Davis Financial Fund

Investor Summary

The fund is co-managed by Christopher C. Davis, who has served as lead portfolio manager since January 1, 2014, and has been with Davis Funds since 1989, and Pierce B.T. Crosbie, who serves as co-portfolio manager. The combined portfolio management experience spans over three decades, providing institutional memory across multiple market cycles. The Davis family and advisory team have over $2 billion invested alongside clients, demonstrating significant alignment of interests between fund management and external investors.

Fund Strategy

Davis Financial Fund applies the signature Davis Investment Discipline to seek financial companies with competitive advantages, strong balance sheets, solid free cash flows, earnings growth potential, and proven outstanding management. The fund employs a bottom-up research approach targeting well-managed financial companies with sustainable competitive advantages, focusing on durable, well-managed financial businesses often undervalued relative to the market. The investment strategy seeks long-term growth of capital by investing at least 80% of net assets in securities issued by companies principally engaged in the financial services sector.

ANNUALIZED SINCE INCEPTION	QUARTERLY	YTD
11.96%	0%	29.29%

2025
29.3%

Executive Summary

Davis Financial Fund returned +29.29% in 2025, significantly outperforming the S&P Financials Index (+15.02%) and S&P 500 Index (+17.88%). The fund's outperformance was driven by payments and consumer lending companies (Capital One, American Express, Rocket Companies), foreign banks (Danske Bank, DBS Group, DNB Bank), select U.S. banks (JPMorgan Chase, Wells Fargo), and capital markets companies (BNY Mellon, Julius Baer). Banking stocks benefited from multiple tailwinds including stable credit trends, widening interest spreads as fixed-rate assets roll over at higher yields, expense control through technology investment, and a more favorable regulatory environment. Financial stock valuations have reset higher with price-to-tangible book multiples expanding over 70% in three years, though the portfolio still trades at approximately 13x earnings, a significant discount to broader markets. The managers trimmed bank exposure given strong performance and redeployed capital into property & casualty reinsurers, payments companies, and holding companies. Despite the valuation reset, they believe the portfolio remains positioned for attractive returns over the next decade given the quality of franchises and continued discount to intrinsic value.

Forward Outlook

The managers remain consistent in their approach of looking for companies with durable competitive advantages coupled with competent and honest managements priced at a discount to intrinsic value. They invest presuming they will own companies through business cycles and do not attempt to build a portfolio around particular speculative forecasts. The portfolio is diversified across leading franchises earning above-average returns on capital in banking, payments, custody, wealth management and property & casualty insurance.

Date	Letter	Tickers	Keywords	Pitches	Quick Takes
Jan 26 2026	2025 Q4	AXP, BAER.SW, BK, BRK-A, CB, COF, D05.SI, DIS, FI, FITB, JPM, MKL, PNC, RE, RKT, RNR, USB, WFC	Banking, capital, financials, insurance, regulation, returns, value	COF WFC CB	Davis Financial Fund delivered exceptional 29% returns in 2025, significantly outperforming benchmarks through concentrated exposure to quality financial services companies. Strong performance across banking, payments, and capital markets was driven by improving credit spreads, regulatory tailwinds, and expense discipline. Despite recent valuation expansion, the portfolio trades at attractive 13x earnings with durable competitive advantages intact.

Date

Letter

Tickers

Keywords

Pitches

Quick Takes

Jan 26 2026

2025 Q4

AXP, BAER.SW, BK, BRK-A, CB, COF, D05.SI, DIS, FI, FITB, JPM, MKL, PNC, RE, RKT, RNR, USB, WFC

Banking, capital, financials, insurance, regulation, returns, value

COF
WFC
CB

Davis Financial Fund delivered exceptional 29% returns in 2025, significantly outperforming benchmarks through concentrated exposure to quality financial services companies. Strong performance across banking, payments, and capital markets was driven by improving credit spreads, regulatory tailwinds, and expense discipline. Despite recent valuation expansion, the portfolio trades at attractive 13x earnings with durable competitive advantages intact.

