"Tracking Charles Akre's Akre Capital Management Portfolio – Q2 2017 Update"
"Chuck Akre’s portfolio value increased from $6.08B to $6.15B this quarter.Akre Capital Management substantially increased Dollar Tree & O’Reilly Automotive while dropping Colfax, Dollar General, and Fortive.The top three positions are American Tower, Moody’s, and MasterCard and they add up to ~38% of the entire portfolio.This article is part of a series that provides an ongoing analysis of the changes made to Akre Capital Management’s US stock portfolio on a quarterly basis. It is based on Akre’s regulatory  filed on 08/14/2017. Please visit our  series to get an idea of their investment philosophy and their moves during Q1 2017.This quarter, Akre’s portfolio value increased marginally from $6.08B to $6.15B. The number of positions decreased from 28 to 27. The largest five stakes are American Tower, Moody’s Corporation, MasterCard, Markel Corporation, and Visa Inc. and they together account for ~53% of the total portfolio value.AUM is distributed among privately funds, separately managed accounts, and the Akre Focus Mutual Fund (AKREX) (AKRIX) (AKRSX). Akre coined the term "compounding machines" to describe the type of businesses he invests in. To learn more about that investing style, check out .New Stakes:Boston Omaha (BOMN): BOMN is a minutely small 0.08% portfolio stake established this quarter. Boston Omaha had an IPO in June. Trading started at ~$13.50 and the stock currently goes for $14.94.Stake Disposals:Colfax Corp. (CFX): The ~3% CFX position was first purchased in Q3 2012 and built up over the last four years at prices between $20 and $75. Q2 2016 saw an about-turn: ~20% reduction at prices between $25 and $34. There was another ~23% selling in Q4 2016 at prices between $29 and $40. The disposal this quarter was at prices between $37 and $41.50. The stock is now at $37.90.Note: Akre Capital Management had a ~4% ownership stake in Colfax Corp as of Q1 2017.Dollar General (DG): DG is a 1.72% portfolio stake purchased in Q4 2016 at prices between $67 and $80 and disposed of this quarter at prices between $68 and $79. The stock is now at $76.33.Fortive Corporation (FTV): FTV was a very small 0.74% of the portfolio position disposed this quarter. The position came about as a result of the spinoff from Danaher in June last year.Stake Increases:American Tower (AMT): AMT has been in the portfolio for well over sixteen years. It is the largest stake at 15.66% of the portfolio. Recent activity follow: the last five years saw consistent buying every year. The share count has increased over four times from 1.7M shares to 7.3M shares during that period. The buying happened at prices $65 and $118 and the stock is now at $143. There was a marginal increase this quarter.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. Q4 2016 saw a ~15% increase at prices between $94 and $109 and that was followed with a ~22% increase last quarter at prices between $95 and $114. It currently trades at $132 and it is now the second-largest stake at ~11.27% of the portfolio. There was a marginal increase this quarter.Note: Akre’s cost-basis on MCO is ~$39 (roughly three times return in five years so far).MasterCard (MA): The large (top three) 10.55% MA position was first purchased in 2010 in the low-20s price-range and it currently trades at $133. The stake saw increases every year thru 2015 but was kept steady last year. Last quarter saw a ~13% increase at prices between $105 and $113 and that was followed with a marginal increase this quarter.Note: Akre’s cost-basis on MA is $22.20 (roughly six times return in six years so far).Markel Corporation (MKL): MKL is another top five 8.19% portfolio stake that has been in the portfolio for over twenty years. Recent activity follow: H2 2013 and H1 2014 saw a stake doubling at prices between $510 and $655 and since then the position has remained relatively steady. The stock is now at $1052. Last quarter saw a marginal reduction while this quarter saw a very minor increase.Note: Akre saw 20-times compounding over 20 years on his first purchases of MKL. However, they also increased their original stake substantially a decade ago at a cost-basis of $444 (2.5 times book value) and that portion has only increased ~140%.Roper Technologies (ROP): ROP is a large ~6% 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 stock is now at $231. There was a marginal increase this quarter.Dollar Tree (DLTR): DLTR is a 5.51% of the portfolio position first purchased in 2010 at a cost-basis in the low-20s. The stock currently trades at $74.32. The position was kept relatively steady last year although previous years had seen significant buying. There was a ~15% increase this quarter at prices between $66.50 and $83.