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Akre Focus Fund Commentary First Quarter 2021

The Akre Focus Fund commentary discusses the fund's performance in the first quarter of 2021. While the fund trailed the S&P 500's return of 6.17% with a return of 3.98%, its 12-month return of 41.23% outperformed the market. The fund experienced low turnover due to its strategy of identifying businesses that compound value over many years. Top positive contributors included CarMax, KKR, and American Tower, while top detractors were Costar Group, Verisk Analytics, and Roper Technologies. The fund remains invested in high-quality, exceptional businesses and expects their stock prices to outperform over the long-term, not necessarily at all times.

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Pranab Pattanaik
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145 views2 pages

Akre Focus Fund Commentary First Quarter 2021

The Akre Focus Fund commentary discusses the fund's performance in the first quarter of 2021. While the fund trailed the S&P 500's return of 6.17% with a return of 3.98%, its 12-month return of 41.23% outperformed the market. The fund experienced low turnover due to its strategy of identifying businesses that compound value over many years. Top positive contributors included CarMax, KKR, and American Tower, while top detractors were Costar Group, Verisk Analytics, and Roper Technologies. The fund remains invested in high-quality, exceptional businesses and expects their stock prices to outperform over the long-term, not necessarily at all times.

Uploaded by

Pranab Pattanaik
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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AKRE FOCUS FUND

Akre Focus Fund Commentary


First Quarter 2021
Greetings from Middleburg where spring is in full bloom, and it increasingly feels as if the long
COVID-19 winter may finally be thawing. The folks at Akre Capital Management are in various
stages of vaccination, and we hope you and your families are safe and healthy. While uncertainty
remains a constant, it is hard not to feel more optimistic as vaccination rates rise along with
temperatures.
The Akre Focus Fund’s first quarter 2021 performance for the Institutional share class was 3.98%
compared with S&P 500 Total Return at 6.17%. Performance for the trailing 12-month period
ending March 31, 2021 for the Institutional share class was 41.23% as compared with 56.35% for
the S&P 500 Total Return.
As you know from past writings, execution of our investment strategy is undertaken with the goal
of compounding shareholder capital at an above-average rate measured over decades. This
requires the avoidance of the short-term, tactical thinking fanned incessantly by Wall Street and
the financial media.
As an outcome of avoiding short-term thinking, the Fund has experienced low turnover, although
this outcome is not a goal in itself. We are not “buy and hold no matter what” investors and spend
much of our time critically reevaluating the businesses the Fund already owns. Thus, low
turnover is the logical outcome of identifying and owning businesses that compound economic
value per-share at above-average rates for many years. We believe this approach will continue to
serve our shareholders well. However, it also means that over any given time period the Fund’s
performance will trail or lead the market based on the share price performances of more or less
the same group of businesses. Said differently, we will not abandon what works to chase what is
working.
As Morgan Housel put it in his book, The Psychology of Money, “doing well with money has a little
to do with how smart you are and a lot to do with how you behave.” We heartily agree. Further,
we believe that setting rational expectations is crucial to good investment behavior. For example,

Performance Total Annualized Returns % as of 03/31/21


Since
Inception
Net Assets QTD YTD 1 YR 3 YR 5 YR 10 YR 8/31/09
Retail Share Class (AKREX) 3.90 3.90 40.85 19.52 19.83 17.37 17.03
Institutional Share Class (AKRIX) 3.98 3.98 41.23 19.84 20.15 17.68 17.34
S&P 500 TR 6.17 6.17 56.35 16.78 16.29 13.91 14.77

Performance data quoted represents past performance and does not guarantee future results. The
investment return and principal value of an investment will fluctuate so that an investor’s shares, when
redeemed, may be worth more or less than their original cost. Fund performance current to the most
recent month-end may be lower or higher than the performance quoted and can be obtained by calling
1-877-862-9556. The Fund’s annual operating expense (gross) for the Retail Class shares is 1.31% and
1.05% for the Institutional Class shares. The Fund imposes a 1.00% redemption fee on shares held less
than 30 days. Performance data does not reflect the redemption fee, and if reflected, total returns would
be reduced.

Mutual fund investing involves risk. Principal loss is possible. The Fund is non-diversified, meaning it
may concentrate its assets in fewer individual holdings than a diversified fund. Therefore, the Fund is
more exposed to individual stock volatility than a diversified fund. The Fund invests in small- and
medium- capitalization companies, which involve additional risks such as limited liquidity and greater
volatility than larger capitalization companies.

Akre Capital Management, LLC | 2 West Marshall Street, Middleburg, Virginia 20117 | 540-687-3880 | akrecapital.com | akrefund.com
AKRE FOCUS FUND

we expect the businesses the Fund owns to be periodically richly valued as well as cheaply valued
over the course of a long holding period. That expectation promotes good investment behavior
by encouraging patience for buying opportunities and reducing temptation to part with
exceptional businesses on the basis of fleeting valuation considerations alone.
Another expectation of ours is that the Fund will not, cannot, and should not outperform the broad
market at all times. The Fund’s performance is determined by a small and slow-to-change group
of businesses that we believe to be both exceptional and opportunistically purchased. While we
look to own “all-weather” businesses, we do not expect their stock prices to outpace at all times
and under all market conditions, particularly highly speculative market conditions. Having the
contrary expectation may lead to poor investment behavior, such as abandoning what works to
chase what’s working.
The largest five positive contributors to performance during the quarter were CarMax, KKR,
Topicus.com, American Tower, and O’Reilly Automotive. American Tower was the Fund’s largest
performance detractor in 2020 and its recent reversal is notable.
The largest five detractors from performance this quarter were Costar Group, Verisk Analytics,
Roper Technologies, Visa, and Alarm.com. Nothing noteworthy to point out.
The Fund’s cash weighting at March 31, 2021 was 2.9% compared with 6.2% at year-end and
10.3% on March 31, 2020. During the first quarter, we added a combined $452 million to a couple
of positions, and we also trimmed several positions and exited another position entirely.
We thank you for your continued support. Be safe and be well.

John & Chris

Top Ten Holdings as of 03/31/21 Sector Weightings as of 03/31/21


% of net % of net
Name assets Type assets
Mastercard, Inc. 11.7% Information Technology 34.8%
Moody's Corp. 10.2% Financials 19.1%
American Tower Corp. 9.6% Real Estate 13.8%
Visa, Inc. 7.2% Consumer Discretionary 12.5%
CarMax, Inc. 5.8% Industrials 12.1%
Constellation Software, Inc. 5.7% Communication Services 30.%
CoStar Group, Inc. 5.0% Health Care 2.4%
KKR & Co., Inc. 4.6% Cash & Equivalents 2.3%
Adobe, Inc. 4.5%
Roper Technologies, Inc. 4.3%

The composition of the sector weightings and fund holdings are subject to change and are not
recommendations to buy or sell any securities. Cash and Equivalents include asset backed bonds,
corporate bonds, municipal bonds, investment purchased with cash proceeds for securities lending,
and other assets in excess of liabilities.

The S&P 500 TR is a broad based unmanaged index of 500 stocks, which is widely recognized as
representative of the equity market in general. It is not possible to invest directly in an index.

The Fund’s investment objectives, risks, charges, and expenses must be considered carefully before
investing. The summary and statutory prospectus contains this and other important information about
the investment company and it may be obtained by calling (877) 862-9556 or visiting
www.akrefund.com. Read it carefully before investing.

The Akre Focus Fund is distributed by Quasar Distributors, LLC.

Akre Capital Management, LLC | 2 West Marshall Street, Middleburg, Virginia 20117 | 540-687-3880 | akrecapital.com | akrefund.com

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