QUARTER	THEMES	TAGS
2025 Q4	AI Manager draws parallels between today's AI-driven environment and the 2014-15 oil collapse, warning that AI has become a macroeconomic assumption embedded in capital expenditure plans and valuations. Notes AI infrastructure is profoundly energy-intensive with rising electricity costs and grid constraints challenging assumptions of frictionless scalability.	Artificial Intelligence Data Centers Energy Infrastructure Valuations Technology
	Energy Discusses energy's critical role in AI infrastructure economics, with data centers becoming largest single-site electricity consumers. Rising power costs compress margins while grid constraints and regulatory scrutiny complicate deployment timelines and challenge scalability assumptions.	Electricity Power Costs Grid Infrastructure Data Centers Utilities
	Semiconductors References semiconductor manufacturers as benefiting from AI narrative loop where demand justified capital spending and growth projections justified valuations. Notes many AI-exposed companies including semiconductor firms trade at multiples assuming near-flawless execution.	Chip Manufacturers AI Infrastructure Valuations Capital Spending
	Value Manager emphasizes discipline in seeking businesses mispriced relative to long-term intrinsic value, finding interesting opportunities in areas overlooked amid prevailing narratives. Approach remains grounded in intrinsic value despite market preference for narrative momentum over breadth.	Intrinsic Value Mispriced Securities Long-term Investing Discipline

QUARTER

THEMES

AI

Manager draws parallels between today's AI-driven environment and the 2014-15 oil collapse, warning that AI has become a macroeconomic assumption embedded in capital expenditure plans and valuations. Notes AI infrastructure is profoundly energy-intensive with rising electricity costs and grid constraints challenging assumptions of frictionless scalability.

Artificial Intelligence Data Centers Energy Infrastructure Valuations Technology

Energy

Discusses energy's critical role in AI infrastructure economics, with data centers becoming largest single-site electricity consumers. Rising power costs compress margins while grid constraints and regulatory scrutiny complicate deployment timelines and challenge scalability assumptions.

Electricity Power Costs Grid Infrastructure Data Centers Utilities

Semiconductors

References semiconductor manufacturers as benefiting from AI narrative loop where demand justified capital spending and growth projections justified valuations. Notes many AI-exposed companies including semiconductor firms trade at multiples assuming near-flawless execution.

Chip Manufacturers AI Infrastructure Valuations Capital Spending

Value

Manager emphasizes discipline in seeking businesses mispriced relative to long-term intrinsic value, finding interesting opportunities in areas overlooked amid prevailing narratives. Approach remains grounded in intrinsic value despite market preference for narrative momentum over breadth.

Intrinsic Value Mispriced Securities Long-term Investing Discipline

Date	Pitch Type	Author	Ticker	Company	Industry	Sub Industry	Bull / Bear	Exchange	Keywords	Action
Jan 26, 2026	Fund Letters	Chris Davis	COF	Capital One Financial Corp	Financials	Consumer Finance	Bull	New York Stock Exchange	credit cards, Payments, ROE, synergies, valuation	Login
Jan 26, 2026	Fund Letters	Chris Davis	WFC	Wells Fargo & Co	Financials	Diversified Banks	Bull	New York Stock Exchange	Asset Cap, banking, buybacks, efficiency, tangible book	Login
Jan 26, 2026	Fund Letters	Chris Davis	CB	Chubb Ltd	Financials	Property & Casualty Insurance	Bull	New York Stock Exchange	Defensiveness, Insurance, Pricing power, ROE, underwriting	Login