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 thru Q2 2016 at prices between $42 and $68. The stock is now at ~$64. There was a marginal increase this quarter.Enstar Group (ESGR): ESGR is a long-term 4.71% portfolio stake that has been in the portfolio for almost a decade. The bulk of the original stake is from Q1 & Q2 2008 at prices between $89 and $119. The position remained largely untouched until 2015. H2 2015 & Q1 2016 saw a roughly 3x increase at prices between $146 and $165 and the stock is now at $203. There was marginal increase this quarter.Note: Akre Capital Management has a ~9% ownership stake in Enstar Group (ESGR).O’Reilly Automotive (ORLY): ORLY is a 4.24% portfolio stake first purchased in 2005. Over 800K shares were purchased at the time. The position was at 825K as of Q1 2017 - every year had seen adjustments but overall the position had remained remarkably steady over the twelve year holding period – the stock returned ~10x during that time. This quarter saw a ~45% stake increase at prices between $216 and $270. The stock is now at $195. The substantial increase indicates a clear bullish bias.Verisk Analytics (VRSK): VRSK is a ~3.5% 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 $81.21. There were marginal increases in the last two quarters.Monro Inc. (MNRO) previously Monro Muffler-Brake: MNRO is a small 1.10% portfolio stake first purchased in H2 2012 at prices between $32 and $39. H2 2014 saw a 3x stake increase at prices between $48 and $58 and it has since been kept relatively steady. The stock is now at $45.35. There was a very minor increase this quarter.Berkshire Hathaway (BRK.A) (BRK.B): Berkshire Hathaway stake is now at 1.25% of the portfolio. Last five years have seen only very minor activity. There was a minor increase this quarter.Stake Decreases:None.Kept Steady:Visa Inc. (V): V is a large (top five) ~7.5% of the portfolio stake. It was established in Q2 2012 at a cost-basis of around $30. Q2 2013 saw a one-third increase in the low-40s and that followed with a 60% increase in Q2 2016 in the high 70s. Last quarter also saw another roughly one-third increase at prices between $79.50 and $90. The stock is now at $103.SBA Communications (SBAC): SBAC is a 5.41% portfolio stake. The original 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. The stock currently trades well above those ranges at $146.Danaher Corporation (DHR): DHR is a 2.27% 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 $81.82. Q4 2016 saw a ~10% increase.Note: The prices quoted above are adjusted for the Fortive spinoff in July last year.Ubiquiti Networks (UBNT): UBNT is a 2.26% portfolio stake built up in H2 2014 at prices between $28 and $46.50. Q1 2015 also saw a ~40% stake increase at prices between $26 and $32. Since then, the position has been kept relatively steady. The stock currently goes for $65.12.TD Ameritrade (AMTD): AMTD is a ~2% portfolio position first purchased in 2009. The bulk of the current stake was built in 2011 & 2012 at prices between $15 and $22 and the stock is now at $43.10.LKQ Corporation (LKQ): LKQ is a 1.90% position established in 2015 at prices between $24 and $31. Last five quarters had seen a ~12% combined increase at prices between $25 and $36. The stock currently trades at $34.14.AlarmCom Holding (ALRM), Bank of America (BAC) WTS, CSX Corporation (CSX), Diamond Hill Investment Group (DHIL), Lamar Advertising (LAMR), Primo Water (PRMW), and WMIH Corp. (WMIH): These are very small (less than ~1% of the portfolio each) stakes left untouched this quarter.Note: Akre Capital Management has a ~6% ownership stake in Primo Water (PRMW).Below is a spreadsheet that highlights the changes to Charles Akre's Akre Capital Management US long stock portfolio as of Q2 2017:Regulatory Filings thru 5/29/2017: 13Gs on 2/13/2017: ESGR - 1.46M shares - ~9%. PRMW - 1.68M shares - 5.8%. CFX - 4.7M shares - 3.83%.- : PERFORMANCE - Separately Managed - 27 years - 12.7% vs 9.4% S&P (330-basis point diff compounded annually for 27 years), Private investment partnership - 23 years - 15.25% net to partners vs 9.2% for S&P. FBR Focus & Akre Focus mutual funds combined - 13.2% vs 7.7%. Akre - 7 years 125-basis point over market - ~13.8%. International Speedway - 20-times return over 10+ years - now not a great business because owner has given control to daughter who is not as talented. Penn National Gaming - horse race track - owner is a real-estate guy - never co-signed with wife although he borrowed a lot which impressed Akre - became largest non-Vegas operater - made 20-times. MasterCard - purchased 2/2010 (13 to 14 earnings growing much faster) when Dodd-Frank discussions - domestic debit issue - bought it as $22.20 average and today it is $109 - 5 times in 6 years. Moody’s - purchased 2/2012 at $39 average - today $110. Made 2.75-times in 5 years. Dodd-Frank - allowed 6-8 rating agencies but it is market driven - only three count - Moody’s, S&P, and Fitch - 40-40-20 split. Enstar - 10+ year ownership - buys insurance in runoff - 2007 purchase - paid $102.90 (2009 bought more at $56) for first shares and now at $195. Two hundred-baggers in his lifetime: Berkshire Hathaway & American Tower - own both still. AMT, Moody’s, MA can be bought today at ~19x 2018 cashflow - earnings yield of 5.5% compares well with 1.x% treasury - most of the time you can buy these at this valuation. At rare times, you can buy them cheap. AMT - bought 1999 when in 3 countries - now in 15 countries. 1999 in the 60s and was at $5 in 2002 - they bought and it later on dropped to $2 that year - in October saw it drop to 60c and we bought at 80c which eventually gave a 100-bagger - mostly because of leverage and debt coming due in short order. Great business weighed down by a bad balance sheet. So, it is possible to get great businesses at a good value at times and rarely for a steal. Penn National & Markel - the idea is not to sell as it is hard to realize how good a position is and so it is better to hold. Markel - - saw 20-times compounding over 20 years - bought at 2.5x book (444) and has only doubled in 10-years - paid too much as the rate of compounding since has dropped mainly because of secular decline in rates and so all businesses have done less well."