Akre Capital Management Portfolio – Q4 2021 Update (MUTF: AKREX)

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100 to 1

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This article is part of a series that provides an ongoing analysis of the changes made to Akre Capital Management’s 13F portfolio on a quarterly basis. It is based on Akre’s regulatory 13F Form filed on 2/11/2022. Please visit our Tracking Akre Capital Management Portfolio series to get an idea of ​​their investment philosophy and our last update for their moves in Q3 2021.

This quarter, Akre’s 13F portfolio value increased from $ 16.24B to $ 17.92B. The number of positions decreased from 23 to 22. The largest five stakes are American Tower, Mastercard, Moody’s, Visa, and O’Reilly Auto. They account for ~ 52% of the total portfolio value.

AUM is distributed among private funds, separately managed accounts, and the Akre Focus Mutual Fund (AKREX) (AKRIX). Since the 2009 inception, the mutual fund’s annualized returns are at 17.60% compared to 15.60% for the S&P 500 Index. Through EOY 2021, the fund returned 24.19% compared to 28.71% for the S&P 500 Index. Their cash allocation has come down from ~ 17% to ~ 2% over the two years. Akre coined the term “compounding machines” to describe the type of businesses he invests in. To learn more about that investing style, check out 100 to 1 in the Stock Market.

Note: positions in the mutual fund not reported through the 13F filings include Adyen NV (OTCPK: ADYEY), Constellation Software (OTCPK: CNSWF), and Topicus.com (OTCPK: TOITF). Topicus.com is a spinoff from Constellation Software that started trading in February 2021 at ~ $ 55 per share. The stock currently trades at ~ $ 76.

Stake Disposals:

Ollie’s Bargain (OLLI): The minutely small OLLI stake was disposed during the quarter.

Stake Increases:

American Tower (AMT): AMT has been in the portfolio for well over nineteen years. It is the largest stake at 13.75% of the portfolio. Recent activity follows: the six years through Q3 2018 saw consistent buying almost every quarter. The share count increased over four times from 1.7M shares to 7.1M shares during that period. The buying happened at prices between $ 65 and $ 118. Since then, there have only been minor adjustments. The stock is now at ~ $ 237.

Note: Acre is very bullish on AMT as incremental margins are at over 90% and growth in wireless communication is a significant tail-wind.

Mastercard (MA): MA is currently the second-largest 13F stake at 13.27% of the portfolio. It was first purchased in 2010 and has consistently increased since. Their overall cost-base is ~ $ 22 compared to the current price of ~ $ 370 per share. Q1 2020 saw a ~ 9% stake increase. Last six quarters have seen only minor adjustments.

Note: In a WealthTrack interview in November 2019, Akre commented that something extraordinary is happening at MasterCard – if the rate of return is cut down twice, they would still be earning above average. On the question “one investment every investor should own some of”, Akre responded with two: Mastercard and Visa.

Moody’s Corporation (MCO): The initial purchase of MCO happened in Q1 & Q2 2012 in the high-30s price-range. Since then, the position size was doubled at higher prices. Recent activity follows: Q4 2016 saw a ~ 15% increase at prices between $ 94 and $ 109 and that was followed with a ~ 22% increase the following quarter at prices between $ 95 and $ 114. It currently trades at ~ $ 332 and is now the third-largest stake at 12.25% of the portfolio. There was marginal trimming in the last nine quarters while this quarter saw a minor increase.

Note: Acre’s cost base on MCO is ~ $ 39.

O’Reilly Automotive (ORLY): ORLY is a large (top five) 6.22% portfolio stake first purchased in 2005. Over 800K shares were purchased at the time. The position was at 825K shares as of Q1 2017 – every year had seen adjustments but overall, the stake had remained remarkably steady over that twelve-year period – the stock returned ~ 10x during that time. 2017 saw a ~ 130% stake increase at an average cost of ~ $ 195. Q1 2021 saw a ~ 14% selling at prices between ~ $ 425 and ~ $ 509. The stock is now at $ 668. Last three quarters have seen only minor activity.

CarMax, Inc. (KMX): The 5.30% KMX stake is a very long-term position first purchased in 2002. The bulk of the current stake was built over the four quarters through Q2 2016 at prices between $ 42 and $ 68. There was a ~ 10% stake increase in Q4 2018 at prices between $ 57 and $ 74. 2019 had also seen a ~ 17% stake increase at prices between $ 58 and $ 98 and that was followed with a ~ 20% further increase in Q1 2020 at prices between $ 44 and $ 102. The two quarters through Q1 2021 had seen a ~ 12% selling. The stock is now at ~ $ 109. There were minor adjustments in the last three quarters.

Adobe Inc. (ADBE): ADBE is a 4.84% of the portfolio position purchased in Q1 2020 at prices between $ 285 and $ 383 and increased by roughly one-third in Q1 2021 at prices between ~ $ 421 and ~ $ 502. The stock currently trades at ~ $ 474. Last three quarters have seen only minor adjustments.

Roper Technologies (ROP): ROP is a 4.56% of the portfolio position first purchased in Q2 & Q3 2014 at prices between $ 129 and $ 150. The stake saw incremental buying in the following quarters. In Q2 2016, there was a ~ 20% increase at prices between $ 165 and $ 185. The first three quarters of 2020 had seen a ~ 22% stake increase at prices between $ 254 and $ 453. The stock is now at $ 438. H1 2021 had seen a ~ 12% trimming. Last two quarters have seen only minor activity.

Brookfield Asset Management (BAM): BAM is a 4.42% of the portfolio stake established in Q3 2019 at prices between $ 32 and $ 36 and increased by ~ 18% next quarter at prices between $ 34 and $ 39. The first three quarters of 2020 had seen another ~ 45% increase at prices between $ 22 and $ 45.50. The stock currently trades at ~ $ 58. Last few quarters have seen only minor adjustments.

