| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.84% | 3.17% | - |
The Davenport Value & Income Fund returned 3.17% in Q2 2026, underperforming the Russell 1000 Value Index's 13.87% return as semiconductor stocks dominated market gains with a 138% quarterly advance. The fund's best performers were Texas Instruments and Cisco, both benefiting from AI infrastructure spending, along with health insurers UnitedHealth and Elevance as the underwriting cycle improved. Energy holdings Exxon Mobil and Chevron detracted as oil prices fell 30% following reduced Iran tensions. Accenture lagged on concerns that AI efficiency gains may reduce billable consulting hours. The fund initiated positions in Abbott Laboratories and International Flavors & Fragrances at 16-17x earnings, below historical averages, with 2-2.6% dividend yields. Six holdings raised dividends, including Johnson & Johnson for the 64th consecutive year. Major banks increased dividends 10-12% after passing Federal Reserve stress tests. Management emphasizes the fund trades at a significant discount to the Russell 1000 Value while providing a 2.5% yield, maintaining commitment to value and income principles despite near-term underperformance versus momentum-driven technology stocks. The team views current market concentration in capital-intensive AI stocks as creating opportunity for patient, dividend-focused investors.
The Davenport Value & Income Fund maintains disciplined adherence to value investing and dividend income generation despite significant underperformance versus momentum-driven indices dominated by AI and semiconductor stocks in Q2 2026.
Management expects the current one-sided sentiment toward technology and AI to eventually normalize, though timing is uncertain. The fund will continue to prioritize companies that possess more capital than they need and return excess capital to shareholders via dividends and buybacks. The team views return on capital and return of capital as timeless investment principles that can benefit investors who stay true to them, particularly in an environment where many high-flying companies have become increasingly capital intensive.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 27 2026 | 2026 Q2 | ABT, ACN, C, CSCO, CVX, ELV, IFF, JNJ, JPM, LHX, MDT, PEP, TXN, UNH, WFC, XOM | AI, dividends, energy, healthcare, large cap, semiconductors, value | - | The Davenport Value & Income Fund underperformed in Q2 2026 as AI and semiconductor momentum dominated markets, but management maintains disciplined value orientation. Top performers included Texas Instruments, Cisco, and health insurers as underwriting cycles improved. The fund added Abbott Laboratories and International Flavors & Fragrances at attractive valuations with solid dividend yields. Six holdings raised dividends including Johnson & Johnson's 64th consecutive increase, reinforcing the fund's commitment to quality dividend payers over capital-intensive growth stocks. |
| Apr 13 2026 | 2026 Q1 | ACN, BDX, CMCSA, CSCO, CVX, ELV, ENB, FDX, NEE, NSC, NVO, SLB, TXN, UNH, UNP, VSNT, WAT, WY, XOM | AI, dividends, energy, Geopolitical, income, infrastructure, large cap, value | - | Value & Income Fund delivered 1.89% in Q1 2026 as energy holdings surged on Middle East conflict while AI fears pressured tech names. Managers trimmed energy war premiums and added infrastructure plays. Fourteen holdings raised dividends 6% on average, exceeding inflation. Strategy focuses on capitalizing on market inefficiencies during sector rotation while maintaining quality dividend growers. |
| 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 | - | Davenport maintained disciplined value investing in Q4 2025 despite underperforming AI-driven markets. Their focus on quality dividend-growing companies with strong buyback programs positions them for potential outperformance when market leadership rotates. With reduced policy uncertainty expected in 2026 and stretched valuations in momentum stocks, their conservative approach targeting overlooked opportunities could benefit from broader market participation. |
