Burgundy Asset Management’s Holdings & Investing Strategy

Updated on October 5th, 2020 by Nikos Sismanis

Burgundy Asset Management was founded in 1990 and began investing for clients in 1991. The Burgundy region of France inspired the name “Burgundy”. This area of France is known for producing high-quality wines in the world. Burgundy currently has offices in Toronto, Montreal, and Vancouver, Canada.

Tony Arrell co-founded the firm. He recognized the firms focus on quality-value investing and long-term thinking. He joined Burgundy as Chairman and CEO in 1993.

Tony Arrell holds a Bachelor of Science degree from the University of Guelph. He also holds a Master’s degree in Business Administration from York University. Mr. Arrell has 50 years of professional experience, which includes Gardiner Watson Ltd, Wood Gundy, and Midland Walwyn.

The Fund currently administers over $25.2 billion in Assets Under Management (AUM). Following the company’s 13F filings over the last three years (from August 14th, 2017, through mid-August 2020), investors would have generated an attractive total return of around 9.7%.

Note:  13F filing performance is different than fund performance.  See how we calculate 13F filing performance here.

You can download an Excel spreadsheet with metrics that matter of Burgundy Asset Management’s current 13F equity holdings below:


Table Of Contents

Burgundy’s Investing Strategy

The fund’s goal is to preserve and grow its client’s capital over the long term. It focuses on buying undervalued high-quality companies to hold for the long term. Burgundy investment approach has three core components.

Burgundy narrows down global investment options and only focus on companies that fit its “circle of competence.” The Fund uses a qualitative and quantitative research methodology. Some of the qualitative research techniques include interviewing the management teams, site visits, and talking to customers and industry experts.

The fund analyzes financial statements, tests balance sheet strength, and identifies and forecasts key operating metrics for quantitative research.

Burgundy Investing

Burgundy uses these same strategies and apply them globally. This helps the firm to obtain the necessary experience and insight to allow Burgundy’s team to create a global perspective.

Once both qualitative and quantitative analyses have been completed, the firm focuses on the valuation assessment and determines the investments’ intrinsic value. Burgundy prefers to have concentrated investment portfolios with approximately 25-40 holding per regional geography.

The firm has developed its skills progressively since inception. First stating with a Canadian equity strategy and finally building a policy in the emerging markets.

Burgundy Timeline

About Burgundy’s Funds

On August 14, 2020, the firm had 99 equities, with a total market value of $9.1 billion. The company’s top 10 holdings comprise of the following stocks:

Alphabet (GOOGL) & Facebook (FB):

Despite slightly trimming its Alphabet and Facebook positions by around 3% and 4%, respectively, the two companies still account for more than 10% of the fund’s total public equity holdings. Displaying some of the world’s best financials, including tons of cash, little to no debt, juicy margins, and rapid growth, we can see why Burgundy likes both companies.

Johnson & Johnson (JNJ):

The company’s largest, and only significant pure healthcare play, is the industry giant Johnson & Johnson, which the company also trimmed by around 3% in order to rebalance its portfolio. Counting 58 years of consecutive dividend increases, the company displayed financial resilience throughout several decades and numerous recessions. As a result, the stock provides a magnificent combination of income and growth, being considered quite a stable investment in the sector. The company recently announced the acquisition of Momenta Pharma for $6.5 billion, which should strengthen its immune-mediated disease segment going forward, unlocking various synergies with its existing portfolio of products.

Microsoft (MSFT) & SS&C Technologies Holdings (SSNC):

Collectively occupying around 8% of its holdings, Burgundy has increased its tech exposure with two marvelous industry leaders. Microsoft has been taking the market along with the overall market indices by storm, continuously rallying to new highs amid its cloud infrastructure success. In regards to SS&C, the company is not that well-known, but its software-enabled solutions can be found integrated with various financial and healthcare institutions. Further, the company has recently been rapidly expanding its revenues while also focusing on growing its distributions due to higher profitability levels. The fund also trimmed both positions by around 6% and 2% in order to pick up more individual equities during the quarter.

Oracle (ORCL):

Oracle is a very controversial stock. On the one hand, investors seem to dislike their business practices and overall business culture. On the other hand, the company is a cash cow, booking billions in profits quarter after quarter. Its database and cloud segment remains robust, facing little to no challenges as a result of the pandemic.

Oracle averages annualized profits of around $10 billion, which the company has been committed to returning to shareholders mainly in the form of stock buybacks. To illustrate the sheer amount of stock repurchases, Oracle has repurchased 26% of its shares outstanding in the past 3 years alone. Further, due to always having a humble valuation attached to its shares, the stock is currently trading below 20X earnings, likely still making for a great investment.

Truist Financial Corp (TFC):

Truist Financial is Burgundy’s largest financial holding, making up around 3% of its total holdings. Despite the challenges of COVID-19, the company managed to retain its dividend and currently yields a juicy 4.65%. The fund also trimmed its position by around 7% on this one.

Carrier Global Corporation (CARR):

Amongst several stake reductions in its holdings, Carrier Global is the only stock in the company’s top 10 holdings to have its stake just initiated. The fund bought around 9.4 million shares during the quarter, just after the company completed its IPO. Since the company’s initial offering, the stock has tripled, currently trading at all-time highs. As a result, CARR is one of Burgundy’s most successful purchases as of recently. Further, the company is quite profitable in its refrigeration, fire, security, and building automation technologies, which is quite rare for an IPO during this period. The company has initiated a dividend as well, quickly returning cash back to shareholders.

Allison Transmission Holdings (ALSN) & AmerisourceBergen Corporation (ABC):

The two bottom stocks of Burgundy’s 10 most significant holdings, is Allison Transmission Holdings and Allison Transmission Holdings, which collectively account for around 5% of its holdings. Allison Transmission mainly manufactures tactical U.S. defense vehicles worldwide. As a result, its revenues are relatively secured. The company managed to remain profitable during the past couple of quarters, despite its capital –intensive business.

AmerisourceBergen has also displayed resilient performance over this period, as the company sources and distributes pharmaceutical products in the United States and internationally. During a time in which hospitals are filled with patients, the company’s operations have held up incredibly well. We consider these two holdings to be relatively defensive, for now.

Out of the 99 holdings, only 15 of the equities do not pay a dividend. This shows how important income generation in Burgundy’s portfolio is. Further, they appear to avoid having no equities make up more than 10% of their respective equity portfolio, by constantly trimming their positions.

Final Thoughts

Burgundy’s portfolio is well diversified, with 99 total holdings. The most recent 13F filing shows promising moves. The past 3-year performance has been quite adequate, and its latest moves should reward its clients quite nicely in the future. The fact that the firm does not have one investment that is over 10% of the total portfolio displays satisfactory levels of diversification, with careful risk management.

Investors seeking capital preservation and high resilient quality companies, investing in or following Burgundy moves should be rewarding.