A common theme among many of our portfolio companies is that management is opportunistically allocating excess capital toward the repurchase of shares. While capital allocation one of management’s most important responsibilities, many CEOs focus solely on their operating businesses and fail to allocate capital effectively.  In our portfolio, we hold a number of companies with managements that have demonstrated a strong understanding of capital allocation.  This is not by accident; it is part of our selection process.  In the most recent quarter, Group 1 Automotive, Jefferies Group, Synchrony, and HCA all actively repurchased significant amounts of their own shares. While … Read More

In 2017, the total value of exported U.S. goods was $1.57 trillion; the total value of imported goods was $2.44 trillion, leaving a U.S. trade deficit in goods of around $870 billion. The U.S. ran a surplus of about $300 billion in services, for a net deficit of roughly $570 billion.  While this deficit raises some cause for concern, most economists agree that maintaining open trade is likely to do more for U.S. prosperity than would managed trade.  Furthermore, given the structural budget deficit of the United States, it is difficult to balance the accounts without running a structural trade deficit. Closing one … Read More

MCM’s Garrett Arms recently sat down with Forbes contributor Luke Schiefelbein to discuss Pershing Square, one of the world’s largest publicly-traded hedge funds. Forbes: Why Bill Ackman Will Salvage Pershing Square  

This week, Warren Buffett provided a clearer look at Berkshire Hathaway’s management structure in the event he and vice-chair Charlie Munger ever depart their roles at the company.  The two oft-mentioned successors to the Berkshire throne, Ajit Jain and Greg Abel were appointed to the company’s Board of Directors.  In connection with the appointment, Abel was promoted to the role of Vice Chairman of Non-Insurance Business Operations and Jain to the role of Vice Chairman of Insurance Operations.  The announcement is viewed as another piece of Buffett’s move toward succession over time.  Both individuals serve essential roles at Berkshire and … Read More

Before a company is taken public through an initial public offering (IPO), it goes through a lengthy disclosure and review process with the Securities and Exchange Commission.  Financials are assembled and audited, outlining a track record–something investors who are contemplating buying the offering can evaluate.  Using these financials, investors that buy securities can examine things like the company’s capital structure or the cash flow of the underlying business. A new twist on the traditional IPO is the initial coin offering (ICO).  Purchasers of these offerings are not buying stock in a company, rather, they are purchasing digital coins from the … Read More

  As the Chinese financial sector announced second quarter results this week, it was reported that China’s top four banks collectively wrote off 130.3 billion yuan ($19.5 billion) of bad loans in the first half of 2016.  While charge-offs were up sharply from the prior year, the results reflected relatively healthy earnings numbers.  Not surprisingly, the market continues to view these reported financial figures with a skeptical eye—the MSCI China Banks Index is down roughly 25% over the past eighteen months. Many of the large Chinese financial firms now trade at sizable discounts to the book value of their equity, … Read More