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Akre Capital Management, an investment management company, published the “Akre Focus Fund” second quarter 2023 investor letter. A copy of the same can be downloaded here.
Akre Capital Management follows an investment philosophy that targets a select group of outstanding businesses led by capable and honest managers who judiciously reinvest free cash flow. Referred to as the "three-legged stool," this approach is intuitive and enduring. The firm's overarching investment objective is to compound capital for investors at rates exceeding the average over extended periods, all while maintaining a level of risk below the industry norm. Historically, the firm, led by founder Chuck Akre, operated with a streamlined team that delivered robust results until Akre stepped down from the Akre Focus strategy in 2020.
Charles Akre, an accomplished asset manager with over 40 years of experience overseeing private funds, mutual funds, and separately managed accounts, leads the team. Partnering with Chuck on investment endeavors is John Neff, who serves as the portfolio manager of the Akre Focus Fund. After 21 years in the securities business at NYSE member firm Johnston, Lemon & Co., Chuck established Akre Capital Management in 1989. During his tenure at Johnston, Lemon & Co., Chuck handled diverse aspects of the business, including branch management, research, and asset management. From June 1993 onward, he operated the firm within the framework of Friedman, Billings, Ramsey & Co. Subsequently, in 2000, he opted to make the business private once again and relocated the firm to the rural village of Middleburg, Virginia.
In the third quarter of 2023, the value of Akre's 13F portfolio was approximately $11.52 billion. Akre's assets under management (AUM) are diversified among private funds, separately managed accounts, and the Akre Focus Mutual Fund (MUTF:AKREX) (AKRIX). Since its inception in 2009 through Q3 2023, the mutual fund has delivered an annualized return of 13.92%, surpassing the 12.92% of the S&P 500 Index. Year-to-date performance through Q3 2023 indicates a return of 10.10% for the fund compared to the S&P 500 Index's 13.07%. Currently, the cash allocation stands at approximately 6.1%, positioned near the lower end of the historical range. Akre has coined the term "compounding machines" to characterize the businesses he prefers to invest in.
