David Rolfe

David Rolfe

Last Update: 2014-05-16

Number of Stocks: 21
Number of New Stocks: 2

Total Value: $5,401 Mil
Q/Q Turnover: 17%

Countries: USA
Details: Top Buys | Top Sales | Top Holdings  Embed:

David Rolfe' s Profile & Performance

Profile

David Rolfe has been managing Wedgewood's portfolio for 18 years. He studied at University of Missouri and received a degree of B.S.B.A. in Finance/Economics in 1984.

Web Page:http://wedgewoodpartners.com/

Investing Philosophy

Wedgewood's underlying equity investment philosophy is predicated on a strong belief that significant long-term wealth will be created by investing as "owners" in companies. In our "Invest as Business Owners" approach, we seek companies that the following characteristics:

1. A dominant product or service that is practically irreplaceable or lacks substitutes.
2. A sustainable and consistent level of growing revenues, earnings and dividends.
3. A high level of profitability, measured by return on equity without the use of excessive debt.
4. A strong management team that is shareholder oriented.

This is the flow chart of their process:

Total Holding History

Performance of Wedgewood Partners

YearReturn (%)S&P500 (%)Excess Gain (%)
201221.7515.46.4
20115.612.083.5
201014.515.06-0.6
3-Year Cumulative47.2 (13.8%/year)35.5 (10.7%/year)11.7 (3.1%/year)
200960.8326.4634.4
2008-38.12-37-1.1
5-Year Cumulative46.5 (7.9%/year)8 (1.5%/year)38.5 (6.4%/year)
200715.045.619.4
2006-2.7715.79-18.6
20055.844.910.9
20049.6112-2.4
200342.2528.713.5
10-Year Cumulative170.5 (10.5%/year)99.7 (7.2%/year)70.8 (3.3%/year)
2002-20.42-22.11.7
2001-7.72-11.94.2
2000-10.31-9.1-1.2
199956.992136.0
199849.628.621.0
15-Year Cumulative318.4 (10%/year)93.8 (4.5%/year)224.6 (5.5%/year)
199721.133.4-12.3
199623.57230.6
199542.5937.65.0
19943.781.32.5
1993-6.2110.1-16.3
20-Year Cumulative768.9 (11.4%/year)388.1 (8.2%/year)380.8 (3.2%/year)

Top Ranked Articles

GEICO - The “Growth Company” That Made the “Value Investing” Careers of Both Benjamin Graham and Warren Buffett (Wedgewood VIC Presentation)
"In 1948, we made our GEICO investment and from then on, we seemed to be very brilliant people." Read more...
GuruFocus Interview with Wedgewood's David Rolfe at the Omaha Value Investing Conference
GuruFocus interviewed Guru and Wedgewood Partners' Chief Investor Officer David Rolfe at the 10th Annual Value Investor Conference in Omaha. Over the last 20 years, Rolfe has achieved a 774.5% cumulative return, versus 388.1% for the S&P 500, while consistently beating the index. Currently, Wedgewood manages about $3 billion in a single strategy. Read more...
Ask Wedgewood Partners' David Rolfe Your Investing Question for GuruFocus Reader Q&A
David Rolfe, chief investment officer of the $1.3 billion investment management firm Wedgewood Partners Inc., is joining GuruFocus for a reader Q&A. Rolfe has also been a Premium Member of GuruFocus since 2007. Readers are welcome to submit their questions – regarding Wedgewood’s process, their personal investing or the economy at large – by entering them in the comments box below. Read more...
Introducing New Guru David Rolfe, Added to EXPD, CTSH, VAR, QCOM in Q2
Wedgewood Partners is a new firm that GuruFocus tracks. The firm manages assets of about $2 billion and employs a long-term, long-only, value approach for its portfolio of 18-24 stocks. Its CIO is David Rolfe, and it has returns of 38.4% compared to a 1.1% loss for the S&P 500 cumulatively for the last five years, and 316.1% compared to 124.3% cumulatively for the last fifteen years. Read more...
Wedgewood Partners Comments on Express Scripts
Although we have been investors in Express Scripts Holding Company (Express Scripts) (ESRX) since 2007, it was not always a "holding company." Express Scripts is the largest pharmacy benefits manager (PBM) in the country, managing nearly one third of all prescriptions written in the U.S. The Company recently (second quarter of 2012) rose to this market position after successfully closing the acquisition of Medco Health Solutions (Medco), effectively doubling the volume of prescriptions previously handled. Express Scripts' primary value proposition is to drive lower absolute and relative drug spend by injecting itself into almost every step of a clients' drug prescription process -­‐ from patient evaluation and distribution channels, to adherence. The Company's unparalleled scale and unique focus on the behavioral and clinical aspects of the drug prescription process enables them to effectively deliver an "open architecture" drug benefit which maximizes the opportunity for clients to eliminate spending waste. The Company's clients include managed care organizations, health insurers; mid-­‐to-­‐large employers and unions, all of whom are constantly bombarded by double-­‐digit Read more...
» More David Rolfe Articles

