Matthew Dent grew his fund's assets by 27% in just one year. He breaks down which company is the 'next Berkshire Hathaway' - and shares 4 other top stock picks.

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Matthew Dent grew his fund's assets by 27% in just one year. He breaks down which company is the 'next Berkshire Hathaway' - and shares 4 other top stock picks.
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  • Matthew Dent's Premier Growth Investor Fund brought in powerful returns and posted an enormous year of growth in 2019, far outstripping the market and 99% of competing funds.
  • Dent told Business Insider why he's come to believe that one favorite stock pick of his could be "the next Berkshire Hathaway."
  • He also detailed his must-haves for successful growth investments and named four other companies he expects to dominate.
  • Visit Business Insider's homepage for more stories.

In 2019 almost every type of investment seemed to work, but Matthew Dent's picks worked better than most.

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Den - of DF Dent & Co. - is one of the managers of its Premier Growth Investor Fund. That fund has seen its net asset value climb 27% in the past year as most of its top investments crushed the broader market. In a strong year for stocks, Dent beat 99% of the competition with a 42.9% return.

"We are high-quality growth investors. It's the only thing we've been doing for 44 years, and we've stuck to our knitting," he told Business Insider. "We're focused on investing in high-quality companies with strong balance sheets, recurring revenues, and talented and ethical management teams."

For Dent, that means companies that deliver strong returns for investors while building for the long term. One company that embodies those qualities, in his view, is diversified insurance and investment company Markel.

Dent continued adding to his position in 2019 even as the company's stock climbed, and he reserves some of the highest praise possible for Markel by comparing it to Warren Buffett's company.

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"Tom Gayner ... is really building what we think might be the next Berkshire Hathaway," he said. While he's cautious about companies that make too many acquisitions, he says Markel could be following Buffett's example by slowly building a conglomerate out of many strong businesses.

"They really started by providing coverage for hard-to-place risk and niche markets ranging from everything from professional risks to summer camps and classic cars and moon bounce rentals," he said. "They have made some unique acquisitions that brought them into other lines like reinsurance and manufacturing and services. Most recently they've also started making investments in and buying up private companies."

He's confident in Merkel as an investment, to say the least. In his exclusive interview, Dent named four other stocks he expects to stay in the portfolio and outperform for years.

(1) Visa and Mastercard

Visa is the biggest holding in Dent's portfolio, and as of September 30th, it and Mastercard made up a combined 10% of the Premier Growth Investor Fund's investments. Dent says both companies are going to win long-term because of their leading positions in the payments business.

"We expect their growth to continue to be driven by the global transactions going from cash and checks to electronic payments," he said. "That trend is still probably early in its migration and has been accelerating due to pervasive growth in e-commerce."

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(2) Tyler Technologies

Dent says Tyler's software and services help governments get more efficient, and demand for it services is only going to grow.

"There's a lot of obsolescence going on within the legacy government IT systems, in addition to a lot of IT workers in the Baby Boom generation that's looking to retire, and Tyler software can integrate various offerings and do so with less headcount," he said.

He added that the company scores high on quality measurements as well.

"They have a debt-free balance sheet and the management team is very long-term oriented," Dent said.

(3) BlackLine

Software companies have stood tall on Wall Street lately, and Dent says automation software maker BlackLine satisfies two of his most important criteria because it will benefit from the evolution of business and because it has a CEO who is committed to the company.

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"They're led by a very passionate software engineer, who's the founder and the CEO, named Therese Tucker. We believe the company can grow its revenues above 20% for the next three to years and it's be going to become a very profitable company," he said. "They have very little competition and vast market opportunities."

(4) Pros Holdings

Dent says that Pros is poised to benefit as companies adopt a more flexible approach to pricing online, adjusting what they are charging as demand shifts.

"They combine analytics, automation and AI and data science to identify ... deals that are going to be most profitable," he said. "In the airline space, they've worked with Southwest for over 30 years now. And so they enable not only Southwest but other airlines, but other companies in various industries, to price their products at a place where supply meets demand in an efficient manner."

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