Chuck Akre at Capitalize For Kids Sohn Canada Conference

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Chuck Akre of Akre Capital Management who presented four case studies.


Chuck Akre's Sohn Canada Presentation

He presented four case studies of companies who have a successful capital allocation record and high returns on tangible capital.  Quickly outlined Danaher (DHR), Colfax (CFX), and Berkshire Hathaway (BRK.A), however no specific recommendations were given.  It should be pointed out, however, that CFX has seen quite the drastic sell-off recently and it has been one of Akre's top holdings for some time.

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.

What We're Reading ~ Analytical Links 12/4/13

On investment idea velocity [Dasan]

Mapping investor behavior [All About Alpha]

Should AT&T (T) buy Vodafone (VOD)? [FT]

Bullish thesis on Sears (SHLD) starting to show cracks? [Peridot Capitalist]

A write-up on Colfax Corp (CFX) [Brooklyn Investor]

Once cable's king, Malone aims to regain his crown [Dealbook]

Deflation fears stalk eurozone [The Guardian]

Stock funds lure most cash in 13 years as investors chase rally [Investment News]

Short seller: best opportunity in two decades [CNBC]

Treasury seeks an exit from General Motors (GM) by year-end [Dealbook]

Paper on the valuable asset of spectrum [SSRN]

Advice on careers, finance and life from Harvard Business School class of 1963 [HBS1963]

Clear Channel's Bob Pittman on the value of dissent [NYTimes]

East Coast on Transformation Investments: Union Pacific, Colfax & WABCO (Q4 Letter)

Christopher Begg's East Coast Asset Management is out with their Q4 letter.  Last time, we highlighted their letter on investment process and this time around, they focus on examples of 'transformations' that they invest in.

East Coast defines transformations as businesses that often have average or below-average economics and they are focused on seeking the cause that will produce a 'meaningful inflection point of change' on the economics of the business.

Begg writes,

"Our investment process becomes considerably more important when we try to ascertain if a business is truly transforming and emerging toward greatness.  Every business is either getting better or worse with change, and we feel the market tends to value businesses on a one-point perspective by inferring the status quo.  This can lead to mispricings for those transformations that we identify prior to change agents being reflected on businesses' financial statements."


3 Types of Transformations & Investment Examples

They've broken this down into 3 categories:

Secular:  Prolonged positive inflection point in a business' economics (often after industry consolidation).  Examples that East Coast owns include Union Pacific (UNP) and Burlington Northern Santa Fe (via Berkshire Hathaway ~ BRK.B)

Systemic: A business that adopts new companywide operational and cultural methods that drive change.  Ex: Colfax Corp (CFX), which East Coast purchased in the fourth quarter.

Separation: Often a result of spin-offs, these businesses weren't operating at full potential within the context of a larger organization.  Ex: WABCO (WBC), which they also purchased in Q4.


To read East Coast's thesis summary on each security, read their Q4 letter embedded below:

 


For more from this manager, head to East Coast's thoughts on what defines a great business and a look at IBM.

John Griffin's Blue Ridge Capital Buys Colfax (CFX)

John Griffin's hedge fund firm Blue Ridge Capital filed a 13G with the SEC after market close yesterday disclosing a brand new position in Colfax (CFX).

Per the filing, Blue Ridge now owns 5.73% of the company with 5,370,000 shares due to portfolio activity on July 6th.  They did not own a position at the end of the first quarter, so they've built this position somewhere between April and July.

In other activity from this fund, we've detailed how Blue Ridge was buying Martin Marietta Materials as well.

Per Google Finance, Colfax is "a global industrial manufacturing and engineering company. The Company provides gas- and fluid-handling and fabrication technology products and services to commercial and governmental customers worldwide under the Howden and ESAB brand names and by Colfax Fluid Handling. Colfax’s products are marketed principally under the brand names Allweiler, Baric, Fairmount Automation, Houttuin, Imo, LSC, COT-Puritech, Portland Valve, Tushaco, Warren and Zenith."

For more from John Griffin's firm, check out Blue Ridge's recommended reading list.