Commentaries and Stories

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David Rolfe's Wedgewood Partners Q2 2014 Commentary
Review and Outlook More...

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David Rolfe Comments on Mead Johnson Nutrition
Mead Johnson Nutrition (MJN) More...

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David Rolfe Comments on LKQ Corporation
LKQ Corporation (LKQ) is the world's largest procurer and distributor of alternative and aftermarket collision replacement parts for automobiles and other vehicles. The Company has grown rapidly since its inception in 1998, by executing an expansion strategy that has included aggressive organic and inorganic investments. To date, LKQ's strategy has resulted in a business with unparalleled scale, at over $5 billion in revenues across three continents, compared with aftermarket and salvage parts competitors that routinely post less then $100 million in sales, usually with the largest footprints limited to regional geographies. More...

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David Rolfe Comments on Berkshire Hathaway
Although we view Berkshire Hathaway (BRK.A)(BRK.B) to be an exceptional growth and profitability machine, that doesn't mean Mr. Market agrees with us. In other words, despite our expectations for double-­‐digit BVPS growth and value-­‐added advantages, growth could turn out to be "not growth." Essentially, we could be wrong. While this might sound helpless, quite the contrary, we believe it is this admission of potential error that allows us to seek an effective cushion from the very risk of "not growth." If Chapter 20 of the Intelligent Investor just came to mind, then kudos to you! If not, we understand, particularly because Ben Graham's examples of a "margin of safety" are much more draconian than we use. But the concept of preserving capital by not overpaying for the future earnings stream of a business is very much the same. More...

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David Rolfe Comments on Visa
During the quarter, Visa (V) reported strong year-­‐over-­‐year growth with earnings up 14%, as the business continues to operate at a superior level – very much in-­‐line with the past several years. Visa has been a core holding for our clients since October 2008 and rarely has a year gone by without the Company and its partners having to contend with lawsuits and legislation aimed at limiting pricing power and 4 distribution. 2014 is no exception, though most of the news has been favorable, with a ruling for "no change" to Visa's exclusivity for high-­‐value signature transactions. We continue to see Visa's pricing power as being derived from VisaNet's superior value proposition relative to substitutes, particularly paper-­‐ based payments, automated clearinghouse (ACH), and more recently, "cryptocurrencies" (e.g. Bitcoin). While these emerging payment platforms, including PayPal and Square, represent very legitimate substitutes to traditional interchange, in our view they are not quite "good enough," as evidenced by merchant acceptance that is largely sequestered to small businesses. While we have More...

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David Rolfe Comments on Stericycle
Stericycle (SRCL) alone operates globally and generates close to $2 billion in annual revenues. Despite Stericycle's strong business performance during the recently reported quarter, the stock detracted from performance, partially driven by headlines of rumored regulatory action related to one of the Company's incinerators. We believe the issue is not meaningful to results and we would be willing to add to shares on pullbacks related to this. Stericycle's stock trades in the mid to high-­‐teens EBITDA range, but the company routinely purchases smaller competitors for just 3X-­‐6X EBITDA. This accretion is a byproduct of Stericycle's competitive positioning and we believe it paves a multi-­‐year runway for double-­‐digit growth. More...

