Akre Adds to Stakes in Third Quarter

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Jan 05, 2015
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An English literature major in college, guru Chuck Akre (Trades, Portfolio)’s education didn’t appear – on the surface – to prepare him for a career in finance. Upon his graduation from college, he considered going to medical school before opting for the path he took – a path that ultimately led him to start his own firm, Akre Capital Management, in 1989.

Akre calls his investment philosophy the “three-legged stool” approach, which emphasizes business models, rates of return and reinvestment opportunities. The name is derived from a small milking stool he has in his office. The reasoning behind the name is that, on such a stool – low to the ground – a farmer will not fall far if it flipped over while he was using it. The suggestion is that ACM's investors won’t suffer serious damage if their investments go south on them.

ACM has produced consistent returns in recent years. The rates of return declined between 2009 and 2011 but rose again in 2012 and 2013. In 2009, ACM enjoyed a return of 37.54%. That rate dropped to 18.5% in 2010 and 11.53% in 2011 but went up to 16.04% and 38.09% in 2012 and 2013, respectively.

In the third quarter, Akre added holdings in two companies that are new to his portfolio – Discovery Communications Inc (DISCK, Financial) and Ubiquiti Networks Inc (UBNT, Financial).

He bought 900,000 shares of Ubiquiti, a California-based wireless technology company, for an average price of $42.47 per share. The transaction had a 0.96% impact on his portfolio.

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He added to his stakes in six companies – Roper Industries Inc (ROP, Financial), Monro Muffler Brake Inc (MNRO, Financial), Danaher Corp (DHR, Financial), CarMax Inc (KMX, Financial), Markel Corporation (MKL, Financial) and Crown Castle International Corp (CCIPRA, Financial).

Akre bought 406,500 shares in Roper Industries, an industrial company based in Florida, for an average price of $147 per share. The acquisition had a 1.68% impact on Akre’s portfolio.

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He acquired 760,000 shares of Monro Muffler Brake, a New York-based automotive service company specializing in mufflers and brakes, for an average price of $51.44 per share. The deal had a 1.03% impact on Akre’s portfolio.

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Divestitures and reductions

Akre sold his stakes in two companies – Discovery Communications Inc (DISCA, Financial) and Liberty Ventures (LVNTA, Financial).

He sold his stake in Discovery, a mass media company based in Silver Spring, Maryland, for an average price of $41.74 per share. The sale had a -6% impact on his portfolio.

Akre’s sale of 180,000 shares of Liberty Ventures, a video and digital commerce company, for an average price of $36.59 per share had an impact on his portfolio of -0.39%.

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He sold portions of his holdings in two other companies – MarkWest Energy Partners LP (MWA) and Leucadia National Corp (LUK).

Akre’s sale of 700,000 shares of MarkWest Energy Partners, a Colorado-based oil and gas company, for an average price of $74.87 per share had a -1.49% impact on his portfolio.

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