Strong stock performance from some of our longtime holdings led to a big month for our domestic fund.

 

February

Since Inception (Annualized)

Inception Date: 11/1/10

Motley Fool Great America Fund (TMFGX)

4.96%

12.77%

Russell Mid-Cap Index

4.31%

13.83%

Russell 2000 Index

3.80%

13.32%

For a standardized list of performance for the Great America Fund, please click here. For fund holdings, please click here.

February was a good month for domestic stocks, and the Great America Fund benefited from the ebullient environment. Three of our holdings -- American Woodmark, Infinera, and Varex Imaging -- gained more than 20% during the month. Performance also got a boost from two of the fund’s largest holdings, Thor Industries and XPO Logistics, with returns of 7.1% and 14.0%, respectively. I find it interesting that some of the recent big contributors to the fund’s performance are companies that we have owned for over four years. That includes Varian Medical Systems, which was the parent company of the recently spun out Varex Imaging.

Thor Industries is the nation’s leading manufacturer of RVs, with management claiming 47% market share at the end of 2016. CEO Bob Martin believes that 2017 will bring even higher RV unit volume sales than did 2016, which was the best year for wholesale RV sales since the 1970s. We embrace long-term buy-and-hold investing at Fool Funds, and Thor is one example of our putting that philosophy into practice. We’ve owned shares of Thor since the inception of the fund, and through a combination of small and steady purchases and share-price appreciation, it is now the largest holding in Great America.

The two worst performers in the fund for the month were generic-drug company Aceto, down 19.6%, and outdoor-sporting-goods retailer Cabela’s, down 16.2%. Aceto reported weak earnings for the second quarter of its fiscal 2017, with sales down 4.6% and profits virtually disappearing. Like many other retailers, Cabela’s reported a dismal Q4, with merchandise sales down more than 6% and net income decreasing by 26%.

During the month we exited our positions in Natus Medical, Pebblebrook Hotel Trust, and Polaris. Two new companies entered the fund: Dorman Products and Sabre. Dorman Products is a leading supplier of aftermarket replacement parts for passenger cars and light- and heavy-duty trucks. Sabre is a tech company that provides software to enable airline and hotel reservations. We think very highly of the management teams and competitive positions of Dorman Products and Sabre.

 

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