| Oct 20 2025 | 2025 Q3 | AAPL, ACN, AMZN, AVGO, EA, ELV, GOOGL, ISRG, META, MSFT, NOW, NVDA, NVO, ORCL, ROK, SPOT, TEL, UNH, UPS, XOM | AI, dividends, large cap, momentum, technology, Valuations, value | - | Strong Q3 market performance driven by AI enthusiasm and policy support masks elevated valuations and speculative excess. S&P 500 at 23x forward earnings with record-low credit spreads signals compressed risk premiums. Davenport maintains valuation discipline despite relative performance challenges, focusing on asymmetric opportunities outside momentum-driven tech/AI names while awaiting broader market participation. |
| Jul 21 2025 | 2025 Q2 | AAPL, ACN, AMZN, AVGO, EA, ELV, GOOGL, ISRG, META, MSFT, NOW, NVDA, NVO, ORCL, ROK, SPOT, TEL, UNH, UPS, XOM | AI, earnings, Federal Reserve, momentum, small caps, technology, Valuations | - | Davenport acknowledges strong Q3 market performance driven by AI enthusiasm and supportive fiscal/monetary policy but warns of elevated valuations and speculative behavior. While recognizing powerful economic backdrop, they maintain valuation discipline and seek asymmetric opportunities outside momentum-driven tech/AI space, expecting their contrarian approach to be rewarded over time. |
| Mar 31 2025 | 2025 Q1 | AVY, BAM, BMY, BRK.B, BUD, CMCSA, CVX, ELV, FDX, HP, HSY, JNJ, LHX, NEE, NSC, ORCL, PM, SNY, STZ, UPS | Buybacks, Consumer Staples, Defensive, dividends, healthcare, value | - | Davenport Value & Income Fund outperformed in Q1 2025 as defensive sectors led by healthcare and consumer staples outpaced declining technology stocks. The Fund benefits from strong dividend growth across holdings and attractive valuations in individual names despite broader market concerns. Management selectively added positions while maintaining focus on quality companies with compressed valuations and resilient cash flows. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIThe fund acknowledges AI infrastructure as a dominant market theme but positions itself outside this momentum-driven trade. Management notes that semiconductor companies benefiting from AI buildout drove significant index returns, with the semiconductor group providing about half the Russell 1000 Value's total return for the quarter. The fund's holdings Texas Instruments and Cisco are getting their fair share of AI-related business, though the fund maintains underweight exposure to the broader AI infrastructure complex. |
Semiconductors Infrastructure Technology |
SemiconductorsSemiconductors dominated market performance with the semiconductor group appreciating 138% in Q2 and representing over 8% of the Russell 1000 Value index. The fund's best performers were Texas Instruments and Cisco, both benefiting from AI infrastructure spending. However, management notes the fund remains significantly underweight this sector relative to benchmarks, as many semiconductor stocks provide near-zero dividend yields and exhibit high volatility inconsistent with the fund's value and income mandate. |
AI Technology Valuations | |
Managed CareHealth insurers UnitedHealth Group and Elevance Health were among the fund's star performers for the quarter. Management indicates this industry appears to have turned the corner, with the underwriting cycle starting to show a better pricing versus cost trend. This represents a positive inflection point for the sector after prior challenges. |
Healthcare Insurance Pricing | |
DividendsThe fund emphasizes its commitment to dividend-paying companies as a core mandate. Six holdings increased dividends during the quarter, including Johnson & Johnson for the 64th consecutive year, PepsiCo for 54 years, and Medtronic for 49 years. Major banks including JPMorgan, Wells Fargo, and Citigroup raised dividends by 10-12% after passing Federal Reserve stress tests. Management views long dividend track records as tangible evidence of good businesses and contrasts dividend-paying stocks favorably against capital-intensive growth companies. |
Income Quality Banks | |
EnergyEnergy holdings Exxon Mobil and Chevron were among the fund's worst performers as oil prices turned in their worst quarter in six years. The decline followed investor optimism around the apparent end of the war with Iran and the reopening of the Strait of Hormuz shipping channel. Management notes that while oil prices fell approximately 30%, natural gas prices increased 14%, which partially benefits Chevron and Exxon as they produce more natural gas than oil. |
Oil Natural Gas Geopolitics | |
