Author Topic: Chuck Akre sells most of his BRK  (Read 3831 times)

thepupil

  • Hero Member
  • *****
  • Posts: 1684
Re: Chuck Akre sells most of his BRK
« Reply #10 on: May 12, 2020, 08:34:02 AM »
I guess what's interesting is that Akre still holds 4+% of MKL. I don't see why MKL is more attractive than BRK. I also don't quite understand holding something like MKL in a fund. You're basically buying a company that holds a bunch of stocks and not even at a discount. Also somewhat true for BRK, but BRK at least has pretty big wholly owned businesses part.

I agree with you that BRK > MKL.

I would also point out that again using the Q1 2018 13-F's and the Q1 2020 13-F's, Akre has gone from owning 3.7% to 3.6% of MKL and it has declined from 8%+ to a ~4% position.

Akre has been "selling" MKL in a tax efficient manner via dilution with inflows and letting other positions get bigger.


Jurgis

  • Hero Member
  • *****
  • Posts: 5356
    • Porfolio
Re: Chuck Akre sells most of his BRK
« Reply #11 on: May 12, 2020, 08:36:59 AM »
I guess what's interesting is that Akre still holds 4+% of MKL. I don't see why MKL is more attractive than BRK. I also don't quite understand holding something like MKL in a fund. You're basically buying a company that holds a bunch of stocks and not even at a discount. Also somewhat true for BRK, but BRK at least has pretty big wholly owned businesses part.

I agree with you that BRK > MKL.

I would also point out that again using the Q1 2018 13-F's and the Q1 2020 13-F's, Akre has gone from owning 3.7% to 3.6% of MKL and it has declined from 8%+ to a ~4% position.

Akre has been "selling" MKL in a tax efficient manner via dilution with inflows and letting other positions get bigger.

Good insight.

Maybe he sold BRK for tax reasons too: a good year to match whatever BRK gains they have against losses elsewhere? Not sure. Just thinking aloud.  ::)
"Human civilization? It might be a good idea." - Not Gandhi
"Before you can be rich, you must be poor." - Nef Anyo
"Money is an illusion" - Not Karl Marx
--------------------------------------------------------------------
"American History X", "Milk", "The Insider", "Dirty Money", "LBJ"

thepupil

  • Hero Member
  • *****
  • Posts: 1684
Re: Chuck Akre sells most of his BRK
« Reply #12 on: May 12, 2020, 08:39:21 AM »
Why did they sell Berkshire now?

Berkshire has owned highly regulated businesses for years. Same with its bank portfolio. It hasn't met those aspects of Akre's criteria for a long time - so why sell now?

Perhaps Akre doesn't believe Berkshire fits the remainder of his criteria, perhaps:

Enduring, predictable high ROEs* and FCF**
Identifiable, sustainable competitive advantages
Pricing power in excess of costs, inflation protection

As of July 31st 2019, the Akre Focus Fund owned 200,000 B shares, a 0.4% position
https://www.akrefund.com/wp-content/uploads/2019/09/Akre-Focus-Fund-7.31.19-Annual-Report.pdf

As of January 2020, the Akre Focus Fund owned 200,000 B shares, a 0.3% position.
https://www.akrefund.com/wp-content/uploads/2020/04/Akre-Focus-Fund-Semiannual-Final-1.31.20.pdf

they could have just realized a loss and are using the opportunity to sell some highly appreciated shares.

For example, they sold 1/2 their Primo Water shares. No idea when they bought but maybe they are realizing a loss (based on the stock price) and used that loss to offset the gain on sale of the berkshire (which I assume has been held forever)
« Last Edit: May 12, 2020, 08:48:36 AM by thepupil »

thepupil

  • Hero Member
  • *****
  • Posts: 1684
Re: Chuck Akre sells most of his BRK
« Reply #13 on: May 12, 2020, 08:41:00 AM »
Akre is a super rich, super successful dude who follows a consistent investment process. I imagine he is tax sensitive and find the series of events discussed here to be consistent with all of that.

the dude has like 3-10% turnover and doesn't trade much and has been growing in value and receiving net inflows, and has a lot of highly appreciated stock, and manages a RIC that passes on realized gains to his clients (who get annoyed by that). put yourself in his position and think how he operates as a PM.

when your AUM/fund size is going up and if you aren't buying more stock (as in Markel), you are selling the position and vice versa. you are making the company a smaller determinant of your absolute and relative performance by which you are judged and by which you receive inflows which determine your wealth (in addition to your own balance sheet investment in the fund compounding).

I think there are many reasons to own or not own Berkshire that are completely independent of Chuck's tax management/portfolio clean-up / whatever is going on here. I doubt anyone owned Berkshire because of Chuck's ringing endorsement via his 40 bp position, that is now sized down.
« Last Edit: May 12, 2020, 08:54:06 AM by thepupil »

Coleman

  • Newbie
  • *
  • Posts: 3
Re: Chuck Akre sells most of his BRK
« Reply #14 on: June 10, 2020, 08:22:43 AM »
More recently, they've made a virtue of their streamlining the portfolio and reducing the number of holdings.
@colemanrhawkins

Liberty

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 12712
  • twitter.com/libertyRPF
    • twitter.com/libertyRPF
Re: Chuck Akre sells most of his BRK
« Reply #15 on: June 12, 2020, 10:23:23 AM »
I thought it was interesting because Akre has been holding Berkshire for many decades, not because of the size of the position in his portfolio.
"Most haystacks don't even have a needle." |  I'm on Twitter  | This podcast episode is a must-listen

buffetteer1984

  • Jr. Member
  • **
  • Posts: 71
Re: Chuck Akre sells most of his BRK
« Reply #16 on: June 12, 2020, 11:39:42 AM »
What's more interesting is Chuck Akre never thought Berkshire was worth making a bigger part of his portfolio.  That should tell you what he thinks of the company despite prices down into the 160-170. That also coincides with Buffett claiming it wasn't much of a bargain either.  He instead added positions like Adobe and Livenation at decent size on top of his other top holdings.