Akre On Finding "Compounding Machines"

Chuck Akre’s focused fund has been an excellent long term performer, and he recently talked with WealthTrack’s Consuelo Mack about how he targets “compounding machines” — companies that generate high returns on capital and then reinvest their free cash flow back into their businesses and continue to generate those high returns.

Akre also talks about why he prefers companies that reinvest their free cash into the business rather than paying dividends. And he discusses how investing in companies with good growth, high returns on capital, strong balance sheets, and good valuations creates portfolios with less risk than the broader market.


Validea’s Benjamin Graham-inspired portfolio is up 15.4% annualized since its mid-2003 inception vs. 5.9% for the S&P 500. Check out its holdings here.