Date

Pitch Type

Author

Ticker

Company

Industry

Sub Industry

Bull / Bear

Exchange

Keywords

Action

Jan 26, 2026

Fund Letters

Chris Davis

COF

Capital One Financial Corp

Financials

Consumer Finance

Bull

New York Stock Exchange

credit cards, Payments, ROE, synergies, valuation

Jan 26, 2026

Fund Letters

Chris Davis

WFC

Wells Fargo & Co

Financials

Diversified Banks

Bull

New York Stock Exchange

Asset Cap, banking, buybacks, efficiency, tangible book

Jan 26, 2026

Fund Letters

Chris Davis

Chubb Ltd

Financials

Property & Casualty Insurance

Bull

New York Stock Exchange

Defensiveness, Insurance, Pricing power, ROE, underwriting

TICKER	COMMENTARY
AXP	American Express Company represents 22.1% of company owned with cost basis of $1,287 million and market value of $56,088 million, providing $479 million in 2025 dividends.
BK	Bank of New York Mellon, the largest financial custodian in the world, advanced amid strong earnings results. America's oldest bank is an early leader in the adoption of AI, with a multiyear partnership with OpenAI.
BRK-A	Miles mentioned that he had been a long-term shareholder of Berkshire Hathaway and had never sold his shares. Over roughly twenty-five years, his investment compounded at about 10.9% annually. The first dollar he invested became approximately thirteen dollars. Since around 1990, Berkshire has only marginally outperformed the S&P 500. By Buffett's own historical standards, this period could be described as mediocre. And yet, admiration for Buffett has not faded—if anything, it has intensified.
CB	Chubb is one of our core property & casualty insurance holdings. It is well-diversified across products and geographies. The company has consistently generated returns on equity comfortably ahead of the industry owing to a combination of running advantaged lines of business with a disciplined underwriting and operating culture. Pricing trends in the insurance markets have generally been strong in recent years, and consequently Chubb has been earning returns on tangible equity in the low 20s. While competitive forces may in time push that back toward a normalized level a few points lower, Chubb we believe would still be valued at 10–11x earnings looking out a few years.
COF	We added to Capital One Financial Corporation, which was a core new addition in the prior quarter.
D05.SI	We have followed the company for many years, but aside from occasional trades, we had not felt compelled to build a meaningful position in a business—even one that is an industry leader—whose business is traditionally mainly asset-based lending and whose earnings are still meaningfully influenced by interest-rate cycles. Over the previous two years, we have been increasingly impressed by the extent to which DBS has converted scale and technology into a structural economic moat.
DIS	We sold our long-term holding in Disney, reflecting our view that consumer discretionary spending could remain under pressure if cost-of-living conditions stay tight, especially at a time when the company is spending significantly on Parks and Resorts.
FI	Notable detractors from performance came from Fiserv (-43bps absolute and -39bps relative)
FITB	We continued to harvest gains by trimming Fifth Third (FITB) to 6% NAV. While we remain constructive on the sector's ability to steadily generate 10%+ earnings yield, valuations have expanded, and credit underwriting standards are gradually easing.
JPM	JPMorgan (JPM) has identified 42 AI-related stocks in the S&P 500, which today represent 45% of the index's market cap. They estimate that these stocks have accounted for 78% of S&P 500 returns, 66% of earnings growth, and 71% of capital spending growth since ChatGPT launched in November 2022. As it relates to the impact on the U.S. economy, JPM estimates tech sector capital spending contributed 40%-45% of U.S. GDP growth through the first 9 months of the year, up from less than 5% during the same period in 2023.
MKL	MKL produced excellent results in its insurance and investment operations. The insurance segment delivered a 93% combined ratio while the equity portfolio benefited from the year-end market rally. MKL's disciplined capital allocation, including significant stock buybacks, boosted their book value per share growth.
PNC	We initiated a preferred perpetual security in this bank holding company due to its robust capital position.
RE	In many ways we have come full circle with Everest Group – it is an old friend. We owned Everest RE, now called Everest Group, for 11 years in our Small Cap strategy during which it grew into a large cap, and we purchased it in our Large Cap program as well. We sold it out of both portfolios in 2020 to reallocate capital to companies with larger margins of safety. In the third quarter of 2023, we repurchased Everest Group in our Large Cap strategy. Despite steady value per share growth, Everest Group's stock price declined in 2024 and 2025 so we were able to buy it again in our Small Cap strategy. Everest Group is one of the top reinsurance companies in the world. They also have a meaningful primary insurance segment. Everest Group's quarterly numbers can be volatile, but over a cycle the company produces positive underwriting results. An underwriting loss is the cost of funds from premiums paid to an insurance company. An underwriting profit means that those funds do not have a cost. In fact, it means the insurance company is being paid to keep your money. They are able to invest these funds and earn investment income. Insurance companies that produce underwriting profits should trade at a meaningful premium to tangible book value. Everest Group, on the other hand, trades at a discount to tangible book value. The company realizes that its shares are significantly undervalued and is using its free cash flow to repurchase stock which positively impacts our value per share growth. We are thrilled to have the opportunity to own this well-managed leading insurance company again.
RKT	Rocket Companies, a fully integrated mortgage provider which we received shares of following the recent closing of its acquisition of Mr. Cooper, underperformed due to evolving market expectations surrounding the path of interest rates, which is key driver of its mortgage originations business. Rocket Companies, following its 2025 acquisition of Mr. Cooper, became a combined company with a market capitalization exceeding $50 billion. As a result, the position moved well beyond our small-cap mandate, and we exited the position.
RNR	RenaissanceRe (Finance & Investment, US) outperformed during the period as the market rewarded impressive quarterly results and aggressive share buybacks.
USB	Select holdings in banking (US Bank) detracted from returns
WFC	and money center banks Citigroup and Wells Fargo, all following strong performance

