(GuruFocus, September 1, 2009) Investment Guru Chuck Akre Jr. of Akre Capital Management, LLC announced his launching of Akre Focus Fund (AKREX) on August 31, 2009). Earlier on, Akre resigned as sub-advisor of FBR Focus Fund (FBRVX) on August 22, 2009. GuruFocus will track the portfolio of the new fund instead.
Under Chuck Akre’s leadership, FBR Focus, with $1 billion in assets under management, has been one of the best-performing stock mutual funds. The fund has annualized returns of 13% since its inception in December 1996 -- placing it 10th among all U.S. stock funds during that period, and second overall among mid-cap funds, according to industry tracker Morningstar Inc.
Akre promised he intends to follow the same stock picking system that he employed for 13 years as the founding manager of the FBR fund. From the company’s PR:
Along this line, let’s take a look at the portfolio of Chuch Akre as of June 30, 2009. This is prior to his resignation, so we are still talking about the of FBR Focus Fund. Total asset in stocks was $942 million and there are only 33 stocks in the mutual fund. True to its name, the mutual fund has focused sector allocation as well: Consumer Services 49.9%, Financials 26.7% , Technology 13.9%, and Industrials 5.6%. The rest are not significant. Here are his top holdings:
No. 1: American Tower Corp. (AMT, Financial), Weightings: 13.93% - 4,159,210 Shares
American Tower Corporation is a wireless communications and broadcast infrastructure company with three operating segments. The company operates a network of communications towers and is the largest independent operator of broadcast towers in North America. The company provides comprehensive network development services for wireless service providers and broadcasters. The company also operates a leading teleport business which transmits Internet voice data and video communications worldwide. American Tower Corp. has a market cap of $12.49 billion; its shares were traded at around $31.65 with a P/E ratio of 51 and P/S ratio of 7.8. American Tower Corp. had an annual average earning growth of 18.6% over the past 10 years.
Akre started to own 8.177 million shares of AMT since 1Q07 and has been selling shares since 2Q08. As of 2Q09, he still held 4.159 million shares.
No. 2: Penn National Gaming Inc. (PENN, Financial), Weightings: 12.41% - 4,014,315 Shares
Penn National Gaming Inc. is a diversified gaming and pari-mutuel wagering company. Penn National Gaming Inc. has a market cap of $2.29 billion; its shares were traded at around $29.21 with a P/E ratio of 24.3 and P/S ratio of 0.9. Penn National Gaming Inc. had an annual average earning growth of 27.7% over the past 5 years.
Akre started to own 7.4 million shares PENN in 1Q07 and has been selling shares since 3Q07 when he had 7.8 million shares. He owned 4.0 shares in 2Q09.
No. 3: Markel Corp. (MKL, Financial), Weightings: 10.75% - 359,385 Shares
Markel Corporation markets and underwrites specialty insurance products andprograms to a variety of niche markets. Markel Corp. has a market cap of $3.23 billion; its shares were traded at around $328.86 with a P/E ratio of 25.1 and P/S ratio of 1.7. Markel Corp. had an annual average earning growth of 31.4% over the past 5 years.
Akre started to own 411K shares of MKL in 1Q07. And he owned 359K shares as of 2Q09.
No. 4: 99 ONLY STORES (NDN, Financial), Weightings: 9.77% - 6,775,941 Shares
99 Cents Only Stores is a deep-discount retailer of name-brand consumable general merchandise. 99 Only Stores has a market cap of $928.3 million; its shares were traded at around $13.57 with a P/E ratio of 31.6 and P/S ratio of 0.7. 99 Only Stores had an annual average earning growth of 13.4% over the past 10 years. GuruFocus rated 99 Only Stores the business predictability rank of 3-star.
Akre started to own 6.9 million shares from 1Q07 and increased over time to 9.4 million shares in 2Q08. Since then, he has been selling slowly and owned 6.8 million shares by 2Q09.
