Year to date, and since inception, our fund remains well ahead of its benchmark.

 

March

Year to Date

Since Inception (Annualized)

Inception Date: 6/16/2009

Motley Fool Global Opportunities Fund (FOOLX)

-1.05%

7.35%

13.66%

FTSE Global All Cap Index

-1.35%

-0.61%

11.68%

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

Global equity markets entered March recovering nicely after a volatile and down February. Up a delightful 2%, they reversed course and stumbled through the back half of the month. The likely culprit was a combination of U.S. economic developments: increasing trade war fears on the back of new steel and aluminum tariffs and rising U.S. interest rate fears coming to fruition. Both actions have global investing implications but did not stop the Global Opportunities Fund from outperforming its benchmark during the month. As we’ve said before, our focus remains on analyzing the businesses and prospects on a micro level, and any macro musing we engage in centers on long-term views. So far, we’re not concerned, and this policy has served us well in the past. Year to date, and since inception, the Global Opportunities Fund is nicely ahead of its benchmark.

The best performing stock during March was Watsco (+9%). It is unclear why shares rallied, but I won’t miss the chance to gab about a business I’m fond of. Perhaps Watsco, America’s largest HVAC distributor, is viewed as a haven in turbulent times (we North Americans like our heat and air conditioning regardless of the state of the world). After all, the HVAC installed base has increased for 60 consecutive years, and Watsco pays a meaningful dividend. Perhaps the market is starting to realize that the technology investments are strengthening the company’s competitive position. Who knows?

The worst performing stock during March was Ionis Pharmaceuticals (-17%). Ionis makes drugs to treat rare diseases. It doesn’t appear that Ionis did anything in particular to deserve this treatment, but in a broad market sell-off, higher-risk companies (like smallish biotechs) often take the brunt of the pain. Still, we did get some good news from Ionis. In early March, it released trial data regarding its treatment for Huntington’s disease. Development appears to be progressing, and the outlook for a growing portfolio of drugs is good.

Early in the month, we sold our stake in casual dining chain Texas Roadhouse. There is a lot to like about this business. It is led by a fanatical founder, has an excellent profit-sharing regime to incent restaurant managers, knows its customers and markets, prioritizes the guest experience by only opening for dinner and limiting wait staff to only three tables, and has a strong operating history. But the restaurant industry is brutally competitive – a fact that leads us to weight price more than we would for a more firmly defensible business. Roadhouse shares, which we purchased for around 15 times forward earnings a few years ago, now trade for 25 times (and that is with the benefit of lower taxes). We believe the only justification for that price is a successful expansion of a new test concept, which, to date, has not caught hold.

We purchased two new businesses during the month. The first, Yum China operates 7,700 restaurants in China, primarily under the KFC and Pizza Hut nameplates. Based on its market capitalization, Yum China is the fifth largest restaurant company in the world. Our thesis is simple: We want to own a well-run restaurant operator serving the growing middle class in China that has a focus on economies of scale, brand value, and technology investments (i.e., better online ordering and delivery). We believe Yum China was mismanaged in the past, but since it has been spun out of Yum! Brands, its new management team can set the standard on convenience, consistency, and profitability for Chinese restaurants. We also purchased Anheuser-Busch InBev, the global beer powerhouse. The company has control of 500 brands, including 18 that generate $1 billion in annual sales and 7 of the top 10 largest grossing brands. AB InBev dominates most of the globe via those brands and its incredible distribution network. While a mature cash cow, this company has defensible characteristics that offer a nice balance to some of the other companies we own in the Global Opportunities Fund. It is a high-quality, mature cash cow, that is reasonably priced and led by a remarkable and returns-focused management team.

The Global Opportunities Fund changed its name from The Independence Fund on December 31, 2017.

Note: The Morningstar RatingTM for funds, or 'star rating', is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. As of 3/31/2018, the Motley Fool Global Opportunities Fund (Investor shares) was rated in the World Large Stock Funds category, receiving a four-star rating among 717 funds over a three-year period and a five-star rating among 591 funds over a five-year period.

Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10- year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Past performance is no guarantee of future results.

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