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David Rolfe Comments on Varian Medical Systems
Varian Medical Systems (VAR) has been a staple in our portfolio since the fall of 2005. The stock has rebounded smartly, up +31% from its April 2013 lows through the first quarter. Varian continues to be the global market share and technological leader in the radiation oncology business. Unfortunately, the incidence of cancer continues its deadly growth. In the U.S. alone, the American Cancer Society projects that some 1.7 million people will be diagnosed with cancer. Expectations of new cancer cases around the world are approaching 25 million over the next three decades. Of these new cases, approximately two-­‐thirds will be treated with some sort of radiation therapy. Varian has been at the forefront of linear particle accelerator since the late 1940's. Today the Company's installed base numbers over 7,300 LINACS across the globe – a 60% market share. As impressive as that may sound, the availability of state-­‐of-­‐the-­‐art radiation therapy (radiosurgery and proton therapy) outside of the U.S. is woefully low. The developed world has access to 35 to 110 LINACS per million people over the age of More...

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David Rolfe Comments on Schlumberger
Schlumberger (SLB) was a top performer during the quarter, continuing its strong performance since the summer of 2012. Since late June 2012 (6/22) through mid-­‐ April 2014, the stock (a holding since late September 2011) is up approximately 60% -­‐ nearly double the S&P 500 Index's gain of 36%. Schlumberger continues to do what it does best – dominate their respective industry and generate industry-­‐ leading growth and cash flow generation. The Company is a leading global provider of oil services. At the risk of repeating an oil service industry cliché, "the easy oil has been found." The technological development being brought to bear to the extremes and complexities in the exploration and development of hydrocarbon energy is relentless. The Company's depth and breadth of their integrated products and services has been at the forefront of the unceasing progress of energy services for decades. Indeed, according to the Company, over the past decade, total E&P capital expenditures have increased by 400%, yet global oil production is up only a scant 15%. Furthermore, in just the last three years, More...

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David Rolfe's Wedgewood Partners Q1 2014 Investor Letter
Review and Outlook More...

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Wedgewood's David Rolfe Wagers in Favor of Berkshire in High-Stakes Bet
It takes a lot chutzpah to bet against Warren Buffett (Trades, Portfolio) — arguably the greatest investor in history. Yet much to my own surprise, that’s exactly the position I've unexpectedly found myself in. More...

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Coach: A Champion Among Luxury Retailers
As a luxury brand retailer, Coach Inc. (COH) enjoys strong pricing power, sourcing and distribution advantages, as well as capital efficiency, making it one of the top companies in the industry with a narrow economic moat. Its high quality handbags and accessories, sold at a more attractive price than its competitors, have garnered a large customer base with strong brand loyalty, resulting in a business with excess economic profits. Therefore, it should come as no surprise that investment gurus like John Griffin (Trades, Portfolio) and David Rolfe (Trades, Portfolio) recently acquired over 1 million shares in this company, hoping to gain long term rewards. More...

LUXURY BRAND RETAIL,ACCESSORIES,HANDBAGS,LEW FRANKFORT,VICTOR LUIS,LEATHER,APPARELL


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Wedgewood Partners' Views on 2014
While our primary task is to be “bottom-­up” owners of terrific businesses, rather than the less predictable, less profitable and certainly less satisfying task of economic or stock market forecasting, we would like to offer our views on the current investing environment. In short, we expect much of 2014 to be the opposite of 2013. Further, we expect Main Street to outperform Wall Street. We expect better than expected economic growth, better employment - and correspondingly higher than expected inflation and interest rates. Even a cursory dive into the latest employment figures shows that the college-plus segment is near full employment. Leading economic indicators have currently crept back up to 3-­year highs. Relatedly, what may be better for the economy, may very well likely challenge current exuberant financial markets - particularly the stock market. Higher interest rates and higher inflation could cause a deflation-­obsessed Fed to "taper" much sooner than their official policy statements. More...

DAVID ROLFE, WEDGEWOOD PARTNERS


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David Rolfe on Charles Schwab Corp.
Charles Schwab was our largest relative contributor to performance. The stock gained +82% in 2013 – after a gain of 30% in 2012. We trimmed the position throughout the year and fully exited the position at the end of October. Our sale rationale is quite succinct. Schwab remains a best-in-class business, but the stock, in our view, had become less than best in class (read: overvalued).... More...