No. 5: O'Reilly Automotive Inc. (ORLY, Financial), Weightings: 9.58% - 2,369,121 Shares
O'Reilly Automotive Inc. is a specialty retailer and supplier of automotive aftermarket parts and tools. It supplies equipment and accessories to both ``do-it-yourself`` customers and professional mechanics or service technicians. O'reilly Automotive Inc. has a market cap of $5.19 billion; its shares were traded at around $38.28 with a P/E ratio of 20.5 and P/S ratio of 1.5. O'reilly Automotive Inc. had an annual average earning growth of 19% over the past 10 years. GuruFocus rated O'reilly Automotive Inc. the business predictability rank of 4.5-star.
Akre started to own ORLY since 1Q07 and owned 2.4 million shares as of 2Q09.
No. 6: CarMax Inc. (KMX, Financial), Weightings: 6.25% - 4,000,661 Shares
CarMax Group is a one of the nation's used car dealership. Carmax Inc. has a market cap of $3.81 billion; its shares were traded at around $17.31 with a P/E ratio of 72.1 and P/S ratio of 0.5. Carmax Inc. had an annual average earning growth of 21.9% over the past 5 years.
Akre started to own 4.4 million shares of KMX in 1Q07 and still owned 4.0 million shares as of 2Q09.
Conclusion
Chuck Akre emphasizes on growth. None of the stocks reviewed appears to be a bargain based on P/E ratio and all of them carries a high growth rate. His track record of the past 13 years speaks for him. So there is a life in investing in high growth and high P/E stocks, as long as you know what you are doing.
GuruFocus keeps track of the investment moves of Investment Gurus such as Warren Buffett and Chuck Akre. More information is available to Premium Member. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.Â
Under Chuck Akre’s leadership, FBR Focus, with $1 billion in assets under management, has been one of the best-performing stock mutual funds. The fund has annualized returns of 13% since its inception in December 1996 -- placing it 10th among all U.S. stock funds during that period, and second overall among mid-cap funds, according to industry tracker Morningstar Inc.
Akre promised he intends to follow the same stock picking system that he employed for 13 years as the founding manager of the FBR fund. From the company’s PR:
"While Akre Focus Fund is a new mutual fund, we do expect many investors who have had an above average experience over the past 13 years to follow Chuck from the old focus fund to Akre Focus Fund. He has been their manager of record since inception. Chuck brings with him more than 40 years of experience in the securities business and a highly regarded reputation in fund management," said Andrew Schaefer, president and chief operating officer at Akre Capital..
"We want to build a closer relationship with shareholders," said Akre. "The recent economic crisis of confidence has underscored the need to communicate well and often to investors. We plan to do just that. With our own fund, we have a greater opportunity to control our own destiny," he added.
Akre's investment style will remain the same, as the fund will invest in companies believed to offer the best opportunities for growth, regardless of size or sector. This thoughtful approach allows the portfolio manager to look for businesses with high returns and low risk that are reasonably priced. In addition, the portfolio favors companies managed by people who act with integrity and continually put shareholder interests first.
Along this line, let’s take a look at the portfolio of Chuch Akre as of June 30, 2009. This is prior to his resignation, so we are still talking about the of FBR Focus Fund. Total asset in stocks was $942 million and there are only 33 stocks in the mutual fund. True to its name, the mutual fund has focused sector allocation as well: Consumer Services 49.9%, Financials 26.7% , Technology 13.9%, and Industrials 5.6%. The rest are not significant. Here are his top holdings:
No. 1: American Tower Corp. (AMT, Financial), Weightings: 13.93% - 4,159,210 Shares
American Tower Corporation is a wireless communications and broadcast infrastructure company with three operating segments. The company operates a network of communications towers and is the largest independent operator of broadcast towers in North America. The company provides comprehensive network development services for wireless service providers and broadcasters. The company also operates a leading teleport business which transmits Internet voice data and video communications worldwide. American Tower Corp. has a market cap of $12.49 billion; its shares were traded at around $31.65 with a P/E ratio of 51 and P/S ratio of 7.8. American Tower Corp. had an annual average earning growth of 18.6% over the past 10 years.
