Our domestic stock fund rose alongside the general market in April.

 

April

Year to Date

Since Inception (Annualized)

Inception Date, 11/1/2010

Motley Fool Great America Fund (TMFGX)

2.31%

4.87%

12.37%

Russell 2500 Growth Index*

2.75%

7.99%

13.58%

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

The Great America Fund surged in April, but the broader market surged even more. Our 2.31% gain didn't quite match the roaring Russell 2500 Growth Index’s 2.75% appreciation.

April was a light month for trading in the fund. We added no new companies, but we did add to our position in Watsco, a leading U.S. distributor of heating and air conditioning equipment. Watsco may also be one of the most boring companies we own, and I say that with great affection. The only position we sold in April was Panera Bread, which is in the process of being acquired.

Our best-performing stocks in April were Ionis Pharmaceuticals (up 19.9%), Align Technology (up 17.4%), and Proto Labs (up 13.5%).

Ionis reversed its 19.2% decline in March. Mid-cap biotech companies often have volatile share prices, but that doesn’t bother us as long as our thesis remains intact, and it does with Ionis. The company’s partner, Biogen, announced positive clinical trial data for the drug Spinraza and Q1 sales that surpassed the market’s expectations.

Align Technology, the maker of the orthodontic treatment Invisalign, posted Q1 revenue growth of 30%, exceeding management’s long-term target range of 15%-25%. We’re happy with that result.

The worst-performing stocks for the month were Fastenal (down 13.2%), Tractor Supply (down 10.2%), and KapStone Paper and Packaging (down 8.7%).

Fastenal shares sold off following the company’s Q1 report because of concerns over profit-margin compression. Fastenal offers vending machines and onsite inventory, and we think the market doesn’t fully appreciate the customer stickiness that comes with those advantages. Before the report, shares had been trading at the higher end of where they’ve been historically, so a little bit of a valuation pullback was in play as well.

Longtime holding Tractor Supply had a disappointing Q1, with comparable-store sales down 2.2% and net income down 10.9%. As happens with many retailers that report poor results, management cast some blame on the weather, but also noted that with moderation of the weather in the spring, customers were responding. We place greater emphasis on annual than on quarterly results, and we’ll see how the year progresses for Tractor Supply.

* The Great America Fund changed its benchmark from the Russell MidCap Index and the Russell 2000 Index to the Russell 2500 Growth Index on Feb. 28, 2017.

 

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