An Interview With Broad Run Investment Management by John Rotonti, via The Motley Fool
A Motley Fool analyst interviews Broad Run’s portfolio managers about quality growth investing, valuation, and more.
Broad Run Investment Management, based in Arlington, Virginia, was founded in 2012 by Brian Macauley, David Rainey, and Ira Rothberg. The colleagues have a history of collaboration: They have worked together since 2004, applying the same investment approach Broad Run uses today. As of June 30, 2016, Broad Run had $2.5 billion in assets under management in a sub-advised mutual fund and separately managed accounts (SMAs). The three portfolio managers’ track record dates back to Sept. 1, 2009, when they assumed responsibility of the mutual fund.
For much of the past decade, Crispin Odey has been waiting for inflation to rear its ugly head. The fund manager has been positioned to take advantage of rising prices in his flagship hedge fund, the Odey European Fund, and has been trying to warn his investors about the risks of inflation through his annual Read More
Broad Run manages a concentrated investment strategy with about 20 to 30 stocks and 60% to 80% of assets in the top 10 positions. According to the firm’s website, Broad Run aims to invest in high-quality, growth-oriented businesses at discount valuations. The company manages concentrated portfolios because 1) finding superior businesses at discount prices is rare, and 2) it allows the investment team to focus its resources on the most promising businesses. The firm averages about 14% portfolio turnover, implying an average holding period of about 7 years.
Broad Run Investment Management
From its inception on Sept. 1, 2009 through June 30, 2016, Broad Run’s Focus Equity Strategy has generated a gross annualized return of 16.2%, and a net (after fees) annualized return of 15.1%, compared to the Russell 3000’s 13.5% return. Broad Run’s outperformance is driven by its ability to pick winning stocks: It has captured 96% of the market’s upside, but only about 85% of its downside.
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