October saw a tough earnings season in the run up to the election. Read on to learn how our funds performed.

It was a challenging third-quarter earnings season, with approximately one out of every three domestic midcap companies missing consensus earnings estimates. We put no weight on quarterly analyst estimates for making our investment decisions, but earnings season on the whole can provide interesting insight into how different sectors of the economy are performing. This round of earnings suggest that consumer discretionary and materials companies are struggling, while tech is roaring strong.

Fund/Benchmark Index

October Result

Since Inception (Annualized)

The Motley Fool Independence Fund (FOOLX)

-2.54%

11.24%

FTSE Global All Cap Index

-1.94%

10.35%

MSCI World Index

-1.91%

10.82%

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

During the month we initiated a new position in NXP Semiconductors, only to have Qualcomm announce on Oct. 29 that it is acquiring the company. While we aim to own the companies we buy for years, we’ll take a quick win when we can get it. We sold out of Cookpad and Trimas.

Level 3 Communications gained 21% in the month. On Oct. 31, CenturyLink announced that it will acquire Level 3. The companies expect the transaction to close in the third quarter of 2017.

Ionis Pharmaceuticals dropped 29% in the month after gaining 24% the month before. Shares of small-cap drug developers are volatile. Rest assured that we are focused on the long-term potential of the company’s drug programs and the progress the company is making with their development.

Fund/Benchmark Index

October

Since Inception (Annualized)

The Motley Fool Great America Fund (TMFGX)

-3.58%

10.99%

Russell Midcap Index

-3.17%

12.24%

Russell 2000 Index

-4.85%

10.81%

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

We opened a new position in Jones Lang LaSalle, a real estate services company that provides a diverse range of services, including participating in real estate leasing and sales transactions, property management services, and asset management. We exited positions in Chuy’s Holdings and TriMas.

Level 3 Communications was the top performer in the fund for the month. IPG Photonics shares gained 17.8% on strong Q3 earnings. The laggards in the fund were Ionis Pharmaceuticals and Proto Labs, whose shares declined 25% after the company issued a weak outlook for Q4.

Fund/Benchmark Index

October

Since Inception (Annualized)

The Motley Fool Epic Voyage Fund (TMFEX)

-0.91%

4.62%

FTSE Global All Cap ex-US Index

-1.84%

5.11%

FTSE Emerging Markets All Cap China A Inclusion Index

0.65%

2.18%

Russell Global ex-US Index

-1.65%

5.50%

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

The team continues to see attractive investment opportunities in emerging markets and initiated new positions in Ctrip.com, Grupo Aeroportuario Del Pacifico, Grupo Aeroportuario Del Sureste, and Safaricom. Leaving the portfolio were Fast Retailing, Fanuc, Halfords Group, Kobayashi Pharmaceutical, and Tessenderlo Chemie.

The best performers in the fund for the month were Mitra Adiperkasa, which gained 19.6%, and Shimano, up 16%. At the bottom of the list were Halfords Group, down 10.8%, and MercadoLibre, which fell 9%.

Where do we go from here?

Last week’s presidential election may have had a surprising outcome, but swirling political winds do not affect how we analyze companies or our long-term buy-and-hold philosophy. As always, we are going to keep looking out for business that we believe are high quality and that are managed by talented people who aim to serve the interests of all stakeholders. 

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