Oak Value Fund - Letter to Shareholders
One of the most important factors we consider in making investment decisions is a company’s ability to generate cash, and we believe the Fund’s portfolio is filled with companies that either have buckets of cash or are generating it. At the end of the third quarter, the Fund’s top five positions were Berkshire Hathaway, Apollo, Medtronic, Praxair, and Diageo—each one of these companies throws off significant free cash flow. When we are analyzing a company as a potential investment, we spend considerable time thinking about how a company is likely to use its cash, for example, whether in the form of increased investment in the business, potential acquisitions, or share repurchases and dividends—not whether or not a particular company is likely to generate cash. Cash generation is not the order winner, it is the order qualifier. -
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