The stock market continued to rise in September. Portfolio Manager Bryan Hinmon looks back at how our funds performed.

September brought the third quarter to a close quietly. With summer vacations over and school in full swing, most families are back to business as usual. For us, that means football season is here (American football, that is) and another earnings season is around the corner. More on that, later, but for now, here is an update on our funds for September.

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September

Since Inception (Annualized) 

The Motley Fool Independence Fund (FOOLX)

0.68%

11.77%

FTSE Global All Cap Index

0.73%

10.78%

MSCI World Index

0.58%

11.24%

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

During the month we didn’t make any new purchases. We did sell our ownership in Innophos, whose new management team is aggressively changing its business. We also sold down our stake in TriMas after the company let go of its long-time CEO Dave Wathen. We spend a good deal of time trying to understand how management teams tick, their impact on company culture, and how they will steward our investment. When we can’t achieve clarity on those issues, we are happy to redeploy capital elsewhere.

Ionis Pharmaceutical (+24%) and Top Glove (+8%) were the top performers in September. Ionis received positive news on one of its emerging drug compounds, restoring some of the faith in the company’s pipeline that was shaken earlier this year. Beer and steak brought up the rear last month – it sounds like this cannot be true, but I checked the numbers twice. Boston Beer, maker of Samuel Adams and so much more, declined 15%, and restaurateur Texas Roadhouse slid 12%.

 

 

September

Since Inception (Annualized) 

The Motley Fool Great America Fund (TMFGX)

0.99%

11.85%

Russell Midcap Index

0.20%

13.04%

Russell 2000 Index

1.11%

11.89%

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

We didn’t make any new purchases in Great America during the month, either. We sold our shares of Innophos here, too, and began selling our stake in TriMas. We eliminated our ownership of Crimson Wine Group. Despite feeling strongly about the quality of its assets, we didn’t see the path to outsize returns.

Ionis Pharmaceutical (+24%) was the top dog in Great America for the reason already mentioned. Outdoor sports and lifestyle retailer Cabela’s increased 12% – perhaps some investors had a time machine and saw the early October announcement that it would receive a buyout offer from Bass Pro Shops. Steak and beer detracted from Great America’s September results, too. Our longtime ownership of Tractor Supply fell 20% after management unexpectedly cut earnings and sales guidance. The company continues to grow, but its clockwork-like super growth had begun to be taken as a given. Retail is hard, and bumpy, but we see the current slowdown as a temporary headwind.

 

September

Since Inception

The Motley Epic Voyage Fund (TMFGX)

1.60%

4.90%

FTSE Global All Cap ex-US Index

1.57%

5.60%

FTSE Emerging Markets All Cap China A Inclusion Index

1.21%

2.08%

Russell Global ex-US Index

1.47%

5.95%

 

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

 

Once again, the most action took place in Epic Voyage. We’re finding the most opportunities in emerging markets and allocating capital accordingly. We sold Brainjuicer, Medtronic, Schlumberger, and zooplus. We reallocated that capital into Credicorp, Coca-Cola Icecek, and TAV Havalimanlari. Credicorp and Icecek are companies we have owned previously – we kept their seats warm. TAV Havalimanlari is a Turkish airport operator. We love the airport’s advantaged location and are bullish on air travel for the longer term. It and Icecek are examples of our willingness to tread where others are fleeing (even if there happens to be a coup) if we find companies of high quality and excellent long-term prospects.

Top performers for the Epic Voyage Fund were led by Top Glove (+18%), Kobayashi Pharmaceutical (+12%), and DuzonBizon (+9%), while the largest detractors were Horizon Discovery (-8%), Fast Retailing (-9%), and International Container Terminal Services (-12%).

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So What's Next?

Earnings season is the time of year where new data comes at us like an all-out blitz. We respond by, well, doing nothing differently but generally having more stacks of paper on our desks. We scour new data for information, try to make connections across the performance and trends of the businesses we study, and apply our learnings to the long-term outlook and value changes of the companies we own or want to own. It’s a little like Christmas morning, but for nerds, who all of a sudden have a lot more toys to play with – or, to keep the analogy going, books to read. We rarely move fast and are vigilant in viewing quarterly updates through our long-term spectacles. Such is the life of a business-focused, long-term investor.

 

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