| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
Avenir Corporation delivered strong performance in 2023, driven by their concentrated portfolio of high-quality technology and infrastructure companies. Their largest holding Microsoft benefited significantly from AI emergence through Azure cloud services and ChatGPT investment, while Amazon.com gained from AWS cloud services and improved profitability through cost cutting. The firm's digital infrastructure theme played out well with DigitalBridge completing its transition to focus on data centers and cell towers. However, some core holdings faced challenges, including Berkshire Hathaway and Markel Group which lagged due to insurance sector headwinds, and American Tower which suffered from REIT sector perceptions despite strong fundamentals. The managers opportunistically added to American Tower and initiated a new position in SBA Communications, viewing the tower business as having excellent secular growth drivers from 5G buildout. Looking forward, they expect market volatility but remain focused on compounding capital through businesses with sustainable competitive advantages and superior management teams, particularly those benefiting from AI and digital infrastructure trends.
Avenir focuses on investing in great businesses with secular tailwinds and excellent management teams that demonstrate superior capital allocation skills, particularly those positioned to benefit from transformative technologies like AI and digital infrastructure trends.
The managers expect markets to encounter bouts of volatility in the year ahead and plan to use such periods to add to or initiate new investments. They remain focused on evaluating prospects for current investments while looking for opportunities in great businesses with excellent franchises that can compound shareholder capital for years to come.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Dec 31 2023 | 2023 Q4 | AAPL, AMT, AMZN, BRK-A, CPRT, DBRG, MKL, MSFT, SBAC | AI, Cloud, growth, large cap, Quality, technology |
AAPL|MSFT|NFLX|NVDA|UNH AMZN DBRG AMT |
Avenir's concentrated portfolio of quality technology companies delivered strong 2023 performance, led by Microsoft and Amazon benefiting from AI emergence and cloud growth. The firm opportunistically added to tower companies during weakness, viewing 5G buildout as a multi-year catalyst. Management expects volatility ahead but remains focused on compounding capital through businesses with secular tailwinds and superior management teams. |
| Dec 31 2022 | 2022 Q4 | AMT, AMZN, DBRG, LMT, MSFT, ORLY | - | - | |
| Dec 31 2021 | 2021 Q4 | - | - | - | |
| Dec 31 2020 | 2020 Q4 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2023 Q4 |
AIAI emerged in early 2023 and is discussed as revolutionary as electricity and the internet. The technology has terrific promise and will affect many aspects of society profoundly. Primary beneficiaries have been large software and hardware providers, though many companies are incorporating AI into business processes. |
Artificial Intelligence Technology Software Hardware Innovation |
CloudCloud services are highlighted through Microsoft's Azure business and Amazon's AWS offering. Both companies are well-positioned to benefit from AI deployment by customers and the surging demand for cloud services driven by digital infrastructure needs. |
Cloud Services Azure AWS Infrastructure Digital | |
Data CentersDigitalBridge completed its transition to an asset manager focused on digital infrastructure, principally data centers and cell towers. The company is well positioned to benefit from surging demand for cloud services and digital infrastructure. |
Digital Infrastructure Asset Management Cloud Demand Technology Infrastructure |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 1, 2024 | Fund Letters | Avenir Corporation | AMT | American Tower Corporation | Real Estate | Specialized REITs | Bull | NYSE | 5G Networks, Cell Towers, contrarian, infrastructure, Mobile Communications, REIT, secular growth | Login |
| Jan 1, 2024 | Fund Letters | Avenir Corporation | AMZN | Amazon.com Inc | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | NASDAQ | AI, AWS, cloud services, cost-cutting, e-commerce, growth drivers, profitability | Login |
| Jan 1, 2024 | Fund Letters | Avenir Corporation | DBRG | DigitalBridge Group Inc | Real Estate | Specialized REITs | Bull | NYSE | Asset Manager, capital allocation, Cell Towers, cloud services, data centers, digital infrastructure | Login |
| Jan 1, 2024 | Fund Letters | Avenir Corporation | AAPL|MSFT|NFLX|NVDA|UNH | Microsoft Corporation | Software & Services | Systems Software | Bull | NASDAQ | AI, Azure, capital allocation, cloud services, Enterprise software, SaaS, technology | Login |
| TICKER | COMMENTARY |
|---|---|
| MSFT | Our largest holding, Microsoft, continues to perform well operationally and through its Azure cloud services business, its investment in ChatGPT and its extensive offerings to software developers, is perhaps the most well-situated enterprise software provider to benefit from the emergence of AI. Microsoft's share price appreciated significantly in 2023, reflecting its unique position. Going forward, due to its ability to grow its core franchises as well as management's demonstrated astute capital allocation, we believe Microsoft is well positioned to continue compounding shareholder's capital for the foreseeable future. |
| AMZN | Similarly, Amazon.com, through its AWS cloud services offering, is very well situated to benefit from the deployment of AI by its customers, and the company will also benefit from the incorporation of AI throughout its e-commerce and related commercial applications. Meanwhile, Amazon's profitability also improved in 2023 due to an aggressive cost cutting program, which coupled with renewed growth in its core businesses resulted in strong share performance during the year. With many growth drivers in place and a focused management team, we believe Amazon will continue compounding shareholders capital for years to come. |
| CPRT | Several other core holdings including Copart, Apple and DigitalBridge also enjoyed strong share performance in 2023. |
| AAPL | Several other core holdings including Copart, Apple and DigitalBridge also enjoyed strong share performance in 2023. |
| DBRG | Several other core holdings including Copart, Apple and DigitalBridge also enjoyed strong share performance in 2023. Notably, during the year DigitalBridge completed its transition to an asset manager focused on digital infrastructure, principally data centers and cell towers, and thus is also well positioned to benefit from the surging demand for cloud services. We understand the opportunity in front of DigitalBridge and think management is motivated to compound shareholder's capital at attractive rates for many years. |
| BRK-A | A few of our core holdings encountered challenges in 2023. Both Berkshire Hathaway and Markel Group, our two property and casualty insurance investments, lagged the market from a performance standpoint, though the underlying businesses continue to perform. Over time, the investment side of these two businesses will benefit from higher interest rates, enhancing their ability to compound shareholder's capital for years. |
| MKL | A few of our core holdings encountered challenges in 2023. Both Berkshire Hathaway and Markel Group, our two property and casualty insurance investments, lagged the market from a performance standpoint, though the underlying businesses continue to perform. Over time, the investment side of these two businesses will benefit from higher interest rates, enhancing their ability to compound shareholder's capital for years. |
| AMT | Lastly, the share price of American Tower lagged the market significantly in 2023. While it has zero exposure to commercial real estate, American Tower is the largest Real Estate Investment Trust (REIT) in the world. REIT's tend to be viewed as interest rate sensitive vehicles, and though American Tower is not a typical REIT, it is often subject to general perceptions on the outlook for real estate. As American Tower's share price became more attractively priced during the year, we added to existing positions opportunistically where appropriate. |
| SBAC | As American Tower's share price became more attractively priced during the year, we added to existing positions opportunistically where appropriate, and we also began investing in SBA Communications, another tower company we have long admired. The tower business remains one of the best business models we have ever seen, and the build-out of 5G networks both domestically and abroad remains the primary driver of the business. The ever-increasing demand for mobile communications and computing provides an excellent secular growth tailwind that will lead to continued long-term compounding for years. |
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