Tracking Akre Capital Management Portfolio - Q2 2022 Update

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John Vincent
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Summary

  • Akre Capital Management’s 13F portfolio value decreased from $14.67B to $12.49B this quarter.
  • They added Snowflake and increased DigitalBridge & Goosehead Insurance while decreasing Mastercard, CoStar Group, and Alarm.com during the quarter. They also dropped ANSYS.
  • The top three positions are Mastercard, American Tower, and Moody’s, and they add up to ~42% of the entire portfolio.

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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 8/11/2022. 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 Q1 2022.

This quarter, Akre’s 13F portfolio value decreased ~15% from $14.67B to $12.49B. The number of positions increased from 21 to 22. The largest five stakes are Mastercard, American Tower, Moody’s, Visa, and O’Reilly Auto. They account for ~58% of the total portfolio value.

AUM is distributed among private funds, separately managed accounts, and the Akre Focus Mutual Fund (MUTF:AKREX) (MUTF:AKRIX). Since the 2009 inception through 6/30/2022, the mutual fund’s annualized returns are at 14.53% compared to 12.98% for the S&P 500 Index. For the year through 6/30/2022, the fund returned negative 22.85% compared to negative 19.96% for the S&P 500 Index. Their cash allocation has increased from ~2% to ~4.3% during H1 2022. 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.

Stake Disposals:

ANSYS Inc. (ANSS): ANSS was a 1.32% 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. The disposal this quarter was at prices between ~$228 and ~$323. It is now at ~$280.

New Stakes:

Snowflake Inc. (SNOW) and Alphabet (GOOG) Calls: These are the new positions this quarter. The 1.11% SNOW stake was purchased at prices between ~$113 and ~$241 and the stock currently trades at ~$161. The leveraged long stake in GOOGL through Calls is a very small 0.09% of the portfolio position established this quarter.

Stake Increases:

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. Since then, the activity has been minor. It currently trades at ~$322 and is now the third-largest stake at 12.42% of the portfolio.

Note: Akre’s cost-basis on MCO is ~$39.

KKR & Company (KKR): KKR is a ~6% 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 2020 had also seen a ~15% increase. Since then, there have only been minor adjustments. The stock currently trades at $56.54.

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

CarMax Inc. (KMX): The 5.32% 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. 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 ~$100. There were minor adjustments in the last five quarters.

Adobe Inc. (ADBE): ADBE is a 4.87% 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 ~$438. Last five quarters have seen only minor adjustments.

Brookfield Asset Management (BAM): BAM is a 4.74% 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 $52.49. Last few quarters have seen only minor adjustments.

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

Salesforce Inc. (CRM): CRM is a ~4% of the portfolio position established in Q2 2021 at prices between ~$211 and ~$246 and the stock currently trades below that range at ~$188. There was a ~8% increase this quarter.

DigitalBridge (DBRG) previously Colony Capital: The DBRG stake saw a ~6x increase in Q3 2020 at prices between ~$1.80 and ~$2.90. This quarter saw a ~55% stake increase at prices between ~$4.55 and ~$7.55. The stock currently trades at $5.47. The stake is still very small at 0.64% of the portfolio.

Goosehead Insurance (GSHD): GSHD is a minutely small position established in Q4 2018 and increased over the next two quarters. There has been periodic buying since. Goosehead had an IPO in April 2018 priced at $10. It currently trades at $66.45. The position is still very small at 0.13% of the portfolio.

Dollar Tree (DLTR): DLTR position was 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 in Q4 2021 at prices between ~$96 and ~$147. The position was almost sold out last quarter at prices between ~$126 and ~$160. The stock currently trades at ~$168. There was a marginal increase this quarter.

Berkshire Hathaway (BRK.B): The minutely small 0.04% BRK.B stake saw a ~4% increase this quarter.

Stake Decreases:

Mastercard (MA): MA is currently the largest 13F stake at ~15% of the portfolio. It was first purchased in 2010 and consistently increased since. Their overall cost-basis is ~$22 compared to the current price of ~$355 per share. Q1 2020 saw a ~9% stake increase while this quarter saw a ~14% selling at prices between ~$309 and ~$379.

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.

American Tower (AMT): AMT has been in the portfolio for over two decades. It is the second-largest stake at ~14% of the portfolio. Recent activity follows: the six years thru 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 ~$278.

Note: Akre is very bullish on AMT as incremental margins are at over 90% and growth in wireless communication is a significant tailwind.

O’Reilly Automotive (ORLY): ORLY is a large (top five) ~8% 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 ~$744. Last five quarters have seen only minor activity.

Roper Technologies (ROP): ROP is a 5.23% 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 ~$434. H1 2021 had seen a ~12% trimming. Last four quarters have seen only minor activity.

CoStar Group (CSGP): The 3.44% 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. There was a ~25% reduction this quarter at prices between ~$54 and ~$68. The stock currently trades at $73.50.

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

Alarm.com Holdings (ALRM): ALRM is a very small 0.13% 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. There was a ~50% reduction last quarter while in this quarter there was a ~73% increase. The stock currently trades at ~$75.

Kept Steady:

Visa Inc. (V): Visa is a large (top five) 8.27% 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 was followed with 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 ~$215.

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

Verisk Analytics (VRSK): VRSK is a 3.39% 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 ~$204.

Danaher Corporation (DHR): DHR is a 3.36% 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 ~$297.

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

ThredUp Inc. (TDUP): The minutely small TDUP stake was kept steady this quarter.

Below is a spreadsheet that highlights the changes to Akre Capital Management’s 13F stock portfolio as of Q2 2022:

Chuck Akre - Akre Capital Management's Q2 2022 13F Report Q/Q Comparison

Chuck Akre - Akre Capital Management's Q2 2022 13F Report Q/Q Comparison (John Vincent (author))

Source: John Vincent. Data constructed from Akre Capital Management’s 13F filings for Q1 2022 and Q2 2022.

This article was written by

John Vincent profile picture
21.39K Followers
Focused on cloning strategies by analyzing 13F reports of a curated set of around fifty super-investors and generating Absolute Returns thru exploiting inefficiency, volatility, and momentum.

Disclosure: I/we have a beneficial long position in the shares of DBRG, GOOGL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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