Take 24 - Random Investing Notes
A collection of insightful investment pieces to broaden and elevate the investing mindset. Includes: 1) Chuck Akre Framework , 2) Current vs. Capital Account, and 3) 13F Filings.
Three-Legged Stool
Chuck Akre is a renowned American investor and founder of Akre Capital Management, known for his long-term, high-conviction investing style.
With over 50 years in the securities industry, Akre built his reputation by identifying “compounding machines”—companies that generate strong returns on capital and reinvest effectively. He’s best known for his “Three-Legged Stool” framework which uses a simple model to identify long-term compounders:
The Business
Must be strong, understandable, and have a competitive moat
Should generate high returns on capital and strong cash flow
For dividend investors: must also distribute excess cash as dividends after reinvestment
The Management
Honest, long-term focused, and shareholder-friendly
Should allocate capital wisely and foster a strong company culture
Reinvestment Opportunities
The most critical leg: companies must reinvest profits effectively
Look for a “long runway” for future growth
Enables consistent profit and dividend growth over time
💡 How to Apply the Framework
Find companies with a history of increasing dividends
Evaluate each leg of the stool: business strength, management quality, reinvestment potential
Ensure the stock price is fair before buying
Hold long-term and monitor for any breakdown in the stool’s legs
🏆 Why It Works for Dividend Growth
Strong businesses generate profits
Smart managers use profits to grow
Reinvestment fuels compounding and dividend increases
Visa is used as an example of a company that fits this model well.Current vs. Capital Account
🌍 The Current Account
This tracks the flow of goods, services, income, and transfers in and out of a country.
Think of it like your checking account:
Exports (money in): When your country sells goods or services abroad (like cars, software, or tourism).
Imports (money out): When your country buys goods or services from other countries.
Income: Wages, dividends, and interest earned from foreign investments or paid to foreign investors.
Transfers: Foreign aid, remittances (money sent home by citizens working abroad), etc.
🔹 Surplus = more money coming in than going out
🔹 Deficit = more money going out than coming in
💼 The Capital Account
This tracks money moving for investments and financial assets.
Think of it like your investment portfolio:
Foreign Direct Investment (FDI): When a company builds a factory or buys a business in another country.
Portfolio Investment: Buying stocks, bonds, or real estate across borders.
Loans and banking flows: International lending and borrowing.
🔹 Capital inflow = foreigners investing in your country
🔹 Capital outflow = your country investing abroad
🧩 How They Fit Together
If a country runs a current account deficit (spending more than it earns), it must finance it with a capital account surplus (borrowing or attracting investment).
If a country has a current account surplus, it’s often lending or investing abroad.
Canada
Current Account: Canada often runs a deficit, especially when oil prices are low, as it imports more than it exports in services and manufactured goods.
Capital Account: Canada attracts foreign direct investment in energy, mining, and real estate, helping offset its current account deficit.United States
Current Account: The U.S. typically runs a deficit, meaning it imports more than it exports. In 2025, the deficit was driven by strong consumer demand for foreign goods and services.
Capital Account: The U.S. attracts massive capital inflows, especially in the form of foreign investment in stocks, bonds, and real estate. This helps finance its current account deficit.China
Current Account: China often runs a surplus, thanks to its strong export sector—electronics, machinery, and manufactured goods dominate global trade.
Capital Account: Historically, China had a surplus, but recent years saw capital outflows due to concerns over economic slowdown and regulatory crackdowns. Wealthy individuals and firms moved money abroad.💡 Why It Matters to Investors
Currency trends: Persistent deficits can weaken a currency, affecting forex and import costs.
Interest rates: Countries with large deficits may raise rates to attract capital.
Market sentiment: Strong capital inflows can signal investor confidence; sudden outflows can trigger market volatility.
13F Filings
Every quarter, U.S. investment managers with over $100 million in assets are required to file a Form 13F with the SEC. These filings provide a snapshot of their equity holdings at quarter-end. While not perfect, they are a powerful tool for retail investors when used correctly. They can be found here: DATAROMA Invest Alongside Superinvestors.
The SEC is the U.S. Securities and Exchange Commission — the federal agency that regulates financial markets and protects investors.What 13Fs Show — and What They Don’t
Snapshot only: They reveal positions as of the end of the quarter, not real-time trades.
No context: They don’t disclose entry prices, shorts, or the reasoning behind a position.
Delayed signal: Filings typically appear weeks after quarter-end, so they’re not trading alerts.
Why They Matter
Idea generation: Every stock in a 13F has already passed a high bar of quality for seasoned managers.
Pattern recognition: By tracking multiple managers, you can spot recurring themes (e.g., AI, semiconductors, healthcare).
Overlap analysis: If several respected investors add the same name in a quarter, that’s a strong cue to study it further.
How to Use 13Fs Effectively
Choose your managers wisely: Follow 5–10 investors whose style aligns with yours (long-term, macro-aware, concentrated pickers).
Focus on conviction moves: New positions and large adds (>20% increase) matter more than small trims.
Map the overlap: Create a table of stocks vs. managers to see where consensus builds.
Do your own homework: Read annual reports, study financials, and check valuations before acting.
Respect your circle of competence: Skip complex sectors you don’t understand, even if multiple superinvestors own them.
The Big Picture
13Fs are not about copying trades. They’re about learning from the best and building a watchlist of high-quality companies. Used thoughtfully, they can sharpen your research process and help you focus on businesses that have already earned the confidence of world-class investors.
Past Editions
Includes: 1) DIY Investing: Is It Right for You?, 2) Margin of Safety, and 3) Value of Currency.
Includes: 1) Real Interest Rates, 2) Stagflation, and 3) Mindset of a Long-Term Investor.
Includes: 1) Yield Curve Steepener, 2) Stock Checklist - Part 2, and 3) Recurring Revenues.
Includes: 1) Buy-Hold Strategy, 2) REITs - FFO and AFFO, and 3) Stan Druckenmiller’s Investing Approach.
Includes: 1) Stock-Based Compensation, 2) Loyal Monopolies, and 3) Interest Rate Cuts.
