Another stand- out performer in the portfolio was First American Financial Corp. (NYSE:FAF), an industry leader in the title insurance and settlement services industry. It gained +12.72% during the quarter. Like BorgWarner, FAF reported better-than-expected earnings for the quarter, as well as continued strength in its residential purchase and commercial business lines. During the period, the company experienced a strong pick-up in purchase volume, which was a positive surprise for investors. With nearly 30% market share and few competitors, First American Financial has distinct scale and relationship advantages in an industry that is becoming increasingly centralized and automated. A historically -depressed real estate environment provided an opportunity to own the stock at levels that reflect current housing demand, rather than at levels that, given a more normalized mortgage origination environment, would reflect the company’s lean cost structure and its resultant earnings power.
From John Rogers (Trades, Portfolio)' Ariel Appreciation Fund third-quarter 2017 shareholder commentary.
