Davis Large Cap Value Portfolio
Overview
Investment Strategy
The goal of the Davis Large Cap Value Portfolio is to provide investors access to attractive investment opportunities among large cap, durable, well-managed businesses. We seek to purchase these businesses at value prices and hold them for the long term. This approach makes the Davis Large Cap Value Portfolio an ideal foundation for an investor’s portfolio.
Using our signature Davis Investment Discipline, the Portfolio has generated consistent long-term outperformance versus the S&P 500® Index.1 Click here to learn more about our historical record of attractive long-term returns.
Why Invest in the Davis Large Cap Value Portfolio
Sixty Years of Experience
The Davis family has compounded wealth for investors over six decades and three generations.
Long-Term Investment Results
The Davis Large Cap Value Portfolio has a unique record of consistent long-term outperformance versus the S&P 500® Index.1 See the illustrations below for additional detail.
Aligned with Shareholders
With more than $2 billion invested side by side with fellow shareholders, we experience the same risks and reap the same rewards.2
Performance as of 3/31/12
1) Compounding Wealth - To be one of the very best over the long term does not mean you have to be number one every year.
As the chart below illustrates, from 1/1/79–3/31/12 Davis Large Cap Value delivered an average annualized return of 14.7%—remarkably outperforming the S&P 500® Index and the Russell 1000® Value Index by an average of 2.8% per year.3
A hypothetical $100,000 investment in Davis Large Cap Value in 1979 has compounded to $9,444,764, while the S&P 500® Index compounded into only $3,820,564 and the Russell 1000® Value Index to only $4,401,625 over that same time period. (Gross of fees. See below for net of fee returns.)
We have been able to create superior long-term investment results, despite the inevitable and expected fact that other investments may have outperformed the Portfolio in any particular year.
| Year | Davis Large Cap Value Composite (gross of fees) |
S&P 500® Index | Russell 1000® Value Index |
|---|---|---|---|
| 1979 | 40.3% | 18.6% | 20.6% |
| 1980 | 45.4% | 32.5% | 24.4% |
| 1981 | 2.2% | -4.9% | 1.3% |
| 1982 | 26.6% | 21.6% | 20.0% |
| 1983 | 24.3% | 22.6% | 28.3% |
| 1984 | 5.9% | 6.3% | 10.1% |
| 1985 | 38.9% | 31.7% | 31.5% |
| 1986 | 23.1% | 18.7% | 20.0% |
| 1987 | -0.6% | 5.3% | 0.5% |
| 1988 | 22.5% | 16.6% | 23.2% |
| 1989 | 35.9% | 31.6% | 25.2% |
| 1990 | -2.0% | -3.1% | -8.1% |
| 1991 | 41.8% | 30.4% | 24.6% |
| 1992 | 13.1% | 7.6% | 13.6% |
| 1993 | 15.6% | 10.1% | 18.1% |
| 1994 | -1.4% | 1.3% | -2.0% |
| 1995 | 40.9% | 37.5% | 38.4% |
| 1996 | 28.4% | 22.9% | 21.6% |
| 1997 | 35.6% | 33.4% | 35.2% |
| 1998 | 15.9% | 28.6% | 15.6% |
| 1999 | 18.9% | 21.0% | 7.4% |
| 2000 | 10.7% | -9.1% | 7.0% |
| 2001 | -10.7% | -11.9% | -5.6% |
| 2002 | -16.7% | -22.1% | -15.5% |
| 2003 | 30.9% | 28.7% | 30.0% |
| 2004 | 12.6% | 10.9% | 16.5% |
| 2005 | 10.0% | 4.9% | 7.1% |
| 2006 | 14.2% | 15.8% | 22.3% |
| 2007 | 2.9% | 5.5% | -0.2% |
| 2008 | -36.1% | -37.0% | -36.9% |
| 2009 | 27.9% | 26.5% | 19.7% |
| 2010 | 11.3% | 15.1% | 15.5% |
| 2011 | 0.3% | 2.1% | 1.0% |
| 3/31/2012 | 10.8% | 12.6% | 11.1% |
| Cumulative Total Return | 9345% | 3721% | 4302% |
| Average Annual Rate of Return | 14.7% | 11.6% | 12.1% |
| Value of a Hypothetical $100,000 Initial Investment | $9,444,764 | $3,820,564 | $4,401,625 |
| Average Annual Total Returns as of March 31, 2012 Large Cap Value Portfolio |
YTD* | 1 Year |
3 Years |
5 Years |
7 Years |
10 Years |
15 Years |
20 Years |
25 Years |
30 Years |
35 Years |
40 Years |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| gross | 10.84% | 5.25% | 22.13% | 0.93% | 3.86% | 4.89% | 7.35% | 10.45% | 11.04% | 13.87% | 14.83% | 12.78% |
|
with a 3% maximum wrap fee |
10.04% | 2.14% | 18.57% | -2.06% | 1.03% | 2.68% | 5.64% | 8.97% | 9.69% | 12.59% | 13.60% | 11.63% |
* YTD is not annualized.
