Our first quarter performance for the Institutional share class was +6.06% compared with S&P 500 Total Return at +6.07%. For the 1-year period ended March 31, 2017, the performance for the Institutional share class was +13.21% compared with the S&P 500 Total Return at 17.17%.
We talked last quarter about the post-election disparity between the broad market’s performance as measured by the S&P 500 compared with our portfolio. After outperforming the market for the year through September, our portfolio was essentially flat during 4Q16 compared with a nearly 4% total return for the S&P 500. Not only did our portfolio not participate in the post-election rally which anticipated higher economic growth (benefitting cyclicals), higher interest rates (benefitting lending businesses), and significantly lower corporate taxes (benefitting domestic-only businesses), but some of our largest, highest conviction positions were sold off by the market as they were deemed less attractive for the new political and economic paradigm ushered in with the election.
In response, the active buying we described in the fourth quarter continued into the first quarter of this year. The fund’s cash weighting fell from roughly 8% at year-end to a little more than 2% at March 31, 2017. Consistent with our view that the post-election rally presented us with good buying opportunities in some of our best businesses, our top-10 holdings represented 69.4% of total assets at the end of March, up from 61.7% at the end of December. This increased concentration is partly a function of the approximately $312M in cash we put to work during the quarter, but is also a result of some of the quick rebounds we have had in the stock prices of many of our large positions and recent purchases.
Our top-5 performers this quarter were among our largest detractors last quarter. American Tower and Moody’s, our two largest positions, were the two top performance contributors this quarter, followed by Visa (NYSE:V), SBA Communications (NASDAQ:SBAC), and MasterCard (NYSE:MA). All were notable laggards in the post-election rally, and Moody’s, Visa, and MasterCard were the largest recipients of the cash we have put to work over the past two quarters.
Our five biggest performance detractors this quarter were, from worst to least, Carmax (NYSE:KMX), Ubiquiti (NASDAQ:UBNT), TD Ameritrade, Monro Muffler, and Enstar. Two of the detractors hail from the retail sector which is struggling under the uncertainty of its own post-election cloud in the form of a potential border tax adjustment.
While the post-election rotation in stocks informs our recent relative performance, we continue to focus only on identifying the best “all-weather” compounding businesses we can find and paying reasonable-to-attractive valuations for their shares. Our focus does not make for compelling cocktail party conversation, but we believe it will continue to make for compelling long-term performance. We thank you for being on this journey with us and we look forward to updating you next quarter.
Chuck, Tom, & John