DAVID ROLFE, WEDGEWOOD PARTNERS


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Worldly Wisdom and Advice, from David Rolfe of Wedgewood Partners
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DAVID ROLFE


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David Rolfe Comments on Perrigo
During the quarter, Perrigo (PRGO) announced strong September quarter adjusted earnings growth of 20%.  We say “adjusted” because the Company incurred what we believe are non-recurring charges related to the recent purchase of Elan Corporation, which is a branded-drug company domiciled in Ireland.  Upon the closing of this purchase, Perrigo has “re-domiciled” itself in Ireland, with an effective tax rate meaningfully below what they were subjected to in the U.S.  Given that the Company actively pursues a strategy of inorganic growth as much as it pursues organic growth - having acquired six new businesses over the past 18 months (including Elan) - we expect that this new tax structure should make future acquisitions, particularly those U.S. based businesses, much more attractive.  Further, Perrigo’s core business, which includes private-label over-the-counter (OTC) pharmaceuticals and infant formula, drove much of the year-over-year growth.  The Company’s unrivaled scale in manufacturing and marketing of store-branded offerings continues to enable retailers to mimic the value proposition of OTC pharmaceuticals and infant formula.  This “store-brand conversion” More...

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David Rolfe Comments on Cognizant
Cognizant (CTSH) continued to execute well on its value proposition of providing deep domain expertise for outsourced enterprise IT.  As IT has rapidly evolved in the face of a “devolving” macroeconomic backdrop, outsourcing customers are demanding more value-added services to not only convert fixed IT costs into variable costs, but to improve business agility and drive revenues. Cognizant has aggressively reinvested to meet and exceed these demands, cultivating a relationship-based approach that relies on a much larger on-site presence compared to transactionally-based peers.  In turn, customers have given Cognizant more “wallet share,” to the point where revenues have routinely grown at a 20% clip.  We expect emerging trends, such as the proliferation of mobile IT as well as the perpetual trend of IT infrastructure transformation to drive double-digit growth well into the future. More...

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David Rolfe Comments on Apple Inc.
Our thesis that innovation is alive and well at Apple – a minority position to be sure over the past year – has been vindicated, in our view, given that the Company refreshed their entire suite of hardware and operating software systems in the second half of 2013.  Apple (AAPL) continued to expand its iPhone franchise, selling close to 34 million units during the September quarter, representing a 25% increase over the year ago period.  Much of this growth can be attributed to the successful roll-out of the iPhone 5S and 5C, Apple’s most recent updates to this key business line.  The Company also continues to upgrade the broad array of services that make up the platform in support of the iPhone (as well as the iPad and Mac), including content (iTunes, App Store, iCloud) and software (iOS).  We think Apple’s platform approach drives a differentiated user experience which leads to a “stickier” customer, which in turn drives customer intentions to repurchase Apple products at significantly higher rates –and profits - than their competitors.  As smartphones proliferate, we expect consumers will become increasingly critical and demanding of their user experience - a More...

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David Rolfe Comments on EMC
EMC (EMC)’s stock was flat over the course of 2013.  In fact, the stock has been flat over the past three years – sigificantly underperforming the near 50% gain in the S&P 500 Index.  The stock has been buffetted over fears that the Company’s current decelerated growth is in secular decline due to a number of competitive threats.  The first threat is that flash storage and software-defined storage will cannibalize traditional hard disk drives.  Two, the public cloud is only a threat (and not an opportunity) that disintermediates information technology (IT) spend from both EMC and VMware (EMC maintains an over 80% ownership stake in VMW).  Third, VMware’s entrenched vSphere gets displaced by Open-Source and Microsoft’s Hyper-V.  Fourth, recent premium-priced acquisitions of Data Domain and Isilon are evidence of lack of internal product development. More...

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David Rolfe's Wedgewood Partners Fourth Quarter 2013 Client Letter
Review and Outlook More...

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Wedgewood Investor David Rolfe Buys One New Stock David Rolfe - Wedgewood Investor David Rolfe Buys One New Stock
CIO of Wedgewood Partners David Rolfe in the third quarter purchased a single new stock: M&T Bank Corp. (MTB). Rolfe’s portfolio contains 22 stocks total and is valued at $4.17 billion. The largest sector represented is technology at 33.4%, followed by financial services at 19.7%. For the third quarter, his fund returned 8.76%, outpacing the S&P 500 index’s 5.24%. More...

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