Christopher Davis, the Wall Street scion and manager of the Davis Advisors family business, has navigated through challenging market conditions over the past 14 years as low interest rates squeezed value stocks. However, with interest rates rising once again, Davis sees an opportunity for a return to normalcy in the market.
Despite some investing blunders, Davis has managed to deliver impressive returns, with his flagship New York Venture Fund outperforming the S&P 500 Index. The fund has seen an average annualized return of 11.4% since its inception in 1969. However, the period of near-zero interest rates from 2008 to 2022 proved challenging for value investors like Davis, as undervalued stocks remained stagnant.
Davis comes from a prestigious Wall Street lineage, with his grandfather and father achieving great success in the industry. His investment strategy is similar to Warren Buffett’s, focusing on buying undervalued companies with strong leadership at reasonable prices. He approaches investment decisions by calculating owner-earnings yield and analyzing a company’s potential for reinvestment.
In recent years, Davis has been heavily invested in financial companies like Berkshire Hathaway, Capital One, and Bank of New York Mellon, which struggled due to the Fed’s easy-money policies. However, with the Federal Reserve beginning to raise rates in March 2022, Davis sees a return to normalcy in the market and is taking advantage of the opportunity.
One of Davis’ biggest positions currently is Meta, which he increased during a period of declining stock prices. Despite challenges facing the company, Davis saw potential in its low valuation compared to other market players. His bet on Meta paid off, with the stock price soaring and delivering significant returns for his fund in 2023.
Davis remains bullish on financials and continues to hold positions in companies like Capital One, JPMorgan Chase, and Wells Fargo. He believes that a return to normalcy in the market will benefit his investment strategy, and he is confident that interest rates will remain higher in the coming years compared to the previous decade. Davis’ approach to investing, based on discipline and long-term thinking, has proven successful in navigating changing market conditions and delivering returns for his investors.
