Chuck Akre (Trades, Portfolio)’s Akre Capital Management established one new position and exited three others during the second quarter.
Portfolio managers Akre, Tom Saberhagen and John Neff utilize a three-legged stool approach to identify potential investments. The approach focuses on the business, management and disciplined reinvestment. The current portfolio of 28 stocks is largely composed of companies in the financial services sector, which represents 46.1% of the firm’s holdings, according to GuruFocus.
Akre Capital’s lone new purchase for the quarter was Boston Omaha Corp. (BOMN, Financial).
Boston Omaha
The firm bought 350,000 shares of Boston Omaha for an average price of $17.84 per share, giving it 0.08% portfolio space.
The conglomerate, which is involved in advertising, insurance and real estate, has a market cap of $197.06 million; its shares were trading around $13.81 on Thursday with a price-book (P/B) ratio of 0.64 and a price-sales (P/S) ratio of 15.75.
The price chart below illustrates the trend in the stock’s price since its initial public offering in June.
The Boston-based company, which went public on June 16, reported its second-quarter results on Aug. 11. The company posted an earnings loss of 18 cents on sales of $1.9 million.
GuruFocus ranked Boston Omaha’s financial strength 8 of 10 and its profitability and growth 2 of 10. The company does not pay a dividend.
With its purchase, Akre Capital became the company’s largest guru shareholder with 2.44% of outstanding shares. Louis Moore Bacon (Trades, Portfolio) is also a shareholder.
The firm divested of its Colfax Corp. (CFX, Financial), Dollar General Corp. (DG, Financial) and Fortive Corp. (FTV, Financial) holdings.
Colfax
Akre Capital sold its remaining $4.69 million shares of Colfax for an average price of $39.62 per share, impacting the portfolio -3.03%. The initial stake was established in the third quarter of 2013.
The industrial manufacturing and engineering company has a market cap of $4.83 billion; its shares were trading around $39.22 on Thursday with a price-earnings (P/E) ratio of 30.62, a P/B ratio of 1.58 and a P/S ratio of 1.38.
According to the Peter Lynch chart below, the stock is trading above its fair value.
The Maryland-based company reported results for its first quarter of 2017 on May 5. It posted diluted EPS of 31 cents and adjusted EPS of 35 cents for the quarter. Operating income grew 37% from the prior-year quarter.
GuruFocus ranked the company’s financial strength 5 of 10 and its profitability and growth 7 of 10. The company does not pay a dividend.
Among the gurus invested in Colfax, Diamond Hill Capital (Trades, Portfolio) is the largest shareholder with 2.04% of outstanding shares. A total of 15 gurus own the stock.
Dollar General
Having established a stake in Dollar General in fourth-quarter 2016, the firm sold all 1.5 million shares for an average price of $72.08 per share. The trade had an impact of -1.72% on the portfolio.
The discount retailer has a market cap of $20.35 billion; its shares were trading around $74.21 on Thursday with a P/E ratio of 16.79, a P/B ratio of 3.69 and a P/S ratio of 0.93.
Based on the Peter Lynch chart below, the stock appears to be trading above its fair value.
The Tennessee-based company reported its first-quarter 2017 results on June 1, posting diluted EPS of $1.02. Its net sales increased 6.5% from the comparable quarter of 2016 and its same-store sales increased 0.7%. It will report its second-quarter performance on Aug. 31.
GuruFocus ranked the company’s financial strength 6 of 10 and its profitability and growth 8 of 10. The company’s trailing dividend yield is 1.38%, and its forward dividend yield is 1.41%. The dividend payout ratio is 23%.
With 2.21% of outstanding shares, Barrow, Hanley, Mewhinney & Strauss is the company’s largest guru shareholder. In all, 13 gurus have positions in Dollar General.
Fortive
The firm sold all 750,000 shares of its Fortive stake for an average price of $62.4 per share, contracting the portfolio -0.74%. The stake was established in the second quarter of 2016.
The industrial company has a market cap of $22.86 billion; its shares were trading around $65.85 on Thursday with a P/E ratio of 25.92, a P/B ratio of 7.2 and a P/S ratio of 3.63.
The Peter Lynch chart below shows the stock is trading above its fair value.
The Everett, Washington-based company reported its second-quarter 2017 results on July 27. It posted net earnings of $240.1 million, diluted EPS of 68 cents and adjusted EPS of 71 cents. Revenue grew 4.7% year over year to $1.6 billion.
GuruFocus ranked the company’s financial strength 6 of 10 and its profitability and growth 4 of 10. The company’s trailing dividend yield and forward dividend yield are both 0.42%. The dividend payout ratio is 11%.
With 0.78% of outstanding shares, First Eagle Investment (Trades, Portfolio) is the company’s largest guru shareholder. Jim Simons (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Murray Stahl (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and George Soros (Trades, Portfolio) are also shareholders.
American Tower
The firm also gained American Tower Corp. (AMT, Financial) shares and appears to have traded in its preferred A shares (AMTPRA, Financial) for them, according to the conversion rate adjustment the company did in the second quarter.
According to Investopedia, convertible preferred shares “are corporate fixed-income securities that the investor can choose to turn into a certain number of shares of the company's common stock after a predetermined time span or on a specific date.”
The Boston-based company announced May 2 an adjustment in the conversion rate for its series A 5.25% mandatory convertible preferred stock. The minimum conversion rate is 0.9337, and the maximum rate is 1.1672.
The real estate investment trust, which owns and operates wireless and broadcast infrastructure, has a market cap of $60.52 billion; its common stock was trading around $141.02 on Thursday with a P/E ratio of 56.63, a P/B ratio of 9.34 and a P/S ratio of 9.58.
According to the Peter Lynch chart below, the stock is trading above its fair value.
GuruFocus ranked the company’s financial strength 4 of 10 and its profitability and growth 9 of 10. The trailing dividend yield is 1.7%, and the forward dividend yield is 1.83%. The dividend payout ratio is 96%.
Akre Capital now holds 1.59% of American Tower’s outstanding common shares. A total of 12 gurus hold the stock.
During the quarter, the firm also added to its positions in O’Reilly Automotive Inc. (ORLY, Financial), Dollar Tree Inc. (DLTR, Financial), Enstar Group Ltd. (ESGR, Financial), Moody’s Corp. (MCO, Financial), Markel Corp. (MKL, Financial) and MasterCard Inc. (MA), among others.
Disclosure: I do not own any stocks mentioned.
