Fleetcor
During the quarter we sold Fleetcor (FLT, Financial) and rolled the proceeds into Bristol-Myers Squibb. We initiated Fleetcor two quarters ago at a very small weighting, as our payment industry exposure already included overweights in Visa and PayPal. While Fleetcor has a few attractive assets in the electronic payments space, particularly in corporate payments and tolls, we think the majority of the Company’s assets will be pressured in the new macro-environment. In contrast, we believe both Visa and PayPal possess significant value propositions that should benefit long-term from the social, cultural and economic changes brought on by the pandemic. As such, we would prefer to add to Visa and PayPal on potential future weakness and sold Fleetcor in order to make room relative to our self-imposed 15% industry maximum weighting. We used the proceeds to add to Bristol-Myers, which was one of our smallest weightings. Bristol-Myers Squibb is less macro-sensitive, has an attractive pipeline due to its recently closed acquisition of Celgene, and a historically depressed multiple despite purchasing Celgene at a single-digit earnings multiple.
From David Rolfe (Trades, Portfolio)'s Wedgewood Funds second-quarter 2020 shareholder letter.
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