Chuck Akre
High returns on equity, earned without leverage, with somewhere to reinvest them.
| Measure | Formula | Median | Middle half | Reporting it |
|---|---|---|---|---|
| Return on equity | Net income ÷ shareholders’ equity | 11.7% | 6.3% – 20.4% | 537 |
| Debt to equity | Total debt ÷ shareholders’ equity | 0.79x | 0.39x – 1.45x | 442 |
| Cash conversion | Operating cash flow ÷ net income | 1.78x | 1.36x – 2.42x | 414 |
Where each comes from
| Return on equity | The first leg: an extraordinary business, which he defines by a high return on equity sustained over time rather than by growth in reported earnings. |
|---|---|
| Debt to equity | The qualifier that does the work. A high return on equity produced by borrowing is not the same finding, so the leverage behind the number has to be read alongside it. |
| Cash conversion | Compounding requires cash that actually arrives, since it is the cash that gets reinvested. |
Source: Akre Capital Management letters and interviews; the “three-legged stool”.
What this cannot tell you
The second and third legs — management acting like owners, and a reinvestment runway long enough to matter — are judgements about people and end markets. Neither is computable from a filing.
This page describes a published method and applies its measures to filings. It is not a score, not a ranking and not a recommendation, and no page here aggregates these into a verdict. · All 11 metrics