Mar Vista Investment Partners, a California-based minority-owned investment management firm, is bullish on XPO Logistics Inc. (NYSE:XPO). In its Q4 investor letter – you can download a copy below– the firm discussed its investment thesis on XPO, noting that the market undervalues CEO Bradley Jacobs’ strategy and the company’s “unique collection of technology, software and data.” In this article, we’re to take a look at Mar Vista’s thoughts on XPO Logistics.
XPO Logistics Inc. is a $12-billion market cap global logistics company that operates in 32 countries, with more than 95,000 employees and 1,455 locations.
Here is everything that the investor said about XPO in the letter:
XPO provides comprehensive supply chain solutions, primarily transportation and logistics, to various industries benefiting from the e-commerce revolution. XPO’s best-in-class software technology and cloud-based data solutions are critically important to global customers and reflect platform-like dynamics as online and omni-channel retailers absorb increasing portions of consumer spending. The company enjoys rapidly expanding network effects from its contract logistics and last mile delivery as new shippers and customers enter the e-commerce marketplace. With only 1.5% market share of the fragmented $1 trillion global transportation industry, XPO has copious opportunities to compound intrinsic value both organically and via acquisitions.
The capital allocation skills of Outsider Brad Jacobs, Chairman and CEO, are critical to our investment thesis. Prior to XPO, Mr. Jacobs successfully led two public companies: United Rentals, which he co-founded in 1997 and United Waste Systems, Inc., which he founded in 1989. He spent two years performing industry research, talking to experts and understanding the importance of technology and data in logistics and transportation before deciding to launch XPO. Known for his maniacal focus on details and long-term business strategy, Jacobs invested $100m of his own capital to start the company and currently owns 17% of the stock. His unparalleled work ethic is often compared to two other Outsider CEO’s, Jeff Bezos and John Malone.
Subsequent to our investment, XPO’s stock appreciated almost 20% when the market learned that the boards of both Home Depot and Amazon had discussed acquiring the company. We believe the market still undervalues Mr. Jacob’s strategy to build a collection of competitively advantaged assets in the last mile delivery and return of heavy goods, and XPO’s unique collection of technology, software and data.