| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | 6.19% | 23.82% |
The Weitz Partners Value Fund returned 6.19% in Q4 2021 and 23.82% for the full year, underperforming the S&P 500's 28.71% annual return. The fund's multi-cap value strategy using a Quality at a Discount framework faced headwinds as mega-cap stocks like Apple, Microsoft, and Tesla drove index performance while many smaller stocks declined significantly below 2021 peaks. Materials companies Vulcan Materials and Martin Marietta Materials were top contributors, benefiting from strong aggregate demand and the federal infrastructure bill providing visibility into future spending. Auto parts suppliers LKQ and AutoZone also performed well amid supply chain challenges. Software and data service providers were consistent detractors, including CoStar Group, Guidewire Software, and MarketAxess, though managers maintain confidence in these high-quality businesses. The portfolio trades at a price-to-value in the low-90s, suggesting adequate long-term return potential. Recent market corrections have improved opportunities for valuation-sensitive investors, with managers expecting an adventurous 2022.
Multi-cap value investing using a Quality at a Discount framework to identify high-quality businesses trading below intrinsic value across all market capitalizations.
The managers expect 2022 to be another interesting and adventurous year for investors. They believe their Quality at a Discount framework provides an enduring advantage and take comfort in the durability of their collection of high-quality businesses. While prudent to temper expectations, they see potential fuel left in the return tank from their sleeper holdings.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 19 2022 | 2021 Q4 | ACIW, AON, AZO, BKI, CSGP, DNB, FRC, GOOG, GWRE, HEI, IEX, LBRDK, LBTYK, LH, LILAK, LKQ, MKTX, MLM, SCHW, VMC | infrastructure, materials, multi-cap, Quality, software, valuation, value | - | Weitz Partners Value Fund's multi-cap value strategy delivered solid absolute returns but lagged mega-cap driven indices. Materials and auto parts companies drove performance while software holdings detracted. The stealth correction in many stocks below mega-caps has improved the opportunity set for their Quality at a Discount approach, with the portfolio trading attractively in the low-90s price-to-value. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2021 Q4 |
Infrastructure SpendingFederal infrastructure bill adds visibility into money allocated to infrastructure projects, benefiting materials companies like Vulcan Materials and Martin Marietta Materials with strong aggregate volumes, backlogs, and pricing momentum. |
Infrastructure Materials Aggregates Federal Spending |
Auto AftermarketLKQ benefited from increased demand for recycled and refurbished auto parts as repair shops faced industry supply chain challenges. AutoZone also posted returns above 70% for the year. |
Auto Parts Aftermarket Supply Chain Repair | |
Enterprise SoftwareSoftware and data service providers were consistent detractors including CoStar Group, Guidewire Software, Black Knight, ACI Worldwide, and MarketAxess. Despite being laggards, these are extremely good businesses run by savvy managers operating in advantaged markets. |
Software Enterprise Data Services Technology | |
ValueFund uses Quality at a Discount framework and believes valuation remains their North Star. Portfolio trades at price-to-value in the low-90s, suggesting adequate long-term return potential. Recent stealth correction has improved options for valuation-sensitive investors. |
Value Valuation Quality Discount |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| VMC | Vulcan Materials was the Fund's largest quarterly contributor due to solid results and bright outlooks for their prosaic, essential products. Aggregate volumes and backlogs are strong across end markets, pricing momentum is robust, and the federal infrastructure bill adds visibility into the amount of money that will be allocated to infrastructure projects. |
| MLM | Martin Marietta Materials was the Fund's largest quarterly contributor due to solid results and bright outlooks for their prosaic, essential products. Aggregate volumes and backlogs are strong across end markets, pricing momentum is robust, and the federal infrastructure bill adds visibility into the amount of money that will be allocated to infrastructure projects. |
| LKQ | Auto parts supplier LKQ contributed to returns as the company enjoyed increased demand from repair shops for its recycled and refurbished parts, in the face of industry supply chain challenges. Auto parts companies LKQ and AutoZone posted returns above 70%. |
| SCHW | Charles Schwab was a notable quarterly contributor. Financial companies Charles Schwab and Aon plc were also strong contributors. Schwab integrated its transformational TD Ameritrade acquisition. |
| GOOG | Alphabet – Google's parent company – was the standout contributor for the year as the stock rose 65% while earnings appeared to be on track to double. Remarkably, we think the company remains discounted despite its nearly $2 trillion market value. Credit to research analyst Jon Baker's stellar analytical work for helping us own and hold the stock with confidence. |
| LILAK | Liberty Latin America was the Fund's largest quarterly detractor, as a resurgence of COVID-19 cases took hold in parts of Latin America. The company's wireless business tends to be more economically sensitive, leading to a bumpier path for this deep value investment. |
| LBRDK | Liberty Broadband (26% owner of Charter Communications) shares fell as recent slowdowns in broadband customer additions fueled fears about rising competitive intensity. Our long-term outlook remains more sanguine, and Charter continues to generate free cash flow and buy back stock at attractive valuations. |
| CSGP | CoStar Group (commercial real estate data and services) was the largest detractor. These are extremely good businesses, run by savvy managers, operating in advantaged markets. Each is a leader in its respective area of expertise. Even though they were laggards for the year, we like our chances with this group over the next few years. |
| GWRE | Enterprise software companies including Guidewire Software (insurance) experienced price markdowns. These are extremely good businesses, run by savvy managers, operating in advantaged markets. Each is a leader in its respective area of expertise. Even though they were laggards for the year, we like our chances with this group over the next few years. |
| BKI | Enterprise software companies including Black Knight (mortgages) experienced price markdowns. These are extremely good businesses, run by savvy managers, operating in advantaged markets. Each is a leader in its respective area of expertise. Even though they were laggards for the year, we like our chances with this group over the next few years. |
| ACIW | Enterprise software companies including ACI Worldwide (payments) experienced price markdowns. These are extremely good businesses, run by savvy managers, operating in advantaged markets. Each is a leader in its respective area of expertise. Even though they were laggards for the year, we like our chances with this group over the next few years. |
| MKTX | MarketAxess (electronic bond trading platform) shares also declined from our mid-year purchase price. These are extremely good businesses, run by savvy managers, operating in advantaged markets. Each is a leader in its respective area of expertise. Even though they were laggards for the year, we like our chances with this group over the next few years. |
| AZO | Auto parts companies LKQ and AutoZone posted returns above 70%. Recent mid-cap additions such as AutoZone align with our collective vision for a successful go anywhere equity portfolio. |
| AON | Financial companies Charles Schwab and Aon plc were also strong contributors. Aon prudently walked away from one (Willis Towers Watson) when regulatory concessions became too onerous. |
| LH | LabCorp enhanced its strong execution by announcing plans to initiate a dividend and boost share repurchases in 2022. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
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