Davis Global Fund PM Commentary with Danton Goei

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Danton Goei:

Hi, everyone. I'm Danton Goei, portfolio manager of the Davis Global Fund. And I'd like to take a few minutes of your time to give you an update on the portfolio. 

I'd like to give you an overview of the results, the contributors and detractors to those results, go through some of the capital allocation decisions we've made, and also give you overview of where we're seeing opportunities in the world. Let's start with the results

As you can see here, the Davis Global Fund had a very strong 2025. Results were up over 31% for the year, outperforming the index by over 800 basis points. And on a three-year basis, we've also outperformed the index, as well as since inception. We do know that on a five-year and a 10-year basis, we have some ground to make up, and I'd like to go into detail about why we're optimistic about the outlook for the portfolio.

I'd like to talk about three main points that underpin our optimism going forward for the portfolio. First is our selectivity.
Here you can see that we are nearly 40 names versus over 2,500 for the index. So we are extremely selective, and the result of that selectivity is here. You can see a much higher earnings per share growth rate over the last five years than the index, and yet, the portfolio is trading at a meaningful discount on a PE basis versus the index. And we think that combination of much higher growth and a lower valuation bodes very well for future absolute and relative performance.

So, let's take a closer look at what drove those results and some of those capital allocation decisions.

So in terms of the contributors, and again, selectivity is key here. 

We have a number of technology names that did really well in 2025, including Samsung, AppLovin, Prosus, which owns Tencent, NetEase, Applied Materials, Google. Those had really strong results in 2025. Financials also, the select financials that we own had a very strong 2025, and those include Danske Bank, Capital One, Ping An Insurance. And then healthcare also, with our holding of CVS Group, had a very strong year as well.

And in terms of detractors, Meituan, the Chinese food delivery company, saw increased competition, which hurt results. And then in the short period that we owned Pinterest, it was also a detractor.

And in terms of the recent capital allocation decisions, if we take it by industry and technology first, because of the strong performance in this space, we've had several valuation trims where we felt just that the margin and safety had narrowed a bit. And so, we trimmed some Meta, some Applied Materials, Amazon, Samsung, and these names continue to be very strong. I mean, Samsung, for example, is one of the leaders in memory, which is a key component to the growth of AI.

And in terms of new buys, we repurposed some of those sales and added some names. We added AppLovin, which is one of the leaders in delivering ads for mobile gaming, which is a growing sector. And we also started a position in Pinterest.

In financials, which was also very strong, we had several valuation trims there as well. We trimmed Capital One, Danske Bank, as well as some Berkshire.

And in terms of the areas we've been adding, healthcare is one where we saw a great opportunity to add to UnitedHealth, which is a name we've owned in the past, but in the past sold it on valuation. And then recently in a month, the stock was down 40%, so we've started positioning UnitedHealth. We trimmed some Quest Diagnostics and Humana. In industrials and materials, we also added a few names there. We added Aumovio and JBS. Now, Aumovio might not be a well-known name, but it's very interesting. It's a German car parts manufacturer that was recently spun off from its parent Continental. And we know that spinoffs can be very interesting area for low valuation buys. And we also added to Full Truck Alliance and Tyson.

And then finally in energy commodity space, we also started some new positions there. We bought Coterra, which owns both oil in the Permian, as well as natural gas and the Marcellus in Pennsylvania. We also trimmed some tech resources which is one of the leaders in copper, due to also really strong performance in 2025.

So, I'd like to go through some aspects of the portfolio and show how we really are quite different than the index. One is the country weightings, and here I'd like to highlight just two of the large country weightings. So our largest country weighting is the United States, and yet we are underweight the US. I mean, the US today is a very large, almost two-thirds percentage of the overall global index, and that's because valuations in the United States are quite elevated. And as a result, we've pivoted slightly away and repurposed some of those into other non-US names, including in China where we are overweight. And we'll talk about this further, but we are seeing some really great opportunities there, where valuations are much lower.

We are also quite different in terms of our sector weightings. So, we are overweight in consumer discretionary, in financials, as well as energy, and then very underweight and technology where we have a much lower exposure to the Mag 7, the top 10 stocks in the S&P 500. 

