The market is more turbulent today than when we wrote to you last in October, and there will always be issues throughout the world to make us ill at ease. We continue to make progress in the U.S., although not at the pace many would like to see. The U.S. stock market ended 2015 on a positive note, as measured by the Standard & Poor's 500 TR, up 1.38% despite all the clamoring; the Akre Focus Fund was up 2.53% for retail shares and 2.76% for institutional shares for the year.
The issues that absolutely drive our work and decision making as it relates to individual investments are characterized by our beloved “three-legged stool.” Today’s environment drives home the importance we place on this. We want to own businesses that are growing in real economic value per share, year in and year out. Even in this turbulent environment, we believe the majority of our chosen businesses are growing in this real economic sense!
The one short-term blemish in an otherwise strongly performing group of businesses in the fund is Colfax (CFX, Financial). Calendar year 2015 was a year that challenged Colfax significantly. Colfax is a company that we describe as an “asset allocator.” Its model is to acquire critically important industrial businesses that it can improve operationally and reinvest all the excess cash it generates stemming from the improvements it has instituted. True to its mission, management has made important improvements, especially in the welding business in terms of margin improvement. Our belief continues to be that the company’s shares are likely set up for a rebound in the coming year or two.
Chuck, Tom and John
Top 10 holdings as of Dec. 31, 2015 and name % of net assets
American Tower Corp. (AMT, Financial)Â –Â 12.3%.
Markel Corp. (MKL, Financial)Â –Â 8.8%.
MasterCard Inc. (MA, Financial)Â –Â 8.4%.
Moody's Corp. (MCO, Financial)Â –Â 7.4%.
Dollar Tree Inc. (DLTR, Financial)Â –Â 6.5%.
Roper Technologies Inc. (ROP, Financial)Â –Â 5.3%.
SBA Communications Corp. (SBAC, Financial)Â –Â 4.4%.
Verisk Analytics Inc. (VRSK, Financial)Â –Â 4.3%.
CarMax Inc. (KMX, Financial)Â –Â 4.2%.
Visa Inc. (V, Financial)Â –Â 4.1%.
Sector weightings as of Dec. 31, 2015 and type % of net assets
Financials – 36.2%.
Consumer Discretionary – 18.2%.
Industrials – 17.1%.
Information Technology – 16.6%.
Cash & Equivalents – 7.5%.
Telecommunication Services – 4.4%.