ValueThe fund maintains a disciplined value orientation despite significant underperformance versus momentum-driven indices. Management notes the Russell 1000 Value's P/E nearly matches the S&P 500, while the fund trades at a sizable discount while supplying an approximate 2.5% dividend yield. The letter emphasizes commitment to the fund's two-pronged mission of value and income, with management viewing return on capital and return of capital as timeless investment principles. New purchases Abbott Laboratories and International Flavors & Fragrances were made at 16-17x earnings, below long-term averages. |
Valuation Discipline Income | |
| 2026 Q1 |
EnergyEnergy was the only S&P sector that rose in March as oil surged 77% for the quarter due to the Middle East conflict and closure of the Strait of Hormuz. The fund's energy holdings including Exxon Mobile, Chevron, and SLB were top performers, though managers trimmed positions to acknowledge war premium pricing. |
Oil Energy Geopolitical Commodities War Premium |
DividendsFourteen of the fund's investments increased their dividend in the quarter, with notable mentions including NextEra Energy (30th consecutive year), Enbridge (30 years), and Chevron (39 years). The average Value & Income holding increased its dividend 6% year-over-year, exceeding headline inflation. |
Dividend Growth Income Inflation Protection Yield Distribution | |
AIArtificial intelligence concerns weighed on technology holdings like Accenture, with market skepticism about the company's ability to navigate AI-driven changes in white collar employment. However, managers note Accenture has historically benefited from prior generational technology changes including the internet and cloud computing. |
Artificial Intelligence Technology Disruption Software Automation Employment | |
InfrastructureThe fund added Union Pacific seeking to acquire Norfolk Southern, viewing it as a potential growth opportunity among large-cap industrials. They also added positions in companies positioned for infrastructure refresh cycles including Cisco Systems entering a networking refresh cycle augmented by data center growth. |
Rail Transportation Data Centers Networking Industrial | |
| 2025 Q4 |
AIAI and technology stocks led market gains in 2025, with massive capital expenditures driving investor excitement. However, the manager expresses concern about valuations and speculative behavior, noting that many AI investments appear driven by FOMO rather than clear returns on capital. |
Artificial Intelligence Technology Valuations Capital Expenditures Speculation |
ValuationsThe manager highlights extreme valuations across AI and technology stocks, with many trading at historically high multiples. They note that 18 of the top 20 Russell 3000 performers were unprofitable companies, indicating speculative excess reminiscent of the late 1990s. |
Overvaluation Multiples Speculation Bubble Risk | |
ValueThe manager emphasizes focusing on stocks that have been cast aside as investors chase momentum. They believe their conservative, valuation-sensitive approach will eventually be rewarded, similar to the late 1990s market dynamic. |
Undervalued Contrarian Conservative Opportunity Discipline | |
DividendsMultiple funds highlight strong dividend growth across portfolio holdings, with companies continuing multi-decade streaks of dividend increases. The Value & Income Fund saw 36 of 42 holdings increase dividends by an average of 7% year-over-year. |
Dividend Growth Income Yield Consistency Returns | |
RatesFixed income markets benefited from stable economic conditions and Federal Reserve policy. The manager notes the importance of the ten-year Treasury yield above 4.1% as reflecting a durable economy that bodes well for lenders. |
Interest Rates Federal Reserve Treasury Economic Growth Fixed Income | |
| 2025 Q3 |
AIArtificial intelligence is driving enormous spending from tech titans and prompting explosive moves in AI-linked stocks. The technology theme has joined forces with monetary stimulus to embolden risk taking. While AI is incredibly promising, many perceived beneficiaries are prioritizing growth over profit and investors may question ultimate returns on AI spending. |
Technology Growth Spending Valuations Returns |
ValuationsThe S&P 500 currently trades for approximately 23x earnings estimates for the next 12 months, which is high by historical standards. The equal-weighted S&P is more reasonable at 17x earnings estimates but still above recent norms. High-yield spreads stand at record lows, suggesting investors are accepting little compensation for additional risk. |
