That Was Quick!

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Just a few weeks ago we posted a video talking about the merits of Park Lawn Corporation (PLC.TO) and how we thought it was trading at an attractive price (hence why we owned it in our Bridgeport Small & Mid Cap Equity Fund). As it turns out, we weren’t the only ones to think that! Earlier this week, as we were just finishing breakfast, our phones started to buzz with alerts of a takeover offer: a private equity firm had offered to buy the entire company at a price of $26.50 per share. That’s a 62% increase above the previous day’s price. What a way to start the day!

Now, there was some luck involved in the timing of our video (which you can rewatch here!). We obviously had no idea that someone was going to buy the entire company within just a few weeks of filming. 

What we did know, however, was that the company was well run and undervalued, and those two things have a tendency to attract takeover offers. Our investment process focuses on identifying and purchasing growing companies that are underpriced, though it often takes time for the market to recognize their true value. So, while the takeover offer itself wasn’t surprising, the quick timing was unexpected. 

Respect the process

We put a lot of effort into our investment process, and there is no better way to have it validated than to see a third party spend $1.2 billion to take one of our portfolio companies private. 

Although our portfolios are highly concentrated (they typically have about 20 companies) they are diversified by type of business to reduce risk. Our investment selection process provides the proper diversification yet still allows each holding to have a meaningful impact. The investment in Park Lawn reinforces the idea that investing in growing, high quality companies that are run by management teams we trust, all while taking a long-term view of the company’s prospects and being cautious about the price we pay never loses its charm.