Davis SMA

Why we may be in the early innings of a “rotation” toward lower-valuation, less-favored areas of the market

Equities remain the preferable asset class – Particularly companies with the pricing power to pass along higher costs (select Tech and Industrials) or who benefit outright from rising rates (Financials)

Ukraine conflict impacts to economies, trade, equity and commodity markets, and central bank policy around the globe

The distortions and anomalies of the current market environment – extraordinarily narrow leadership, massive performance disparities between growth and value – and the risks and opportunities being created

Despite COVID, enormous opportunities can be found in the US among both digital leaders and undervalued companies, European multinationals and consumer businesses across Asia. Rigorous research and selectivity are critical.

Given short term uncertainties for both economies and companies, our focus is on durability, balance sheet strength and competitive advantages– factors that provide long term confidence in our companies over multiple scenarios.