Chris Davis Portfolio: Key Investment & Portfolio Performance Analysis

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Jacob Wolinsky
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Davis Advisors and their chairman Christopher C. Davis have been running a highly successful business since 1989. During the period between 1989 and today, they compounded shareholder wealth at 10.7% outperforming the S&P 500 Index. To better understand these results and performances we need to know Chris Davis’s portfolio holdings, and what are his key investment principles.

Chris Davis’s portfolio currently has 101 holdings, while Meta is the largest. Among other large holdings in his portfolio, Davis prefers Wells Fargo, Capital One, and Bank of New York Mellon (NYSE:BK). New holdings include MGM Resorts International (NYSE:MGM) and KE Holdings Inc (NYSE:BEKE).

While Davis is known as a principal value investor, there is much more to it than that. Stay with us while we go in detail through Davis’s almost $20 billion portfolio, investment history, and performance.

Chris Davis Portfolio

Key Sectors

Chris Davis despite having more than 100 holdings in his portfolio essentially has a very concentrated portfolio. His top 5 holdings take 40% of the entire portfolio, which is also narrowly concentrated in the finance sector.

  1. Finance with 50.8% of the portfolio valued at $9.79 billion
  2. Technology with 27% of the portfolio valued at $5.21 billion
  3. Consumer Discretionary with 10% of the portfolio valued at $1.92 billion
  4. Industrials with 4.9% of the portfolio valued at $950 million
  5. Materials with 2.5% of the portfolio valued at $488 million
  6. Healthcare with 1.3% of the portfolio valued at $242 million
  7. Real Estate with 0.8% of the portfolio valued at $151 million
  8. Companies from undisclosed sectors take up 2.6% of the portfolio valued at $508 million

Current Holdings

  • Meta Platforms Inc. Class A (NASDAQ:META) with 11.9% of the portfolio

Chris Davis has been successfully trading Meta stocks since 2015. In these 9 years, he invested a total of $687 million while his current stake of 4.89 million shares is valued at $2.3 billion. This proved to be a very lucrative investment, resulting in a gain of 235%. During 2023 he sold Meta stocks on three occasions, trimming this holding for about 1.65 million stocks. He sold them at values between $170 and $300, which proved to be a great decision, since he bought that amount of shares during 2022 at an average of $140.

  • Capital One Financial Corp. (NYSE:COF) with 7.79% of the portfolio

One of Davis’s favorite stocks which he kept as a part of his portfolio for more than two decades. At that time he invested a total of $933 million in the holding, while his current stake of 11.1 billion shares is valued at $1.5 billion. This holding has produced gains of 61% so far. In 2023 he sold a total of 290 thousand shares and bought 504 thousand shares. The share value is on the rise. At the beginning of 2023 they were valued at $93 while now their value is $135.

  • Wells Fargo & Co (NYSE:WFC) with 7.61% of the portfolio

Davis in several interviews pointed out that Wells Fargo & Co is proving to be a very good steady investment. He has been trading their stocks for decades, and now he owns 30.3 million stocks. Since mid-2021 he has been trimming down this holding, conducting nine sales and only one buy. Davis invested in WFC $987 million, while the value of this holding is at $1.47 billion, resulting in a gain of 48%.

  • Amazon Inc (NASDAQ:AMZN) with 6.55% of the portfolio

Another holding from the Magnificent 7 list, Davis started investing in Amazon when it wasn’t as big and popular as it is today. He first invested in Amazon in 1999 and he just loves trading it. Davis invested $144 million, which converted into a holding valued at $1.26 billion. During 2023 he did three trades, including two sales and one buy and he now owns 7.43 million shares.

  • Applied Materials Inc. (NASDAQ:AMAT) with 6.15% of the portfolio

Davis loves what he called tech companies that represent picks and shovels of the technological revolution. This manufacturer of equipment needed for the production of semiconductors is Davis’s all-time favorite dating back to the 20th century. Since he started trading their stocks, he invested $283 million, while his 6.81 million stocks are now valued at $1.18 million. This has proved to be a very rewarding investment delivering 318% gains.

