At the outset of the COVID-19 epidemic, market volatility provided us with a unique opportunity to invest in quality companies at valuations unseen for over a decade. We initiated positions in eight names in the first quarter of 2020, an unprecedented pace over our history. As shown in Table 1, the quality characteristics are above-average as evidenced below.
Our average holding period for a security is 10 years and while we prefer gauging our success over a full market cycle, we felt it could be of interest to see how these have contributed to the portfolio after nearly two years. Despite continued market volatility, as evidenced by the characteristics of each holding as of December 31, 2021 in Table 2, we see that nearly all of these names have experienced meaningful appreciation.
These holdings all remain high quality with the exception of Johnson Matthey. We expeditiously eliminated the position as quality concerns arose during Q4 2021. (Refer to the Transaction Summary section for more detail.)
For more than 35 years, we have remained true to our objective of achieving superior long-term performance for our clients through our disciplined “blocking and tackling” of controlling the quality of the companies and the valuations we pay for each. While macro themes such as the pace and magnitude of inflation, the impact of reduced monetary stimulus, and more preoccupy many investors, we focus on our bottom-up approach. With our unwavering commitment to fundamentals, we maintain conviction that the consistent application of our investment process should continue to reward those who share our long-term perspective.
[Note: The tables included in this report pertain to Sprucegrove’s International Pooled Fund and is intended to provide an illustrative example of Sprucegrove’s process, consistently applied across all mandates. Actual weightings of each holding, therefore, may vary between those presented here and the actual weightings in other portfolios.]