The performance presented represents past performance and is not a guarantee of future results. Total return assumes reinvestment of dividends and capital gain distributions. Investment return and principal value will vary so that, when redeemed, an investor’s account may be worth more or less than their original cost. Current performance may be higher or lower. Total return updates are available quarterly. Please ask your financial advisor to contact Davis Advisors.
2) Patience is a
Virtue - By steadfastly adhering to our investment discipline through ever-changing market and economic environments, the Davis Large Cap Value Portfolio has generated a unique record of consistent long-term outperformance versus the S&P 500® Index.
The chart below shows the percentage of time since 1970 the Portfolio has outperformed the S&P 500® Index over various time periods. Patient investors outperformed the Index in 82% of 5 year periods and 100% of all 10 year periods.
This track record covers periods of inflation, deflation, high interest rates, low interest rates, political crisis, wars, and more.
Percent of Time the Davis Large Cap Value Portfolio Has Outperformed the Market (1/1/70–12/31/11) 4
Source: Thomson Financial, Lipper, Bloomberg, and Davis Advisors. Past performance is not a guarantee of future results.
Portfolio Characteristics as of 3/31/12
Portfolio Composition
| Davis Large Cap Value Portfolio |
S&P 500® Index |
|
|---|---|---|
| Forecast P/E Ratio | 13.7 | 13.4 |
| P/B Ratio | 3.0 | 3.1 |
| Weighted Average Market Cap ($bn) | 73.7 | 111.7 |
| Beta (3 year) | 1.1 | 1.0 |
| Standard Deviation (5 year) | 22.3 | 21.8 |
| Number of Holdings | 37 | 500 |
| Turnover | 5.9 | 3.6 |
Top 10 Holdings
| CVS Caremark Corp | 5.8% |
| Wells Fargo & Co | 5.7% |
| Costco Wholesale Corp | 5.6% |
| American Express Co | 5.5% |
| EOG Resources Inc | 4.9% |
| Bank of NY Mellon Corp | 4.8% |
| Occidental Petroleum Corp | 4.8% |
| Berkshire Hathaway Inc - Class B | 3.7% |
| Merck & Co. | 3.7% |
| Loews Corp | 3.5% |
Click here for quarter-end holdings
Top Industries
| Energy | 17.1% |
| Pharmaceutical & Health Care | 14.0% |
| Food & Staples Retailing | 12.1% |
| Diversified Financials | 12.1% |
| Insurance | 11.9% |
| Technology | 7.1% |
| Food, Beverage & Tobacco | 6.2% |
| Banks | 6.1% |
| Materials | 4.9% |
| Retail | 3.0% |
| Automobiles & Components | 2.9% |
| Media | 1.7% |
| Capital Goods | 0.9% |
Literature
| Insights into the Portfolio | ||
|---|---|---|
| Quarterly Review Book: Large Cap Value and All-Cap Portfolios | Download Share |
A comprehensive quarterly update on the two Portfolios, including commentary on investment strategy, performance and Portfolio statistics, and holdings. |
| Large Cap Value Portfolio: Rolling 10 Year Performance | Download Share |
The Davis Large
Cap Value Portfolio has outperformed the S&P 500®
Index over every 10 year period since 1970. |
| Portfolio Commentaries | ||
| Portfolio Commentary - Spring 2012 | Download View Share | A quarterly discussion of the market environment, Portfolio performance, major positions, and investment opportunities. |
| Insights About Davis Advisors | ||
| The Davis Research Methodology | Download Share |
A brief history of Davis Advisors and our unique approach to building long-term wealth through investing in equities, including: what we look for in a company, how we arrive at an appropriate purchase price and the factors that may prompt us to sell a position. |
| Insights into Successful Investing | ||
| The Wisdom of Great Investors | Download View Share | Timeless principles that have guided some of history's most successful investors, including Warren Buffett, Ben Graham, Peter Lynch, and others. |
| Fortune Magazine – Warren Buffett: “Why stocks beat gold and bonds” | Download Share | Warren Buffett on the real danger of investments commonly thought of as “safe”, and why “productive assets” like equities offer a much better chance of maintaining purchasing power (compounding wealth after taxes and inflation). |
This material may be shared with existing and potential clients to provide information concerning market conditions and the investment strategies and techniques used by Davis Advisors to manage its client accounts. Please refer to Davis Advisors Form ADV Part 2 for more information regarding investment strategies, risks, fees, and expenses. Clients should also review other relevant material, including a schedule of investments listing securities held in their account.
The Davis Large Cap Value Portfolio is represented by Davis Advisors’ Large Cap Value SMA Composite. See Performance disclosure for a description of the Composite.
1Gross of fees. Returns discussed are from the first full year after inception of the Large Cap Value Composite (4/1/69) through 3/31/12. Past performance is not a guarantee of future results.
2As of December 31, 2011.
3Gross of fees. This chart starts in 1979 because that is when the Russell 1000® Value Index was first calculated. Both Davis Large Cap Value Composite and the S&P 500® Index have longer histories.
4The performance shown does not include fees and the percent of time the portfolio has outperformed the market would be lower if fees were included.
(1) Read here for objective/risk disclosures
(2) Read here for performance/rolling return disclosures
Davis Distributors, LLC, 2949 East Elvira Road, Suite 101, Tucson, AZ 85756