Background of Chris Davis

Chris Davis comes from a family that has been a part of the investment landscape for several generations. His grandfather Shelby Cullom Davis was a famous investor and founder of Davis Selected Advisors. Christopher’s father Shelby M.C. Davis continued in his father’s investment footsteps and remained in the investment business.

Chris Davis graduated from Williams College acquiring a degree in economics. After that, he joined Davis Selected Advisors. This company was later renamed Davis Advisors. This company was founded by the Davis company, and in it, Chris found a setting to learn and advance through the ranks.

Today he is one of the key people and portfolio managers in the Davis Advisors. He is currently managing several mutual funds including Davis New York Mutual Fund, and Davis Global Fund. In his investment career, he has taken a lot of lessons from Berkshire Hathaway founder Warren Buffett.

Historical Portfolio Performance Analysis

Risk factors

Chris Davis due to his nature of focusing on investing in financial companies is looking at far greater than average business durability. He has seen the downfall of businesses in other sectors that were considered bulletproof, but technology influx disrupted their operations.

When he chooses companies to invest in, he is trying to identify how they are using the new technology to widen their competitive moat. New technologies and the internet widen the moat, so companies need to be aware of this.

Most of the financial giants Davis is investing in have taken a great deal of technology risks when incorporating new methodologies into their businesses. In some cases those were misses, but in most, they turned up to be a game changer.

Returns

Chris Davis and Davis Advisors are managing several funds. The crucial funds and their performances are:

  • Davis Global Fund. The goal of investing in this fund is to find returns on both the United States and Global markets. The strategy of the fund is to find durable businesses with strong fundamentals, and a management team and buy them at reasonable prices. The buy-and-hold strategy is applied to almost all investments. The fund was enacted in 2004 and the average returns including the maximum sales charge fee of 4.75% are 11.64% in the last year, 7.45% in the last 5 years, and 5.79% in the last 10 years.
  • Davis New York Venture Fund. It was founded in 1969 and it serves to find suitable predominantly large-cap, quality-managed businesses in the United States. Like with other Davis funds, they employ value investing principles meaning searching for undervalued businesses with a strong potential. In the last 5 years, its earnings growth has reported 11.9% when compared to the S&P 500 and its 14.8% growth. In the last year, the returns are at 23.82%, in the last 5 years 10.89%, and in the last 10 years 8.18%. If we take a hypothetical $10,000 investment and go back to the date of the fund’s inception we would today have $3,678,000. In the same time frame, the S&P 500 would deliver $2,254,000.
  • Davis Financial Fund. This fund is focused on investing in companies from the financial sector. It was founded in 1991 and since then it outperformed the S&P 500. The target investment companies have strong cash flows, potential for growth in earnings, and solid balance sheets. If we would take a hypothetical $10,000 investment and go back to the day of inception of the fund we would now have $300,000 while in the same period with the same investment S&P 500 brought $176,000. In the last year, the fund brought 15.52% in returns, and when we look at 5 and 10-year periods, the figures are 9.39% and 8.10% respectively.
  • Davis Select U.S. Equity ETF. Fund was founded in 2017 to find high-conviction and best-performing businesses. The goal is to outperform the S&P 500 while focusing on the long-term investing horizon. Since its inception, it generated an annual total return of 10% when compared to S&P 500 13.2% in the same period. In the last year, the fund outperformed the S&P 500 generating a 33.66% return, while S&P 500 generated 26.29%. Annual returns in the last year at an average of 8.27% while in the 5 years, the figure is 13.55%.

Benefits of Investing in Chris Davis’ Portfolio

Investing in Chris Davis’ portfolio brings several benefits, of course, if you prefer a long-term value investing approach. Some of the benefits include:

  • Davis’ experienced management team. Davis with his 35 year’s experience is overseeing work in all Davis-managed funds. Top portfolio managers include other seasoned professionals like Danton G. Goei, Dwight C. Blazin, and Darin Prozes.
  • Good long-term performance. Since its inception, the main Davis fund has managed to outperform the S&P 500. In the recent year, it delivered exceptional results, after two years of slight outperformance.
  • Its focus is on shareholders’ interests. Larger investors do have a say in the investment approach and can make their suggestions to the team. Most of the investors are long-term with the company and share the same view and vision for their and the fund’s financial outlook.
  • High level of transparency. All funds that are part of the Davis Advisors publicly share quarterly performances, investment strategies, and market outlook.
  • Davis Advisor is a tax-efficient company. They employ strategies like managing distributions and tax-loss harvesting to minimize tax liabilities for investors.