Akre started to own 8.177 million shares of AMT since 1Q07 and has been selling shares since 2Q08. As of 2Q09, he still held 4.159 million shares.
No. 2: Penn National Gaming Inc. (PENN, Financial), Weightings: 12.41% - 4,014,315 Shares
Penn National Gaming Inc. is a diversified gaming and pari-mutuel wagering company. Penn National Gaming Inc. has a market cap of $2.29 billion; its shares were traded at around $29.21 with a P/E ratio of 24.3 and P/S ratio of 0.9. Penn National Gaming Inc. had an annual average earning growth of 27.7% over the past 5 years.
Akre started to own 7.4 million shares PENN in 1Q07 and has been selling shares since 3Q07 when he had 7.8 million shares. He owned 4.0 shares in 2Q09.
No. 3: Markel Corp. (MKL, Financial), Weightings: 10.75% - 359,385 Shares
Markel Corporation markets and underwrites specialty insurance products andprograms to a variety of niche markets. Markel Corp. has a market cap of $3.23 billion; its shares were traded at around $328.86 with a P/E ratio of 25.1 and P/S ratio of 1.7. Markel Corp. had an annual average earning growth of 31.4% over the past 5 years.
Akre started to own 411K shares of MKL in 1Q07. And he owned 359K shares as of 2Q09.
No. 4: 99 ONLY STORES (NDN, Financial), Weightings: 9.77% - 6,775,941 Shares
99 Cents Only Stores is a deep-discount retailer of name-brand consumable general merchandise. 99 Only Stores has a market cap of $928.3 million; its shares were traded at around $13.57 with a P/E ratio of 31.6 and P/S ratio of 0.7. 99 Only Stores had an annual average earning growth of 13.4% over the past 10 years. GuruFocus rated 99 Only Stores the business predictability rank of 3-star.
Akre started to own 6.9 million shares from 1Q07 and increased over time to 9.4 million shares in 2Q08. Since then, he has been selling slowly and owned 6.8 million shares by 2Q09.
No. 5: O'Reilly Automotive Inc. (ORLY, Financial), Weightings: 9.58% - 2,369,121 Shares
O'Reilly Automotive Inc. is a specialty retailer and supplier of automotive aftermarket parts and tools. It supplies equipment and accessories to both ``do-it-yourself`` customers and professional mechanics or service technicians. O'reilly Automotive Inc. has a market cap of $5.19 billion; its shares were traded at around $38.28 with a P/E ratio of 20.5 and P/S ratio of 1.5. O'reilly Automotive Inc. had an annual average earning growth of 19% over the past 10 years. GuruFocus rated O'reilly Automotive Inc. the business predictability rank of 4.5-star.
Akre started to own ORLY since 1Q07 and owned 2.4 million shares as of 2Q09.
No. 6: CarMax Inc. (KMX, Financial), Weightings: 6.25% - 4,000,661 Shares
CarMax Group is a one of the nation's used car dealership. Carmax Inc. has a market cap of $3.81 billion; its shares were traded at around $17.31 with a P/E ratio of 72.1 and P/S ratio of 0.5. Carmax Inc. had an annual average earning growth of 21.9% over the past 5 years.
Akre started to own 4.4 million shares of KMX in 1Q07 and still owned 4.0 million shares as of 2Q09.
Conclusion
Chuck Akre emphasizes on growth. None of the stocks reviewed appears to be a bargain based on P/E ratio and all of them carries a high growth rate. His track record of the past 13 years speaks for him. So there is a life in investing in high growth and high P/E stocks, as long as you know what you are doing.
GuruFocus keeps track of the investment moves of Investment Gurus such as Warren Buffett and Chuck Akre. More information is available to Premium Member. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.Â
