Thomas Bancroft’s Makaira Partners Is Betting On These Stocks

Thomas Bancroft’s Makaira Partners has filed its latest 13F with the Securities and Exchange Commission, detailing its long equity positions at the end of the year. There has been relatively little turnover in the fund’s positions over the past quarter, so let’s take a look at the past performance and future prospects of its top picks, of which Wesco Aircraft Holdings Inc (NYSE:WAIR) leads the pack for the second straight quarter.

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Makaira Partners was founded in 2006 by Bancroft, a former portfolio manager and Senior Managing Director at Plaza Investment Managers. Bancroft, who graduated from the University of Colorado with a B.S in political science, was listed by Berkshire Hathaway’s Tom Combs as one of the three people he would hire. The small fund invests in a handful of long-term positions, with a focus on growing but stable companies. Companies in the consumer discretionary (discretionary spending) sector accounted for 42.7% of the fund`s holdings at the end of 2014, as it appears to be betting on burgeoning consumer confidence and disposable income in the coming years.

Wesco Aircraft Holdings Inc (NYSE:WAIR) is not one of those companies, though it was Makaira`s largest holding at the end of 2014 with 7.31 million shares. That was a 27% increase thanks to the purchase of 1.56 million shares during the quarter. Wesco is not actually an airline, but rather an industrial producer of airline parts and services, such as electronics, bearings, and fluid system products, as well as custom-designed products. The company also offers inventory management services to the aerospace industry.

Despite the vastly increased position, and the fact that Makaira’s equity portfolio decreased slightly in overall value, Wesco Aircraft Holdings Inc (NYSE:WAIR)’s percentage of the fund’s portfolio only increased from 17.43% to 18.02%. That was the result of the poor fourth quarter the stock suffered, as it slid 19.66%, the majority of that coming on November 20, when it announced guidance for fiscal year 2015 that was below expectations. It’s possible the newest batch of shares were purchased after that dip, when Makaira saw a good opportunity to build on their position at a reduced rate.

Wesco has since rebounded slightly, up 9.65% over the past six trading days following the release of its latest earnings on February 5 that showed the company posting net sales of $373.3 million, a 66% increase against the year-ago period.