We also initiated a position in Compass Group (LSE:CPG, Financial), a leading global food services provider. Compass’ superior scale enables it to provide services at a lower cost than its peers, which helps to drive a superior value proposition to clients while maintaining an industry-leading level of growth and returns. This virtuous circle of investing in growth and greater scale benefits has long made us admirers of the franchise, but the high valuation has historically kept us on the sidelines. That changed during the coronavirus pandemic, when the shares lost nearly half of their value. Although we believe that short-term conditions will remain challenging, we believe the difficult economic environment will likely lead to greater outsourcing as well as market share gains for Compass, whose already significant competitive advantage should widen over its smaller peers. We believe the company’s strong balance sheet provides the management team with organic and inorganic opportunities. We expect management will continue to judiciously build shareholder value.
From David Herro (Trades, Portfolio)'s Oakmark Global Fund second-quarter 2020 shareholder commentary.
