Shares of Sodexo (XPAR:SW), a catering and facilities management company based in France, also declined during the quarter. In our view, Sodexo’s new CEO reset expectations to a more conservative level at a stage in the economic cycle when there can be a mismatch between the company’s labor-sensitive costs and its concentrated revenues. Given tighter labor markets, Sodexo has experienced labor-cost inflation in some areas, and because of multiyear service contracts, it cannot immediately pass these costs on to customers. We believe the company’s businesses are stable and have generated considerable cash flow. We have been a long-term owner of the stock.
From First Eagle Global Value Fund's first quarter 2018 shareholder letter.