TICKER

COMMENTARY

AXP

American Express Company represents 22.1% of company owned with cost basis of $1,287 million and market value of $56,088 million, providing $479 million in 2025 dividends.

Bank of New York Mellon, the largest financial custodian in the world, advanced amid strong earnings results. America's oldest bank is an early leader in the adoption of AI, with a multiyear partnership with OpenAI.

BRK-A

Miles mentioned that he had been a long-term shareholder of Berkshire Hathaway and had never sold his shares. Over roughly twenty-five years, his investment compounded at about 10.9% annually. The first dollar he invested became approximately thirteen dollars. Since around 1990, Berkshire has only marginally outperformed the S&P 500. By Buffett's own historical standards, this period could be described as mediocre. And yet, admiration for Buffett has not faded—if anything, it has intensified.

Chubb is one of our core property & casualty insurance holdings. It is well-diversified across products and geographies. The company has consistently generated returns on equity comfortably ahead of the industry owing to a combination of running advantaged lines of business with a disciplined underwriting and operating culture. Pricing trends in the insurance markets have generally been strong in recent years, and consequently Chubb has been earning returns on tangible equity in the low 20s. While competitive forces may in time push that back toward a normalized level a few points lower, Chubb we believe would still be valued at 10–11x earnings looking out a few years.

COF

We added to Capital One Financial Corporation, which was a core new addition in the prior quarter.

D05.SI

We have followed the company for many years, but aside from occasional trades, we had not felt compelled to build a meaningful position in a business—even one that is an industry leader—whose business is traditionally mainly asset-based lending and whose earnings are still meaningfully influenced by interest-rate cycles. Over the previous two years, we have been increasingly impressed by the extent to which DBS has converted scale and technology into a structural economic moat.

DIS

We sold our long-term holding in Disney, reflecting our view that consumer discretionary spending could remain under pressure if cost-of-living conditions stay tight, especially at a time when the company is spending significantly on Parks and Resorts.

Notable detractors from performance came from Fiserv (-43bps absolute and -39bps relative)

FITB

We continued to harvest gains by trimming Fifth Third (FITB) to 6% NAV. While we remain constructive on the sector's ability to steadily generate 10%+ earnings yield, valuations have expanded, and credit underwriting standards are gradually easing.

JPM

JPMorgan (JPM) has identified 42 AI-related stocks in the S&P 500, which today represent 45% of the index's market cap. They estimate that these stocks have accounted for 78% of S&P 500 returns, 66% of earnings growth, and 71% of capital spending growth since ChatGPT launched in November 2022. As it relates to the impact on the U.S. economy, JPM estimates tech sector capital spending contributed 40%-45% of U.S. GDP growth through the first 9 months of the year, up from less than 5% during the same period in 2023.

MKL

MKL produced excellent results in its insurance and investment operations. The insurance segment delivered a 93% combined ratio while the equity portfolio benefited from the year-end market rally. MKL's disciplined capital allocation, including significant stock buybacks, boosted their book value per share growth.

PNC

We initiated a preferred perpetual security in this bank holding company due to its robust capital position.

