Quick stats of companies that we own…
Berkshire is trading with an 11% owners earning yield. Berkshire collects this capital and will likely grow the share price at around this level for many years to come.
Google is growing at 24%. Whilst this growth rate is likely to slow over time, it still has enormous growth in emerging markets through Android mobile phone platform dominance.
Managed Accounts is growing at 62%. Managed discretionary accounts growth is in its infancy with single digit billions under management compared to wrap platforms with funds under management of hundreds of billions. The transition from wraps to managed discretionary management has many years to run.
Rolls-Royce is likely to conservatively have more than double the earnings from here in the next few years as the cash-flows of the A350 start to grow. Rolls-Royce is continuing to gain market share over GE in the long-haul engine market. The difficulties from their oil and gas segment are now mostly behind them.
Wells Fargo will continue to gather deposits despite challenges to their procedures. They remain the superior bank in the US with deposits exceeding loans, something very few can claim.
TPG is continuing to steal market share from their more expensive competitors. Their competitors are having difficulty whilst TPG grew at 11% last year.
OFX has likely passed the worst of its restructuring. This is a very high return on equity business. They are lower cost than the banks by a large margin and will continue to offer far cheaper international payments and great service. They had some below average management who overspent and we believe with a new direction they can once again regain their growth.
Capilano will continue to sell more honey at higher prices over the years as they dominate the Australian market and increase their international sales. Their China sales grew at 87% last year and are set to become a major part of their growth over time.
H&R Block has been a difficult investment with management overpaying for their initial share buyback. This unforced error has been outweighed by continuing to purchase shares at far lower prices. The value of the business to shareholders is now increasing with these buybacks. They still have 25% of the size of the business in planned buybacks. They are increasing their dividend.
These businesses as a whole will continue to provide solid returns for shareholders over the coming years despite a generally difficult investment environment due to high valuations.
Some will have temporary difficulty. Others will do better than we hope. We have no foresight of short-term returns, however we are very comfortable that we are positioned well for your investment period, regardless of the market being at elevated levels.