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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
Buyside Digest is not affiliated with, and does not endorse, Giverny Capital Asset Management. This analysis is provided for institutional research purposes only and is not investment advice.
"Giverny underperformed in Q1 as Constellation Software fell 44% on AI disruption fears, though the manager believes ERP switching costs protect the business. Exited Ametek on valuation, bought American Express after 25% decline."
Giverny Capital's portfolio declined 6.88% in Q1 2026, underperforming the S&P 500's 4.33% decline, primarily due to Constellation Software's 44.5% drop over the past year as software stocks faced AI disruption concerns. The manager remains confident in Constellation's durability, arguing that ERP systems are expensive and disruptive to replace despite cheaper coding costs. The firm exited Ametek due to valuation concerns and initiated a position in American Express, attracted by its premium brand, fee-based revenue model, and strong customer loyalty after a 25% price decline. The portfolio maintains exposure to quality companies with strong competitive moats including Taiwan Semiconductor, which outperformed despite customer weakness. With 6% cash, the manager is prepared for continued volatility driven by geopolitical tensions and market unpredictability while focusing on companies with strong fundamentals that can weather disruption.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
Conviction is high at 0.80. The fund is concentrated, with the Top 10 holdings accounting for 61.0% of total assets, including a 10.7% position in Alphabet. Furthermore, the manager demonstrates clear long-term resolve by maintaining his full position in Constellation Software despite a steep 44.5% annual decline, performing extensive channel checks to defend the thesis.
Growth Outlook
Giverny's manager assigns a neutral 0.50 score to the market outlook. He explicitly states that he does not have an opinion on the duration of the conflict in Iran, future oil prices, or whether the US economy will sputter in the coming months, choosing instead to focus entirely on company-specific fundamentals.
Risk Appetite
Risk appetite is scored at 0.75 as the portfolio remains nearly fully invested with only 6% cash. The manager deployed capital into a major new long position in American Express during a 25% price drop and added to existing holdings, reflecting a constructive, risk-tolerant posture.
Capital Deployment
Capital deployment is scored as net neutral (0.50). The manager executed a balanced rotation, fully exiting Ametek and trimming Installed Building Products to fund a new position in American Express and add to existing holdings, leaving the cash position stable at a comfortable 6%.
Forward Guidance
Forward guidance is scored at 0.50. The manager does not outline aggressive future deployment plans or macro predictions, noting that while they do not lack ideas, they feel comfortable holding some dry powder (6% cash) during chaotic times.
Language Signal
The language signal is slightly positive at 0.55. While the manager discusses macroeconomic volatility and AI disruption concerns in the software space, his corporate discussions regarding American Express, Constellation, and the core holdings are robustly constructive.
Perceived Risk
Perceived risk is 0.65 due to active discussions of real-world headwinds, including the US bombing campaign against Iran, inflation uptick, and peak affluence risks. The manager also explores structural risks like AI-led white-collar recessions and headcount-licensing model challenges in software.
Opportunity Density
Opportunity density is rated at 0.60. The manager notes they 'do not lack ideas' and actively found opportunities to buy American Express at a discount and add to Kinsale, TWFG, and Hawkins, though they trimmed Ametek due to rich valuations.
Time Horizon
Time horizon is very long-term at 0.90. Giverny emphasizes its six-year ownership of several core holdings since inception, and the manager explicitly discusses the high switching costs of ERP software that operate on decade-long cycles.
