CMPR’s largest business, Vistaprint (accounting for 70% of CMPR’s sales), turned in a solid year with key metrics improving across the board: customer loyalty strengthened, average order values grew, and net promoter score increased. Robert Keane and team are large owners and long-term thinkers, focused on reinvesting capital to expand the moat and grow intrinsic value. We’re thrilled to be co-owners and support the heavy spending and long-term focus. It’s worth noting, even amid aggressive spending, the Vistaprint business sports healthy margins and attractive returns on capital.

In addition to large outlays at Vistaprint, management has ramped up investments in the Upload and Print space, acquiring a handful of companies of late. This market caters to higher-expectation customers and looks like an attractive fit for CMPR. During CMPR’s annual investor day in August, management laid out their long-term plan to create a Mass Customization Platform built upon CMPR’s network of businesses and third party affiliates. The goal is to leverage CMPR’s strengths (production, technology, and logistics) to create an unmatched value proposition serving the print marketing needs of small businesses worldwide.

CMPR is chock-full of business qualities we crave: dominant and durable businesses in niche markets, run by owner-oriented managers who are laser focused on growing intrinsic value per share. We’re confident that CMPR’s powerful competitive advantages, attractive underlying economics, and long runway ahead will produce growing earnings and shareholder value.

Additionally this year, we decided to sell a large chunk of SNE as the price rose significantly. While SNE’s management is executing well, they compete in fiercely competitive markets that make sustainable strong returns elusive. We sold as the price approached a more reasonable representation of value and the margin of safety shrunk. We also exited Allegany and BAC after nice gains to reallocate the proceeds elsewhere.


The above commentary has been excerpted from the annual letter of Arlington Value Capital.

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