Multiples Risk Spreads Historical Premium | |
MomentumMarket dynamics reflect powerful momentum with unprofitable tech stocks, AI-linked stocks and meme stocks posting explosive moves. Investors are focused more on stories than intrinsic value, flocking towards richly valued momentum stocks. There's been little reward for having differentiated perspectives as winners keep winning while losers keep losing. |
Speculation Stories Differentiation Winners Losers | |
| 2025 Q2 |
AIArtificial intelligence is described as a powerful technology theme prompting enormous spending from tech titans. The manager notes AI is incredibly promising and expects to participate via ownership of select technology leaders, though warns of a gold rush mindset in certain corners of the market with many perceived beneficiaries prioritizing growth over profit. |
Technology Data Centers Semiconductors Cloud Growth |
ValuationsThe S&P 500 currently trades at approximately 23x earnings estimates for the next 12 months, which is high by historical standards. The manager notes this tells them risk tolerance is up, with the 10-year average at 19.0x and 20-year average at 16.4x. |
Risk Appetite Quality Value | |
MomentumThe manager observes speculative behavior with unprofitable tech stocks, AI-linked stocks and meme stocks posting explosive moves higher since April. They note investors are focused more on stories than actual intrinsic value, flocking towards richly valued momentum stocks. |
Growth Risk Appetite Small Caps | |
| 2025 Q1 |
DividendsSixteen of DVIPX's holdings raised their dividends during the quarter, led by double-digit percentage increases at Walmart, Brookfield Corp, and others. The average DVIPX constituent has raised its dividend 8% year-over-year, which exceeds the S&P 500's 6%. The Fund is both higher yielding and possesses higher dividend growth than the benchmarks. |
Dividend Growth Income Yield Payout |
BuybacksSeveral companies accelerated their share buybacks into market weakness including Fairfax Financial Holdings, Chevron, HP, and Comcast, each reducing their share count by more than 4.5% year-over-year. The average company in the Fund has reduced its diluted share count more than 1% versus year-ago levels. |
Share Repurchases Capital Return Share Count | |
ValueMany individual constituents appear to trade at reasonable multiples despite market-wide valuation levels. Constellation Brands trades at 13x multiple, nearly three standard deviations below its long-term average closer to 21x. Many pharmaceutical and insurance holdings trade at even lower multiples. |
Valuation Multiples Compressed Reasonable |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| TXN | Best for the quarter were Texas Instruments Inc. (TXN) and Cisco Systems Inc. (CSCO), both of which appear to have turned the corner in terms of accelerating growth. Those companies are getting their fair share of business associated with the artificial intelligence buildout. Texas Instruments also appears to be on the back side of a capital spending peak, which we believe should translate into significant free cash flow growth over the next several years. |
| CSCO | Best for the quarter were Texas Instruments Inc. (TXN) and Cisco Systems Inc. (CSCO), both of which appear to have turned the corner in terms of accelerating growth. Those companies are getting their fair share of business associated with the artificial intelligence buildout. |
| UNH | The Fund's other star performers for the quarter were our two health insurers: UnitedHealth Group Inc. (UNH) and Elevance Health Inc. (ELV). This is another industry that appears to have turned the corner, with the underwriting cycle starting to show a better pricing vs. cost trend. |
| ELV | The Fund's other star performers for the quarter were our two health insurers: UnitedHealth Group Inc. (UNH) and Elevance Health Inc. (ELV). This is another industry that appears to have turned the corner, with the underwriting cycle starting to show a better pricing vs. cost trend. |
| ACN | Worst for the quarter was Accenture PLC (ACN), which finds itself on the wrong side of the artificial intelligence narrative – the efficiency benefits of AI may translate into businesses that bill by the hour having fewer hours to bill. We acknowledge that change, while at the same time viewing Accenture as a remarkably inexpensive, debt-free company where the stock could recover on less worse news. |
