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James Li
James Li
Articles (1326)  | Author's Website |

Top 5 Buys of Chuck Akre's Firm in the 2nd Quarter

Firm boosts stake in several existing positions

Akre Capital Management, the firm founded by Chuck Akre (Trades, Portfolio), disclosed this week that its top five trades during the second quarter were position expansions of CoStar Group Inc. (CGSP), Ansys Inc. (NASDAQ:ANSS), Mastercard Inc. (NYSE:MA), Brookfield Asset Management (NYSE:BAM) and KKR & Co. Inc. (NYSE:KKR).

The Middleburg, Virginia-based firm seeks long-term capital appreciation through a classic value investing approach. Akre Capital Management looks for companies with strong business models, high return on equity, shareholder-friendly management and low price-to-free-cash-flow ratios.

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As of the quarter-end, Akre Capital Management's $13.2 -billion equity portfolio contains 28 stocks, with no new holdings and a turnover ratio of 4%. The top three sectors in terms of weight are financial services, real estate and consumer cyclical.

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CoStar Group

Akre Capital Management purchased 517,041 shares of CoStar Group, increasing the position 117.96% and the equity portfolio 2.77%. Shares averaged $645.53 during the second quarter.

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The Northwest, Washington-based company provides commercial real estate data through brands like CoStar Suite, LoopNet, Apartments.com, BizBuySell and LandsofAmerica. GuruFocus ranks CoStar Group's financial strength 8 out of 10 on several positive investing signs, which include a double-digit Altman Z-score, robust interest coverage and debt ratios that outperform over 83% of global competitors.

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Signs of high profitability include expanding operating margins and consistent revenue growth over the past five years. Despite this, CoStar's valuation ranks 1 out of 10 on the back of price valuations underperforming over 95% of global real estate companies.

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Ron Baron (Trades, Portfolio)'s Baron Funds also has a holding in CoStar Group.

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Ansys

Akre Capital Management added 141,108 shares of Ansys, increasing the holding 30.11% and the equity portfolio 0.31%. Shares averaged $265.39 during the second quarter.

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The Canonsburg, Pennsylvania-based company produces software that allows users to test products through simulation of multiple concepts. GuruFocus ranks the company's profitability 9 out of 10 on several positive investing signs, which include a five-star business predictability rank and operating margins that are outperforming over 95% of global competitors.

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Ansys' financial strength ranks 8 out of 10, driven by a robust Altman Z-score of 14.48.

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Mastercard

The firm added 97,575 shares of Mastercard, increasing the stake 1.69% and the equity portfolio 0.22%.

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GuruFocus ranks the Purchase, New York-based credit card giant's profitability 10 out of 10 on several positive investing signs, which include a five-star business predictability rank, expanding profit margins and returns that are outperforming over 98% of global competitors.

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Brookfield Asset Management

The firm added 711,025 shares of Brookfield Asset Management, increasing the position 6.59% and the equity portfolio 0.18%. Shares averaged $32.78 during the second quarter.

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The Toronto-based asset management company owns and manages real estate, infrastructure, renewable power and private equity assets. GuruFocus ranks Brookfield's profitability 8 out of 10, driven by a three-star business predictability rank and a three-year revenue growth rate that outperforms 76.84% of global competitors.

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KKR

The firm added 534,321 shares of KKR, increasing the position 3.77% and the equity portfolio 0.12%. Shares averaged $26.79 during the second quarter.

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GuruFocus ranks the New York-based asset manager's financial strength 2 out of 10 on the back of interest coverage and debt ratios underperforming over 90% of global competitors.

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Disclosure: No positions.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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