Elise Hoffmann, founder Chris Niemczewski and Chad Goldberg are Marshfield's three portfolio managers and have spent a combined 77 years at the firm.
The stock fell an additional 40% in 2016 and 2017, and Niemczewski used the prolonged drought to load up on what everyone was selling. According to public filings, Marshfield started buying in the second quarter of 2016 and owned 240,000 shares by the first quarter of 2018, when shares were trading at around $300 each.
Marshfield founder Chris Niemczewski values consensus—and skin in the game. Principals are required to have their personal equity portfolios entirely invested in the strategy.“We have a broad funnel–we’ll talk to anything that piques somebody’s interest–but we have a really, really narrow spout at the end of the funnel, and very few ideas get through,” says co-portfolio manager Elise Hoffmann, who has been at Marshfield since 1995.
An investment usually comes only after multiple calls with a company’s leadership as well as conversations with its competitors, which sometimes winds up with the fund owning two competitors at once to fill precious slots in the portfolio. Two of Marshfield’s four largest holdings today are auto parts stocks AutoZone and O’Reilly Automotive, which it started adding in the summer of 2017.
Sure enough, the short-term weather patterns turned, sales accelerated and both stocks are up more than fivefold since the middle of 2017. They both enjoy profit margins around 20%, much higher than the third major player in the space, Advance Auto Parts, which hasn’t gained at all in the last five years. Marshfield has avoided the stock despite frequent conversations with management. “We still can’t figure out what they’re doing wrong, and they can’t either,” Niemczewski says.
“You can make a lot of money in a really simple stock, so why not, right? You don’t have to make it hard for yourself.”Marshfield’s portfolio is filled out with other well-known companies like Domino’s Pizza, Mastercard, Visa and Goldman Sachs. Yum Brands, the parent company of KFC, Pizza Hut and Taco Bell, was its longest-tenured investment for 22 years, from when it was trading at mid-single digit levels after going public in 1997 until it exceeded $100 per share in 2019.