In many ways we have come full circle with Everest Group – it is an old friend. We owned Everest RE, now called Everest Group, for 11 years in our Small Cap strategy during which it grew into a large cap, and we purchased it in our Large Cap program as well. We sold it out of both portfolios in 2020 to reallocate capital to companies with larger margins of safety. In the third quarter of 2023, we repurchased Everest Group in our Large Cap strategy. Despite steady value per share growth, Everest Group's stock price declined in 2024 and 2025 so we were able to buy it again in our Small Cap strategy. Everest Group is one of the top reinsurance companies in the world. They also have a meaningful primary insurance segment. Everest Group's quarterly numbers can be volatile, but over a cycle the company produces positive underwriting results. An underwriting loss is the cost of funds from premiums paid to an insurance company. An underwriting profit means that those funds do not have a cost. In fact, it means the insurance company is being paid to keep your money. They are able to invest these funds and earn investment income. Insurance companies that produce underwriting profits should trade at a meaningful premium to tangible book value. Everest Group, on the other hand, trades at a discount to tangible book value. The company realizes that its shares are significantly undervalued and is using its free cash flow to repurchase stock which positively impacts our value per share growth. We are thrilled to have the opportunity to own this well-managed leading insurance company again.

RKT

Rocket Companies, a fully integrated mortgage provider which we received shares of following the recent closing of its acquisition of Mr. Cooper, underperformed due to evolving market expectations surrounding the path of interest rates, which is key driver of its mortgage originations business. Rocket Companies, following its 2025 acquisition of Mr. Cooper, became a combined company with a market capitalization exceeding $50 billion. As a result, the position moved well beyond our small-cap mandate, and we exited the position.

RNR

RenaissanceRe (Finance & Investment, US) outperformed during the period as the market rewarded impressive quarterly results and aggressive share buybacks.

USB

Select holdings in banking (US Bank) detracted from returns

WFC

and money center banks Citigroup and Wells Fargo, all following strong performance

Ticker	Put/Call	Company Name	Industry	Value (M)	Shares	Weight %	Shares Purchased/Sold	Change in Share %	Market Cap (M)
COF	-	Capital One Financial Corp.	Financials	2,087.9M	8,614,766	9.4%	-8,145,468	-48.6%	133,659.8M
USB	-	U.S. Bancorp	Financials	1,176.1M	22,041,759	5.3%	-16,821,365	-43.3%	91,332.9M
META	-	Meta Platforms, Inc., Class A	Communication Services	1,157.1M	1,752,974	5.2%	-1,678,054	-48.9%	1,614,716.5M
AMAT	-	Applied Materials, Inc.	Information Technology	1,079.7M	4,201,298	4.9%	-6,906,686	-62.2%	291,446.6M
CVS	-	CVS Health Corporation	Health Care	1,012.7M	12,760,511	4.6%	-10,046,771	-44.1%	98,863.5M
MGM	-	MGM Resorts International	Consumer Discretionary	978.7M	26,820,202	4.4%	-21,086,702	-44.0%	10,196.3M
GOOGL	-	Alphabet Inc., Class A	Communication Services	976.2M	3,118,760	4.4%	-2,422,428	-43.7%	3,657,769.9M
VTRS	-	Viatris Inc.	Health Care	973.3M	78,177,984	4.4%	-60,513,306	-43.6%	18,373.3M
MKL	-	Markel Group, Inc	Financials	892.5M	415,160	4.0%	-331,896	-44.4%	26,241.1M
CTRA	-	Coterra Energy, Inc.	Energy	856.4M	32,537,508	3.8%	-7,229,454	-18.2%	23,869.2M

Ticker

Put/Call

Company Name

Industry

Value (M)

Weight %

Shares Purchased/Sold

Change in Share %

Market Cap (M)

COF

Capital One Financial Corp.

