| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.8% | 1.5% | 13.7% |
| 2025 |
|---|
| 13.7% |
Davenport Asset Management delivered mixed results in Q4 2025, with their diversified approach underperforming in a market dominated by AI and technology momentum. The S&P 500 gained 17.88% for the year while their Value & Income Fund returned 13.69%. The managers maintained their disciplined focus on quality businesses with sustainable competitive advantages, avoiding the speculative fervor around unprofitable AI companies that drove much of the market's gains. They successfully executed value-oriented strategies, with 36 of 42 holdings increasing dividends by 7% on average and 30 companies reducing share counts through buybacks. Key risks include stretched AI valuations and potential investor questioning of massive capital outlays in the sector. Looking ahead, they expect reduced policy uncertainty in 2026 and potential market broadening as fiscal stimulus and Fed support benefit cyclical sectors that have lagged. Their conservative positioning and focus on overlooked value opportunities positions them for potential outperformance when market leadership rotates away from momentum-driven technology stocks.
Davenport Asset Management maintains a disciplined approach focused on high-quality, high-return businesses with durable competitive advantages, emphasizing risk management and appropriate diversification while avoiding the momentum-driven speculation that has dominated recent markets.
The managers expect 2026 to be different from 2025, with less noise from tariffs and DOGE that cast a pall over sentiment. They believe their conservative approach and focus on differentiated perspectives will eventually pay off, as they've seen similar market dynamics before, most notably in the late 1990s.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 18 2026 | 2025 Q4 | ACN, ADBE, ARE, C, CTAS, EOG, FDX, GOOG, HPQ, ISRG, META, MMC, MRVL, MSFT, NOW, NVDA, ORCL, SPOT, UBER, UNP, VRTX | AI, Buybacks, dividends, large cap, technology, value | - | Technology and AI-related stocks led the charge again in 2025, with tech and communications services sectors advancing 23.83% and 32.47% respectively. AI darling Nvidia was… |
| Oct 20 2025 | 2025 Q3 | LOW, NSC, ORCL, UPS | Accenture, Artificial Intelligence, Dividend Growth, energy, healthcare | - | The fund outperformed as holdings like Oracle and TE Connectivity benefited from AI data center expansion, while dividend growth remained robust across holdings. Managers added… |
| Jul 21 2025 | 2025 Q2 | BRK/B, MRK | capital preservation, dividends, free cash flow, income, valuation | - | The commentary focuses on generating reliable income through dividend-paying equities while preserving capital. Management highlights valuation discipline, cash flow sustainability, and downside protection in an… |
| Mar 31 2025 | 2025 Q1 | AWY, HSY, STZ | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI infrastructure buildout continues with supply constraints limiting growth rate. Training and inference demand remains strong, but monetization challenges persist with most users paying nothing. Private market valuations appear excessive with OpenAI valued at $830bn despite $20bn revenue run-rate. |
Training Inference Infrastructure Monetization Valuations |
BuybacksShare repurchases in 2024 and 2025 hit consecutive records as companies raced to meet Tokyo Stock Exchange capital efficiency mandates. Buybacks were a primary driver of the market's 20% climb in the first half of FY2025. |
Share Repurchases Capital Efficiency TSE Mandates Shareholder Returns Records | |
DividendsJapanese companies paid record dividends of ¥18 trillion for fiscal year ending March 2025, a 13.8% year-over-year increase. Many major firms have adopted progressive dividend policies guaranteeing dividends will never be cut, only maintained or increased. |
Progressive Dividend Record Payouts Shareholder Returns Yield Growth | |
ValueManager emphasizes investing in controlled companies trading at significant discounts to NAV, with European holding companies showing discounts of 30-68%. The strategy focuses on securities mispricing where real value exists, contrasting with overvalued technology stocks. |
Discounts NAV Mispricing Undervalued Controlled | |
| 2025 Q3 |
AIAI infrastructure buildout continues with supply constraints limiting growth rate. Training and inference demand remains strong, but monetization challenges persist with most users paying nothing. Private market valuations appear excessive with OpenAI valued at $830bn despite $20bn revenue run-rate. |
Training Inference Infrastructure Monetization Valuations |
EnergyEnergy plays a central role in the manager's analysis, both as a historical lesson from 2014-15 oil collapse and as a current constraint on AI infrastructure. Data centers have become massive electricity consumers with economics highly sensitive to power pricing and grid reliability. Rising electricity prices in data-center-heavy regions and utility challenges in expanding capacity create physical constraints that complicate AI scalability assumptions. |
Data Centers Grid Utilities Power Infrastructure | |
| 2025 Q2 |
Income |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| ACN | Accenture is the world's leading IT consultant, with advantages stemming from their depth and breadth across products, geographies, and industries. Over the last four years, Accenture's valuation has roughly halved. They've faced headwinds in IT spending and suffered from the perception that they are an AI loser. We believe that AI will cause deflationary pressure in parts of their business, but that it will be more than offset by the work required for enterprises to adopt AI. This is recently evidenced by partnerships with OpenAI and Anthropic. |
| ADBE | By looking at their Rnancials, FactSet, PayPal, Adobe, and Salesforce seem to be doing Rne. The market, however, is reading subdued revenue growth as a sign of increased competition on their core oSerings. These companies' outlooks look more di'cult than their past. |
| ARE | Worst for the quarter was Alexandria Real Estate Inc. (ARE) at -39%, as the depth and duration of the valley for biotech real estate appeared to be expanding, and the company signaled a potential dividend cut, which is at odds with our Fund's objective. Subsequent to our sale, the company cut its dividend by 45%. |
| C | Money center bank Citigroup rose amid strong capital markets activity and benign credit conditions. The company continued to repurchase stock and return capital to shareholders, while expenses related to its transformation are expected to decline next year. |
