Mason Hawkins Q2 letter to shareholders, has some interesting mentions of equities, below is an excerpt on Dell.
(Dell, Chesapeake, Level 3) and outside the U.S. (HRT). Within five years of the 2000 period, the Partners and Small-Cap Funds had dramatically outperformed their indices with 5 and 10 year numbers far higher than their benchmarks. Today, we believe our absolute and relative return opportunity for the next five and ten years is equally as bright across all four Long leaf Funds for several reasons.
First, equities should have a strong tailwind with earnings yields still much more attractive than 10-year government bond yields. We presented the following charts on the attractiveness of equities in mid-June of last year at the Morningstar conference. The essence of our presentation was that 1) investors would prefer 8-9% after-tax, growing free cash flow coupons from business ownership to the 1.6% taxable, fixed coupons from 10-year treasuries; 2) equities would significantly outperform fixed income; and 3) investors would lose money in intermediate to long-dated bonds. Since that time, spreads have narrowed, 10-year treasuries have fallen 5%, stock market gains have been over 20%, and the Longleaf Funds have delivered strong absolute and relative results, despite the weak second quarter.
Second, those qualities that guided our successful historic results and attracted you to Southeastern and Longleaf remain firmly in place. A disciplined, long-term, concentrated partnership approach has defined our firm since 1975. Our core investment criteria remain good business, good people, and good price, and our research- intensive, team-driven process is intact. The leadership team who created our successful multi- decade record remains fully engaged and committed. Few firms can boast a consistent culture and stable management for almost four decades. Even fewer are as aligned with clients given our unique ethics policy mandating that, unless granted an exception, all of our public equity money be invested in the Longleaf Partners Funds.
Our third reason for confidence is that the quality and accuracy of our research continues to improve. We have gained knowledge, experience, and an expanded network of contacts over the last 38 years