PAG - Tweedy Browne - U-Haul Holding Co.: Quietly And Progressively Growing The Franchise And Shareholder Value

2024-05-11 07:45:00 ET

Summary

• Over the last twelve months, we established a new position in U-Haul, adding to a number of positions where insider buying played a meaningful role in our decision-making.
• The business has high barriers to entry and strong network effects.
• Importantly, we believe the rapid expansion of this business segment masks underlying, latent earnings power.
• The company under Joe Shoen's leadership has maintained management stability for the last 30-plus years, quietly and progressively growing the franchise and shareholder value.

The following segment was excerpted from this fund letter.

U-Haul Holding Company ( UHAL )

Insider Intelligence: Continuing to Light the Way

A strong, if not predominant, factor driving new idea generation in our managed account portfolios over the last year continued to be material insider buying in companies that, at purchase, were trading at significant discounts to our estimates of their underlying intrinsic value. We have always felt strongly that purchases of shares by knowledgeable insiders at times when their company stock is trading at low prices in relation to metrics such as book value, earnings and/or cash flow can be a powerful clue to possible future outperformance of their companies' shares. Empirical evidence supports this view. As a reminder, the term "insider buying" refers to legal purchases of shares in their own company by corporate "C suite executives," corporate directors, and large shareholders. We also take an interest in studying companies that are buying back their shares, particularly when they appear to be undervalued....

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