate stemming from the improvements they have instituted. True to their mission, management has made important improvements, especially in the welding business in terms of margin improvement. Our belief continues to be that the company’s shares are likely set up for a rebound in the coming year or two.
| Chuck, Tom, & John |
Performance data quoted represents past performance and 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. Fund performance current to the most recent month-end may be lower or higher than the performance quoted and can be obtained by calling 1-877-862-9556. The Fund’s annual operating expense (gross) for the Retail Class shares is 1.34% and 1.09% 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.
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.
