The Fund also established a position in IDEX Corp. (IEX), an industrial company focused on highly engineered industrial and technology solutions. After starting life as an industrial pump company, IDEX has transformed itself over the past two decades into an diversified applied solutions business specializing in fluid and metering technologies, health and science technologies, and fire and safety products.
IDEX’s objective is to build global platforms and defensible niches in highly engineered markets where the company can have a leadership position. The company’s approach is to acquire or develop businesses in small markets that are overlooked by larger industrial manufacturers. These markets demand products characterized by significant technological differentiation and a high degree of customization, making it difficult for competitors to enter. In addition, these products represent a low percentage of the final product’s overall systems content, thus allowing IDEX reasonable pricing power.
We believe that IDEX’s strategy will continue to deliver substantial shareholder value over time. The company endeavors to provide consistent, double-digit earnings growth. We believe IDEX will deliver on its goals through a combination of organic growth, margin expansion, and accretive deployment of its cash flow. IDEX pays out approximately 30 percent of its net income as a dividend, buys back 1-2 percent of shares outstanding per year, and uses the remaining cash to make targeted acquisitions.