| CTAS | During the quarter, we initiated new positions in two companies – Cintas Corp (CTAS) and Marvell Technology Inc. (MRVL). Cintas is the nation's largest uniform rental and facility services provider serving around 1 million customers. We are attracted to the company's strong execution, potential for continued growth in the future, return profile, and current valuation leading us to initiate a new position in the stock. |
| FDX | As strong as the banks were, parcel delivery companies were even stronger, with FedEx Corp (FDX) at +23% pacing the Fund for the quarter. FedEx delivered a sizable beat-and-raise quarterly performance, and higher contracted rates appear to be sticking, even as fuel prices have declined. |
| GOOG | Alphabet's Q4 performance marks a significant triumph, characterized by a rare beat and raise narrative across all critical business segments. The company's recent earnings report was driven by a balanced contribution from its legacy Search and YouTube divisions, with Google Cloud emerging as the standout performer. Cloud's revenue growth reached an impressive 34%, and it boasts an extraordinary $155 billion backlog, a nearly double increase compared to the previous quarter. This remarkable transformation has propelled Cloud from a margin drag to a high-octane profit center. |
| HPQ | HP has not benefited much from the AI frenzy like other technology companies. The company has seen rising costs and projected lower-than-expected earnings for 2026. We did not make any changes to our position in HP and continue to hold the stock in the Fund. |
| ISRG | ISRG shares appreciated in the fourth quarter after the company delivered strong Q3 results highlighting continued procedure growth and accelerating system placements. Procedure volumes rose in the mid-teens globally, with notable strength in general surgery and urology, while recurring instrument and accessory revenue grew faster than expectations. Management also reported that the early rollout of its next-generation robotic platform was tracking ahead of schedule, with utilization metrics trending positively across beta sites. |
| META | On January 9, Meta Platforms unveiled a new agreement with Vistra—the largest generator of competitive electricity in the United States—as well as with TerraPower and Oklo. The announcement builds on Meta's agreement last year with Constellation Energy and positions the company to become one of the largest corporate purchasers of nuclear-generated electricity in the United States. |
| MMC | We added global insurance broker Marsh & McLennan Companies Inc. (MMC), as well as specialty chemicals manufacturer Eastman Chemicals Co (EMN). Marsh strikes us as a quintessentially good business trading at a reasonable valuation – a relatively rare combination with broad market indices trading near all-time highs. |
| MRVL | We also initiated a position in Marvell Technology which is a fabless semiconductor company that supplies technology necessary to move, store, process and secure data across various end-markets such as data centers, enterprise networks and telecommunications infrastructure. We believe the risk/reward looks compelling and we elected to start a position on the stock's recent pullback. |
| MSFT | MSFT was a detractor in 4Q25 following its fiscal first-quarter 2026 earnings report released on October 29. While results were better than expected operationally, investor reaction was driven by guidance and capital expenditure intensity rather than headline performance. Revenue grew 17% year-over-year, exceeding consensus expectations, and Azure revenue increased 39% year-over-year, also ahead of estimates. However, management guided to a sequential deceleration in Azure growth in fiscal Q2, signaling some moderation after a period of exceptional demand. |
| NOW | In the case of ServiceNow, the stock weakened following reports of a potential large acquisition while the company has also been challenged by bearish sentiment across the software as a service or SAAS segment. |
| NVDA | AI bellwether NVIDIA's very strong set of earnings in late November helped the AI theme re-assert its dominance when investors breathed a sigh of relief following the results. |
| ORCL | Investor enthusiasm for Oracle's stock in calendar year 2025 was initially driven by several multi-billion-dollar contracts it signed with leading AI companies, including OpenAI and Meta. However, in Q4 sentiment for ORCL's growth prospects shifted to skepticism, as investors began to scrutinize the return profile of the substantial capital investments required to support the approximately $500 billion of contracts signed by Oracle. Given the widening range of potential outcomes associated with Oracle's elevated capital needs, we reduced our position in ORCL during Q4. |
| SPOT | Spotify is the world's leading audio streaming platform. Third-quarter results showed continued operating progress, with users increasing 11% to 713 million and subscribers growing 12% to 281 million. Meanwhile, operating income expanded to a mid-teens margin, alongside a record quarterly free cash flow. Despite the momentum, the shares weakened as investors reset near-term margin expectations. Spotify has been a top contributor to long-term Fund performance, and we remain confident that pricing, product innovation, advertising efficiency, and an expanding ecosystem can continue to widen margins over time, as reinforced this quarter by the launch of Spotify recommendations within ChatGPT. |
| UBER | UBER was a detractor in the fourth quarter following its third-quarter 2025 earnings report, which delivered strong operating performance but was met with a muted market reaction. Gross Bookings and adjusted EBITDA both came in near the high end of management's guidance, driven by accelerating demand across both Mobility and Delivery. However, investor focus shifted to commentary around reduced margin expansion as the company steps up investment in growth initiatives, including autonomous vehicle partnerships, platform innovation, and commerce expansion. |
| UNP | Union Pacific, the largest freight rail operator in the western United States, has announced plans to merge with Norfolk Southern, one of its major eastern counterparts. If approved, the merger would create the first coast-to-coast rail network in the U.S. |
| VRTX | Top gainers in the Fund this quarter included Vertex Pharmaceuticals (+16%) |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
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| No Recent Buys Data | |||||
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