Tracking Christopher Davis’ Davis Selected Advisers 13F Portfolio – Q1 2022 Update (CFIMX)

This article is first in a series that provides an ongoing analysis of the changes made to Davis Selected Advisers’ 13F portfolio on a quarterly basis. It is based on their regulatory 13F Form filed on 5/16/2022.

Davis Selected Advisers was founded more than 50 years ago in 1969 as an employee-owned investment firm. Their investment philosophy termed “The Davis Investment Discipline” is summarized as “seek to purchase durable, well-managed businesses at value prices and hold them for the long term to allow the power of compounding to work”.

Assets under Management (AuM) is at around $25B. The 13F portfolio has over 100 positions although only around 30 are sized above 0.5% of the portfolio.

This quarter, Davis Selected Advisers’ 13F portfolio decreased ~8% from $21.52B to $19.79B. The number of holdings increased from 120 to 121. The top three holdings are at ~26% while the top five holdings are close to ~38% of the 13F assets: Berkshire Hathaway, Wells Fargo, Capital One Financial, Alphabet, and Applied Materials.

Note 1: Davis Selected Advisors manage several mutual funds and ETFs. The flagship mutual fund is Davis New York Venture Fund (MUTF:NYVTX) with ~$7B in assets. Since its 1969 inception, the fund has generated significant alpha: 11.53% annualized over 53 years compared to 10.6% annualized for the S&P 500 index. Also, they advise the Clipper Fund (MUTF:CFIMX) which was incepted in 1984.

Note 2: Although the following positions are very small compared to the overall size of the portfolio, it is significant that they have sizable ownership stakes: Vroom (VRM) and China Index Holdings (CIH).

Stake Increases:

Meta Platforms (META), previously Facebook: META is a fairly large 3.77% of the portfolio stake first purchased in 2015 at prices between ~$75 and ~$110. The position has wavered. Recent activity follows. There was a ~15% trimming in Q3 2021 at prices between ~$337 and ~$382 while this quarter there was a ~25% stake increase at prices between ~$187 and ~$339. The stock currently trades at ~$170.

Viatris Inc. (VTRS): The 3.12% VTRS stake was established in Q1 2021 at prices between ~$14 and ~$19. Last three quarters saw minor increases and that was followed with a ~25% increase this quarter at prices between ~$10 and ~$15.50. The stock currently trades near the low end of those ranges at $10.30.

JD.com (JD): The 2.60% JD stake was a very small position first purchased in 2014. The position remained small until 2018 when there was a substantial increase from ~2.5M shares to ~7.2M shares at prices between ~$19 and ~$51. Since then, the position has wavered. Recent activity follows. Q3 2021 saw a ~250% stake increase at prices between ~$62 and ~$83 while in the following quarter there was a ~35% selling at prices between ~$66 and ~$92. This quarter saw a ~18% stake increase at prices between ~$43 and ~$78. The stock currently trades at $61.76.

Darling Ingredients (DAR): The small ~1% DAR position saw a stake doubling in Q3 2021 at prices between ~$64 and ~$79. Last two quarters have seen only minor adjustments. The stock currently trades at $56.81.

Coupang, Inc. (CPNG): CPNG had an IPO in Q1 2021. Shares started trading at ~$49 and currently goes for $15.94. The small 0.77% of the portfolio stake was established in H1 2021 at prices between ~$36 and ~$49. This quarter saw the position more than doubled at prices between ~$15 and ~$29.

Stake Decreases:

Berkshire Hathaway (BRK.A) (BRK.B): The ~9% of the portfolio Berkshire stake is their largest position. It has been in the portfolio since their first 13F filing in Q1 1999. Recent activity follows. Last few years have seen minor trimming in most quarters. This quarter saw a ~5% trimming as BRK.B traded between ~$301 and ~$360. It is now at ~$276.

Wells Fargo (WFC): WFC is another very long term stake that has been in the portfolio since their first 13F filing in Q1 1999. At the time, it was already a very large stake at ~28M shares. Recent activity follows. Q3 2020 saw a ~45% stake increase at prices between ~$23.50 and ~$26.50. Since then, the activity had been minor. There was a ~11% trimming this quarter. The stock currently trades at $39.50, and the stake is the second-largest at 8.32% of the portfolio.