Financials

2,087.9M

8,614,766

9.4%

-8,145,468

-48.6%

133,659.8M

USB

U.S. Bancorp

Financials

1,176.1M

22,041,759

5.3%

-16,821,365

-43.3%

91,332.9M

Ticker	Put/Call	Amount Bought	Shares Bought	% Change	Weight %
JBS	-	$170.9M	12M	-	0.77%
FISV	-	$38.2M	569K	-	0.17%
EG	-	$14.1M	39K	49.7%	0.18%
HPP	-	$3.5M	324K	-	0.02%
CUBE	-	$3.3M	91K	-	0.01%

Ticker	Put/Call	Amount Sold	Shares Sold	% Change	Weight %	Status
COF	-	$1,446.4M	8M	-48.6%	9.38%	Decreased
AMAT	-	$994.7M	7M	-62.2%	4.85%	Decreased
META	-	$965.0M	2M	-48.9%	5.20%	Decreased
BRK.A	-	$840.8M	1K	-52.8%	3.20%	Decreased
USB	-	$688.3M	17M	-43.3%	5.29%	Decreased

Industry	Prev Quarter %	Current Quarter %	Change
Financials	48.38%	33.17%	-15.21%
Health Care	21.83%	15.20%	-6.63%
Communication Services	19.46%	13.48%	-5.98%
Consumer Discretionary	16.14%	11.12%	-5.03%
Information Technology	13.12%	8.60%	-4.52%
Consumer Staples	6.01%	4.61%	-1.40%
Energy	5.64%	4.61%	-1.03%
Materials	4.03%	2.76%	-1.26%
Industrials	3.56%	2.50%	-1.05%
Other	2.46%	2.43%	-0.03%
Real Estate	2.31%	1.53%	-0.78%

Symbol	Company	Filed By	Filing Date	Filing
MGM	MGM Resorts International	Davis Selected Advisers	Nov 10, 2025	SC 13G/A
VTRS	Viatris Inc	Davis Selected Advisers	Nov 10, 2025	SC 13G/A
MGM	MGM Resorts International	Davis Selected Advisers	Aug 07, 2025	SC 13G/A
VTRS	Viatris Inc	Davis Selected Advisers	Aug 07, 2025	SC 13G/A
VTRS	Viatris Inc	Davis Selected Advisers	May 08, 2025	SC 13G/A
MGM	MGM Resorts International	Davis Selected Advisers	May 08, 2025	SC 13G/A
VTRS	Viatris, Inc.	Davis Selected Advisers	Jan 24, 2025	SC 13G
MGM	MGM Resorts International	Davis Selected Advisers	Jan 24, 2025	SC 13G
MGM	MGM Resorts International	Davis Selected Advisers	Nov 12, 2024	SC 13G
VTRS	Viatris, Inc.	Davis Selected Advisers	Nov 12, 2024	SC 13G/A
HOLI	Hollysys Automation Technologies, Ltd.	Davis Selected Advisers	Nov 12, 2024	SC 13G/A
NTB	Bank of N.T. Butterfield & Son Ltd.	Davis Selected Advisers	Feb 09, 2024	SC 13G/A
HOLI	Hollysys Automation Technologies, Ltd.	Davis Selected Advisers	Feb 09, 2024	SC 13G/A
VTRS	Viatris, Inc.	Davis Selected Advisers	Feb 09, 2024	SC 13G
VRM	Vroom, Inc	Davis Selected Advisers	Feb 10, 2023	SC 13G/A
NTB	Bank of N.T. Butterfield & Son Ltd.	Davis Selected Advisers	Feb 10, 2023	SC 13G/A
HOLI	Hollysys Automation Technologies, Ltd.	Davis Selected Advisers	Feb 10, 2023	SC 13G/A
CIH	China Index Holdings Ltd.	Davis Selected Advisers	Feb 10, 2023	SC 13G/A

Chris Davis

Davis Financial Fund

Investment Summary

Investor Summary

Fund Strategy

FUND PERFORMANCE AS OF 31st December 2025

Investor Letters

Latest Executive Summary:

Executive Summary

Core Thesis

Forward Outlook

Investment Themes

AI

Energy

Semiconductors

Value

Investor Pitches

Current Portfolio as of ( 31st December 2025 )

Key Risks identified by Manager:

Key catalysts include:

Portfolio Implications

Ticker Commentary

Chris Davis Top Holdings

Recent Buys (13F)

Recent Sells (13F)

13F Sector Summary

Portfolio Distribution

Chris Davis Latest 13D & 13G Filings

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Davis Financial Fund