Compass Group (LSE:CPG, Financial) (U.K.) is a leading global food services provider. Its superior scale enables it to provide services at a lower cost than its peers, which helps to drive a superior value proposition to clients while maintaining an industry-leading level of growth and returns. This virtuous circle of investing in growth and greater scale benefits has long made us admirers of the franchise, but the company's high valuation has historically kept us on the sidelines. That changed during the Covid-19 pandemic, when shares lost nearly half of their value. Although we believe that short-term conditions will remain challenging, we believe the difficult economic environment will likely lead to greater outsourcing and market share gains for Compass, which already had a significant competitive advantage over its smaller peers.
From David Herro (Trades, Portfolio) and Bill Nygren (Trades, Portfolio)'s Oakmark Global Select Fund third-quarter 2020 commentary.