Note: the prices quoted are adjusted for the 3-for-2 stock-split last year.

CoStar Group (CSGP): The 4.31% CSGP stake was purchased in Q4 2019 at prices between ~ $ 54 and ~ $ 62 and increased by ~ 75% next quarter at prices between ~ $ 52 and ~ $ 74. Q2 2020 saw another ~ 120% stake increase at prices between ~ $ 53 and ~ $ 73. The stock currently trades at ~ $ 66. Last six quarters have seen only minor adjustments.

Note: The prices quoted above are adjusted for the 10-for-1 stock split last June.

Verisk Analytics (VRSK): VRSK is a ~ 3% portfolio position first purchased in H2 2012 at prices between $ 46.50 and $ 51. 2015 saw a huge 3x stake increase at prices between $ 63 and $ 81. The position has since been kept relatively steady. The stock is currently at ~ $ 193.

Stake Decreases:

SBA Communications (SBAC): SBAC is a 3.36% portfolio stake. The position is from H1 2014 at prices between $ 88 and $ 102. Q4 2015 saw a one-third increase at prices between $ 100 and $ 121 and a similar increase occurred in Q4 2016 as well at prices between $ 96 and $ 115. H1 2021 had seen a ~ 22% selling at prices between ~ $ 236 and ~ $ 323. This quarter saw a similar reduction at prices between ~ $ 323 and ~ $ 389. The stock currently trades at ~ $ 312. They are harvesting gains.

Dollar Tree (DLTR): DLTR is a ~ 2% of the portfolio position first purchased in 2010 at a cost-basis in the low-20s. Recent activity follows. There was a ~ 15% stake increase in Q2 2017 at prices between $ 66.50 and $ 83. Q1 2020 saw a ~ 10% selling and that was followed with marginal trimming in the next three quarters. Q1 2021 saw a ~ 20% reduction at prices between ~ $ 98 and ~ $ 116. That was followed with a ~ 25% selling this quarter at prices between ~ $ 96 and ~ $ 147. The stock currently trades at ~ $ 137. They are harvesting gains.

Kept Steady:

Visa Inc. (V): Visa is a large (top five) 6.34% of the portfolio stake. It was established in Q2 2012 at a cost-base of around $ 30. Q2 2013 saw a one-third increase in the low-40s and that was followed by a 60% increase in Q2 2016 in the high 70s. Q1 2017 also saw another roughly one-third increase at prices between $ 79.50 and $ 90. Since then, the activity has been minor. The stock is now at ~ $ 225.

Note: Visa stock split 4-for-1 in March 2015. The prices quoted above are adjusted for that split.

KKR & Co. (KKR): KKR is a 6.12% of the portfolio position established in Q1 2018 at prices between $ 20 and $ 24.50 and doubled next quarter at prices between $ 19.50 and $ 25.50. There was another ~ 25% increase in Q4 2018 at prices between $ 18.50 and $ 28. The first three quarters of last year had also seen a ~ 15% increase. Since then, there have only been minor adjustments. The stock currently trades at $ 62.76.

Note: KKR converted from a partnership to a corporation effective July 1, 2018.

Salesforce.com (CRM): CRM is a ~ 4% of the portfolio position established in Q2 2021 at prices between ~ $ 211 and ~ $ 246 and the stock currently trades at ~ $ 208.

Danaher Corporation (DHR): DHR is a ~ 3% of the portfolio position established in Q4 2013 at prices between $ 47 and $ 55 and increased by roughly five-times in Q2 2014 at prices between $ 52 and $ 59. The stock is now at $ 273.

Note: The prices quoted above are adjusted for the Fortive spinoff in July 2017.

ANSYS, Inc. (ANSS): ANSS is a 1.36% of the portfolio position established in Q4 2019 at prices between $ 214 and $ 259 and increased by ~ 190% next quarter at prices between $ 205 and $ 296. Q2 2020 saw another ~ 30% stake increase at prices between ~ $ 211 and ~ $ 294. It is now at ~ $ 319.

Alarm.com Holdings (ALRM): ALRM is a small 0.94% position first purchased in Q2 2015. Q3 2019 saw a ~ 130% stake increase at prices between $ 46 and $ 53. The four quarters through Q3 2020 had seen a ~ 43% further increase at prices between ~ $ 37 and ~ $ 71. The stock currently trades at ~ $ 70.

DigitalBridge (DBRG) previously Colony Capital: The DBRG stake saw a ~ 6x increase in Q3 2020 at prices between ~ $ 1.80 and ~ $ 2.90. The stock currently trades at $ 7.53. The stake is still very small at 0.49% of the portfolio.

Goosehead Insurance (GSHD): GSHD is a minutely small position established in Q4 2018 and increased over the next two quarters. Goosehead had an IPO in April 2018 priced at $ 10. It has since gone up ~ 10x and currently trades at ~ $ 94.76. Q3 2020 saw a ~ 30% stake increase and that was followed with a ~ 20% increase in Q2 2021. The position is still very small at 0.21% of the portfolio.

Berkshire Hathaway (BRK.B) and ThredUp Inc. (TDUP): These two minutely small stakes were kept steady this quarter.

Below is a spreadsheet that highlights the changes to Akre Capital Management’s 13F stock portfolio as of Q4 2021:

Charles Akre - Akre Capital Management

Charles Akre – Akre Capital Management’s Q4 2021 13F Report Q / Q Comparison (John Vincent (author).)

Source: John Vincent. Data constructed from Akre Capital Management’s 13F filings for Q3 2021 and Q4 2021.



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