On Wednesday, The Motley Fool had Chuck Akre, who runs a value focused fund and has a long history of outperforming the S&P, swing by the office to talk about his thoughts on investing.
In the video below, Fool analyst Eric Bleeker details some of the lessons Chuck focused on during his chat with the company.
First, Chuck highlighted the three main components he uses to assess any business.
- The business model: What companies not only have a competitive advantage, but an enduring one that can be sustained through the future? It's a challenging area to assess; Chuck said that a decade ago, if he had to pick any local company within the Washington, D.C. area as having the best franchise and enduring model, he would have picked the Washington Post
(NYSE: WPO). In the past couple years we've witnessed how susceptible the company was to technological shifts.
- The people: What's management's incentive structure, what kind of skills and integrity do they have? Chuck called out Markel's
(NYSE: MKL)management team as an example of people who excel in this area.
- Reinvestment: Can the company reinvest at above-average returns to create a market-beating "compounding machine"?
As far as lessons Chuck's learned from 2008, he said that his principle takeaway was that as part of investing, you must incorporate part of your worldview. Value investors tend to focus on companies first, and see world events as ancillary, but Chuck has definitely backed off that investing style. For example, Chuck's incorporating his macro leeriness about consumer spending into a more positive view of off-price retailers. He noted that among a basket of companies that includes TJX Companies
So investors, while the hunt for great companies should take priority, maybe its time to focus a bit more on the big picture. For more information about Chuck's chat, watch the video below:
Fool contributor Eric Bleeker owns shares of no companies listed above. Markel is a Motley Fool Inside Value choice. The Fool owns shares of Markel. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.