Capital One Financial (COF): The top-three 7.55% COF stake was a very small position first purchased in 2014. 2017 saw a substantial ~12M share stake built at prices between ~$78 and ~$100. The 2018-2020 timeframe also saw incremental buying as the stake was increased to ~16.2M shares. Last five quarters have seen a ~30% reduction at prices between ~$99 and ~$178. The stock currently trades at ~$106.

Alphabet Inc. (GOOG) (GOOGL): GOOG is a top-three 7.36% of the portfolio position first purchased in 2016 at prices between ~$754 and ~$805. The stake has seen periodic selling since. Recent activity follows. Last five quarters have seen a ~45% selling at prices between ~$1735 and ~$3000. The stock currently trades at $2304.

Applied Materials (AMAT): AMAT is a top-five 5.36% long-term stake first purchased in 2011. The position remained very small until 2018 when a ~13M shares stake was built at prices between ~$30 and ~$62. Next year saw a ~15% stake increase at prices between ~$34 and ~$62. Since then, the position has seen selling. Q1 2021 saw a one-third reduction at prices between ~$85 and ~$140. Last four quarters have also seen minor trimming. The stock is now at $86.56.

U.S. Bancorp (USB): USB position is a fairly large 4.64% of the portfolio stake. A very small position was first purchased in 2010. A substantial ~9.2M stake was built in 2018 at prices between ~$45 and ~$58. Next year saw a ~10% trimming but 2020 saw a stake doubling at prices between ~$31 and ~$59. The stock currently trades at $46.50. Last three quarters have seen a ~5% trimming.

Amazon.com, Inc. (AMZN): The fairly large 4.42% of the portfolio position in AMZN was first purchased in 2006. A very large ~12M share stake was built next year at prices between ~$2 and ~$5. The position has since been substantially reduced over the years. Recent activity follows. Q3 2021 saw a ~15% selling at prices between ~$160 and ~$187. The stock currently trades at ~$114. Last two quarters have also seen minor trimming.

Intel Corporation (INTC): INTC is a 4.19% of the portfolio stake built in 2019 at prices between ~$44 and ~$60. Next year saw a ~50% stake increase at prices between ~$44 and ~$69. Last four quarters had also seen a one-third increase at prices between ~$49 and ~$68. The stock currently trades well below the low end of their purchase price ranges at ~$37. There was marginal trimming this quarter.

Cigna Corp. (CI): The ~4% of the portfolio CI stake was built in 2020 at prices between ~$142 and ~$220. Next quarter saw a ~50% stake increase at prices between ~$203 and ~$244. That was followed with a ~185% increase this quarter at prices between ~$218 and ~$246. The stock currently trades at ~$271. Last two quarters have seen only minor adjustments.

Bank of New York Mellon (BK): A huge 110M share stake was built in BK during the 2007-2011 time period at prices between ~$18 and ~$49. The position has since been reduced. The decade through 2020 saw the stake reduced to ~15M shares at prices between ~$21 and ~$58. Last several quarters have also seen minor trimming. The stock currently trades at $41.58, and the stake is at 3.57% of the portfolio.

JPMorgan Chase (JPM): A ~43M share stake in JPM was first built in 2004 at an average price in the high-30s. The position size peaked at over 78M shares by 2008. Since then, the stake has wavered. Recent activity follows. Last five quarters have seen a one-third selling at prices between ~$127 and ~$172. The stock currently trades at ~$112, and the stake is at 3.20% of the portfolio.

Texas Instruments (TXN): A ~58M share stake in TXN was built in the 2007-08 timeframe at prices between ~$14 and ~$38. The position has since been reduced. Recent activity follows. Last five quarters have seen a ~9% trimming at prices between ~$165 and ~$201. The stock currently trades at ~$151 and the stake is at 2.89% of the portfolio.

Alibaba Group Holding (BABA), American Express (AXP), Bank of N.T. Butterfield & Son (NTB), Bank of America (BAC), Chubb Ltd. (CB), DiDi Global (OTC:DIDIY), Hollysys Automation (HOLI), IAC/InterActive (IAC), Loews Corp (L), Markel Corp (MKL), Microsoft Corp (MSFT), Quest Diagnostics (DGX), and Teck Resources (TECK): These small (less than ~2% of the portfolio each) stakes were decreased this quarter.

Note: They have a ~7% ownership stake in NTB and a ~11% ownership stake in HOLI.

The spreadsheet below highlights changes to Davis Selected Advisers’ 13F holdings in Q1 2022: