Christopher Davis, a Wall Street scion, has navigated challenging market conditions over the past 14 years as risk-free borrowing has impacted the value stocks his family business, Davis Advisors, invests in. However, with interest rates on the rise again, Davis sees an opportunity for a return to normalcy in the market.
Davis’ investment approach is rooted in humility and a willingness to learn from past mistakes. He displays framed stock certificates in his office that represent the biggest errors made by his firm, along with lessons learned to avoid repeating them. Despite setbacks, Davis has achieved impressive returns, with his flagship New York Venture Fund outperforming the S&P 500 and delivering a solid average annualized return since its inception in 1969.
During the low-interest-rate environment from 2008 to 2022, Davis faced challenges as value stocks remained undervalued and clients withdrew assets from his Venture Fund. This prompted Davis to question his approach and the delicate balance between conviction and stubbornness in investing. Despite these difficulties, Davis remained committed to his principles and investment strategy.
Davis comes from a prestigious Wall Street pedigree, with his grandfather and father achieving notable success in the industry. Despite his family’s wealth, Davis maintains a modest lifestyle and emphasizes philanthropy. His investment strategy focuses on buying undervalued companies with disciplined leadership and attractive reinvestment prospects, similar to Warren Buffett’s approach.
As interest rates began to rise in March 2022, Davis saw an opportunity to capitalize on what he calls a return to normalcy in the market. He made significant investments in Meta, which he viewed as undervalued compared to other companies in the market. His bet on Meta paid off handsomely, with a 194% return on the stock in 2023.
Financials have also been a driving force behind Davis’ success in 2023, with investments in companies like Capital One, JPMorgan Chase, and Wells Fargo yielding solid returns. While he remains bullish on financials, Davis is selective in his investments and continues to hold positions in companies like Amazon, Applied Materials, and Viatris.
Looking ahead, Davis is confident that higher interest rates are the new normal and believes that his firm’s investment strategy is well-positioned to capitalize on this shift. Despite the challenges and setbacks faced over the years, Davis’ commitment to his principles and disciplined approach to investing have proven successful in navigating changing market conditions.