| XOM | Other laggards included two of our energy holdings: Exxon Mobil Corp (XOM) and Chevron Corp (CVX). Oil prices turned in their worst quarter in six years, as investors cheered the apparent end of the war with Iran and the blockade of the Strait of Hormuz, one of the world's key oil shipping channels. Meanwhile, natural gas prices increased 14% for the quarter, and Chevron and Exxon produce more natural gas than oil. |
| CVX | Other laggards included two of our energy holdings: Exxon Mobil Corp (XOM) and Chevron Corp (CVX). Oil prices turned in their worst quarter in six years, as investors cheered the apparent end of the war with Iran and the blockade of the Strait of Hormuz, one of the world's key oil shipping channels. Meanwhile, natural gas prices increased 14% for the quarter, and Chevron and Exxon produce more natural gas than oil. |
| LHX | Similarly, defense contractor L3harris Technologies Inc. (LHX) lagged as the war wound down. |
| ABT | Abbott Laboratories (ABT) is a Dividend Aristocrat, operating a diversified portfolio of healthcare and consumer products businesses that span infant nutrition (Enfamil) to continuous glucose monitoring platforms (Libre). The company's recent (and largest) acquisition of Exact Sciences (maker of the Cologuard cancer detection kit) provides Abbott's diagnostic platform with a new growth vector. This business should help Abbott sustain mid- to high-single digit top-line growth for the foreseeable future, which along with margin expansion and debt paydown should drive double-digit earnings growth. At the time of our purchase, ABT traded at 16-17x prevailing earnings estimates, well below its longer-term average, while supplying a 2.6% dividend yield. |
| IFF | International Flavors & Fragrances Inc. (IFF) manufactures and sells key ingredients to Consumer Products companies – think of laundry detergent scents and food textures and flavors. The company is divesting non-core businesses, including the most-recent announcement that it will sell its Food Ingredients segment for $4.3 billion. IFF indicates it will steer divestiture proceeds to share buyback and debt paydown. Meanwhile, the company's remaining (core) businesses are likely to show a faster growth and higher margin profile, which we believe ultimately ought to translate into a higher valuation. Similar to Abbott, IFF traded near 16x earnings at the time of our purchase, below long-term averages, with shares sporting a 2% dividend yield. |
| JNJ | Six of our holdings increased their dividend in the quarter, including Johnson & Johnson (JNJ) for a remarkable 64th consecutive year, PepsiCo Inc. (PEP) 54 years in a row, and Medtronic Plc (MDT) 49 straight years. |
| PEP | Six of our holdings increased their dividend in the quarter, including Johnson & Johnson (JNJ) for a remarkable 64th consecutive year, PepsiCo Inc. (PEP) 54 years in a row, and Medtronic Plc (MDT) 49 straight years. |
| MDT | Six of our holdings increased their dividend in the quarter, including Johnson & Johnson (JNJ) for a remarkable 64th consecutive year, PepsiCo Inc. (PEP) 54 years in a row, and Medtronic Plc (MDT) 49 straight years. |
| JPM | Separately, all of the nation's systemically important financial institutions passed the Federal Reserve's annual stress test, facilitating JPMorgan Chase & Co (JPM) to raise its dividend by 10%, Wells Fargo & Co (WFC) 11%, and Citigroup Inc. (C) 12%. JPM and Citi also authorized new $50 billion and $30 billion share repurchase programs, respectively. |
| WFC | Separately, all of the nation's systemically important financial institutions passed the Federal Reserve's annual stress test, facilitating JPMorgan Chase & Co (JPM) to raise its dividend by 10%, Wells Fargo & Co (WFC) 11%, and Citigroup Inc. (C) 12%. |
| C | Separately, all of the nation's systemically important financial institutions passed the Federal Reserve's annual stress test, facilitating JPMorgan Chase & Co (JPM) to raise its dividend by 10%, Wells Fargo & Co (WFC) 11%, and Citigroup Inc. (C) 12%. JPM and Citi also authorized new $50 billion and $30 billion share repurchase programs, respectively. |
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