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Dianne Tordillo
Dianne Tordillo
Articles (179)  | Author's Website |

Chuck Akre’s Q3 Portfolio Updates: Three New Buys Are Verisk Analytics, Monro Muffler/Brake and Colfax Corp.

November 16, 2012 | About:
Chuck Akre, who manages Virginia-based Akre Capital Management, has reported 20 transactions in his third quarter portfolio update:

Additions to Current Shares 8
New Buys 3
Reductions to Current Shares 6
Sold Out 3

Known for coining the investment term, “Three-Legged Stool,” Akre chooses to target companies that demonstrate particular qualities revolving the companies’ business model, people and reinvestment opportunities. Specifically these qualities described as:

  1. Businesses that endure high returns on capital and pricing power in excess of input costs.
  2. Businesses whose managers operate in the best interest of all shareholders.
  3. Business with extensive reinvestment opportunities and reinvestment discipline.
Source: www.akrecapital.com

As of the end of the third quarter, Akre’s portfolio consisted of 37 stocks, a total value of $1.3 million and a quarter-over-quarter turnover rate of 8%.

The largest sectors represented in his portfolio are financials, consumer services, and technology, according to his sector weighting:

Financials 48.50%
Consumer Services 31.40%
Technology 11.50%
Industrials 6.90%
Not Assigned 1.30%
Consumer Goods 0.10%
Oil & Gas 0.10%

Currently, his top holdings are:

  1. MasterCard Inc. (MA) representing 12.1% of his portfolio and 0.28% of shares outstanding.
  2. Ross Stores Inc. (ROST) representing 9.8% of his portfolio and 0.87% of shares outstanding.
  3. American Tower Corp. (AMT) representing 9.7% of his portfolio and 0.44% of shares outstanding.
  4. Markel Corp. (ML) representing 7.2% of his portfolio and 2.08% of shares outstanding.
  5. Moody’s Corp. (MCO) representing 6.2% of his portfolio and 0.81% of shares outstanding.
Out of his 20 third quarter updates, Akre’s reduction of TJX Companies (NYSE:TJX), made the most impact to his portfolio as he shed 95.73% of his holding at an average price of $44.86 per share. TJX Companies is a large discount retailer, operating such stores as TJ Maxx, Marshalls and HomeGoods.

Below are three of Akre’s newest additions to his stock portfolio.

Verisk Analytics Inc. (NASDAQ:VRSK)

Akre’s recent acquisition of Verisk Analytics (NASDAQ:VRSK) stock accounted for 676,500 shares.

Verisk has a market cap of $8.14 million and trading at an all-time high of $47.87 per share. Verisk is a company that assists businesses in various fields to assess risk, providing data, software and information services through its several subsidiaries and units.

1353088415349.pngVRSK data by GuruFocus.com

The company reported pretty attractive numbers in its third quarter fiscal report. In diluted adjusted earnings per share, the company underwent a 20% increase compared to the same time last year. Total revenue felt a 17.3% increase for the company, which was driven by increases in revenue of two of its segments: decisions analytics and risk assessment. Its EBITDA increased 21.1%.

Additionally, the company repurchased a total of $20.8 million of its common stock under its existing repurchase program, out of the $179 million of shares remaining, as of Sept. 30.

Frank J. Coyne, chairman and chief executive officer said in a release: “Our third-quarter results were strong and reflect the contributions from our existing businesses as well as recent acquisitions of MediConnect and Argus. We continue to be pleased by the performance of our healthcare businesses and their contributions to the strong organic growth in the vertical. The environment for the adoption of our tools is encouraging, and our team is executing well.”

Verisk has an active insider activity as well, with its last three purchases occurring in the beginning of this month by not only Coyne, but also executive vice president and CFO Mark V. Anquillare and director Arthur Rothkopf.

View more of the company’s financial data on 10-Year Financials.

Monro Muffler/Brake Inc. (NASDAQ:MNRO)

Akre’s new holding of discount auto services provider, Monro Muffler/Brake Inc. (NASDAQ:MNRO), totaled 400,000 shares at an average price of $35.20.

Headquartered in Rochester N.Y., Monro has a market cap of $1.06 billion and operates more than 800 stores in 19 states, according to its website. It services include tire, repair and auto maintenance.

Despite one Severe Warning sign, indicating a faster asset growth compared to revenue, Monro is adorned with eight Good Signs, addressing its strong financial strength, expanding operating margin and a three-year high dividend yield, to name a few.

Trading at a two-year low of $31.92, Monro shows positive growth rates in book value, revenue and earnings per share. Both of its Financial Strength and Profitability and Growth sit at 8 out of 10, with a Business Predictability Rank of 4 out of 5 stars on GuruFocus.

To view more of its financial data, visit 10-Year Financials.

Colfax Corp. (NYSE:CFX)

Akre’s recent purchase of Colfax Corp. (NYSE:CFX) totals 209,280 shares at an average price of $31.08 per share.

Founded in 1995, based in Maryland, Colfax Corp. is involved in diverse industrial businesses including the development of fluid handling systems, filler metals for welding purposes and air and gas handling equipment. It has a market cap of $3.35 billion.

Trading at $35.95 close to its 10-year high, with its stock up almost 2% in today’s afternoon trading, Colfax has experienced a surge in revenue in the past 12 months, reporting a 14.6% increase in its third quarter fiscal report compared to the same time last year.

Steve Simms, Colfax president and CEO said in a release that despite a decrease in product volumes for the quarter, the company was able to recuperate by its improvement in operating margins through better product pricing, restructuring of its selling, general and administrative expenses, global sourcing and plant consolidations.

Colfax’s four Severe Warning signs reveal that its Altman Z-Score is in the distress zone, its Piotroski F-Score is low, implying poor business operation, a low interest coverage and even a possibility that the company manipulated its financial results according to its Beneish M-Score.

Find out more of where Colfax stands financially in its 10-Year Financials.

View the rest of Chuck Akre’s portfolio updates here, as well as his undervalued stocks, top growth companies and high yield stocks. Also read more about Chuck Akre in our GuruFocus article archives.

About the author:

Dianne Tordillo
Dianne Tordillo is staff writer for GuruFocus.com. She reports on a variety of financial news, primarily dealing with investor portfolios and stock trades. Her articles also highlight insider trades, as well as the many useful features of GuruFocus.

Visit Dianne Tordillo's Website

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