2019 REVIEW AND OUTLOOK
REVIEW AND OUTLOOK
2019 was a solid year (+682 vs Russell 1000 (TR) and +188 vs S&P 500) despite only one holding (the 15th) of the top 15 most heavily weighted firms in the S&P 500. For Q4, the 32-basis point gain vs. the S&P going into December’s “fool the client games” flipped while still outperforming the harder to manipulate Russell 1000 Value (TR) index.
Moving into the new decade, we remain confident as holdings sell at a median 14.7x normalized and adjusted free cash flow with 14.7% adjusted return on capital and 7.2% cost of equity capital versus a latter of 8.1% for the S&P 500. Our firms are of stronger credits, possess greater stability in key metrics and, in general, are seeing growth in in adjusted free cash flows in excess of benchmarks. Such are the characteristics that bring superior long-term financial management.
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