Comparison with Competitors

Chris Davis vs Mohnish Pabrai

Both Davis and Pabrai are closely following the value investing principles of Warren Buffett. The main difference is in their approach to company valuation. Pabrai is likely to follow Buffett’s approach that came later in his career. Before he was aiming to buy as cheap as possible, but under the influence of Charlie Munger he opted for the variant of buying good companies at a fair price.

They both prefer investing in good companies and are ready to offer a fair price. But, Davis still more frequently has stints when he is looking for undervalued companies that are traded below their intrinsic value.

Also, Pabrai is known as a clone investor and often follows Buffett’s investment decisions. Pabrai is also more willing to concentrate his portfolio and expose himself to higher concentration risks.

It is also worth noting that Pabrai is more than willing to invest in special situations like spin-offs, turnarounds, and distressed companies.

Chris Davis vs Howard Marks

These two investors are known for their value investing approaches, but they do have significant views and interpretations of this strategy.

Howard Marks is a value investor but he also uses the principles of growth investing and analyzing market cycles. He is always in search of companies trading below their intrinsic value, but he dives deeper adding elements like market sentiment and investor psychology in the mix.

Howard Marks is known as an investor who can identify with mixed results market cycles. His goal is to capitalize on the mispricings between those cycles.

Investing Strategy According to Chris Davis

If you plan to invest like Chris Davis, it all starts with choosing the right companies. Davis is choosing companies that are traded at low or fair prices, and which have strong fundamentals. Davis pays a lot of attention to checking the balance sheets, how high are returns on the capital are, and does a company has a low-cost structure.

The next step is to identify the company’s competitive advantages. The products or services must be up to date, and they have a growing market share. Also, he likes investing in globally present and recognizable brands.

His investment strategy is based on investing in companies from the finance sector. He prefers companies that can reinvest their earnings and push them into innovative services. We also should mention that he often chooses well-managed businesses with solid past performance. He is willing to consider companies going through a rough patch with lower current performance if he sees potential for investment return and solid earnings in the long run.

Once Davis identifies the company he sees as a potential target he conducts additional checks including the owner’s earnings and enterprise value. Once the company passes these tests then Davis calculates their real value.

He is then willing to wait the company out and buy significant shares at a discount price. From this process analysis, we can see that Davis only invests in well-researched companies when nothing can surprise him.

Take A Look At Chris Davis shares Three Generations of Investment Lessons:

FAQ

Who Is the CEO of Davis Funds?

The CEO of Davis Funds is Christopher C. Davis.

Final Thoughts

When talking about value investing we cannot forget to mention Chris Davis, a rockstar and a veteran in the business. His focus on investing in the financial sector is his trademark. He often points out that the finance sector still has a lot to offer in a sense of innovation, and that he is on the lookout for potential overachievers.

He recently pointed out that he will continue to look for companies at discounts, and that he will avoid buying expensive ones. He is advocating for the opinion that value and growth are joined at the hip. The last thing to do is to buy expensive and popular stocks that are performing well and end up with a long-term failure.

In 2023 Davis Selected Advisers trimmed their holdings. They were very busy at the market during the whole of 2023. They sold stocks valued at more than $3 billion, while they bought stocks at half of that value. This has been a trend at the company for several years in a row, but they managed to go out in 2023 with 33.66% returns.

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Jacob Wolinsky is the founder of HedgeFundAlpha (formerly ValueWalk Premium), a popular value investing and hedge fund focused intelligence service. Prior to founding the company, Jacob worked as an equity analyst focused on small caps. Jacob lives with his wife and five kids in Passaic NJ. - Email: jacob(at)hedgefundalpha.com FD: I do not purchase any equities to avoid conflict of interest and any insider information. I only purchase broad-based ETFs and mutual funds.