And as a result, you can see here, our holdings, they look very different than the index. And as a result, our active share is over 90%.

And also, I'd like to address just today's investment landscape and where we're seeing opportunities. And if we just take it by region, and this is really an area where we could spend much longer, but in terms of time, let's just talk about the three major regions that we're looking at and invested in.

The United States, of course, it remains the most dynamic economy in the world and as a result, there are a lot of innovative global leaders, which we own many of. But we also know that valuations are elevated and it's also a very concentrated index today at the top. And luckily, we are finding real opportunities in the rest of the market outside of those very top 10 expensive companies that are very attractive. And so, we are building real positions in healthcare, in industrials, in financials, as well as select technology companies that we believe are going to be very attractive. In terms of the risks, I mean, there are risks. We think about the level of debt in the country, the fiscal deficit, and the risk of inflation is certainly something that we monitor closely.

And in terms of Europe, it is an area where there are a number of great, fantastic multinational companies, but it is also an area where there is a lot of structural headwinds there, whether it's regulatory, demographics, or the cultural aversion to risk. Those are all headwinds that has led to less innovation and less growth on average. And we think that the risk there would be that this continues and that you see continued lower innovation and slower growth.

And then finally, in terms of an area we are overweight, China. Outside the US, I would say it is also one of the most dynamic economies out there, and we're seeing a lot of very competitive and tech-forward companies there that are very attractive and they're very well run. And it's incredible to see some of the advancements that the country has done. I mean, think about renewable energy and the fact that 80% of solar panels or 70% of wind turbines are made in China, or that today it's the world's largest EV market and the largest EV manufacturer is also based in China. So, there's a lot of innovation there, and today it's also trading at a very attractive valuation, which explains our overweight there. Now, there are definitely risks, and we think that the main risk there really is geopolitical, and that's something that we also closely monitor.

And in terms of areas where we're finding opportunities, one area we need to talk about is obviously artificial intelligence, AI, and we are finding a number of great opportunities there. Now, we're looking at it through a value investors lens, and we're looking for opportunities where the risk-reward is really positive. And so, one way that we've invested in AI is through looking at where the bottlenecks are. Right? And so that includes power, the equipment to make the chips, and then memory specifically. So, in terms of power, we've looked at natural gas as the main source of energy to power the data centers. And we've owned Tourmaline, Canadian natural gas company there, and Coterra as well, that owns natural gas, and the Marcellus. And in terms of equipment, Applied Materials, of course, one of the leaders there. And then memory, Samsung is the leader in memory, and it was trading at a very low valuation. Last year, we managed to build a big position, and then this year as the market recognition of the importance of high bandwidth memory took place, the stock Samsung did very well.

And then the other way that we've invested in AI is looking for companies with huge user bases that can apply AI and really reap the rewards. So Meta, Amazon, Google. I mean, Meta, for example, has 3.5 billion daily users. Almost half of the world's population is using a Meta product on a daily basis. So of course, they've been one of really the big beneficiaries of using AI, along with Google and Amazon.

China is another area, as we spoke about, that we're finding real opportunities there. And in terms of specifically how we're investing there, we've invested in consumer facing internet companies that are really leaders and extremely innovative. That includes Tencent, which we own through Prosus and Naspers, which is the largest video game company in the world now, and also a leader in messaging and social media company in China. NetEase, which you might not have heard of, but it is the second largest video game company in China, we own that as well. Meituan, the food delivery company, and then DiDi, the ride-sharing leader in China, with about 70% of the ride-share market there is a very attractive company as well.

And the second area that we've invested in China is life insurance. I think it's a really interesting space, under the radar, really a long-term secular growth story where we expect to see over the next decade plus real growth as Chinese households pivot away from just using real estate and property as a way to save money and look for other means in increasingly its insurance products. So Ping An Insurance is the second largest insurance company there. And we just recently met with the Founder and Chairman, Peter Ma, extremely vigorous leader there at the age of 70

And AIA as well, which is a Pan-Asian life insurer, which was started over a century ago. And then finally, healthcare is an area that we've also been spending a lot of time on, where we own Viatris, which is a large generics manufacturer, as well as CVS. 

And putting it all together, we went through a lot, but we are very data driven and I think this data here is very compelling, in terms of the selectivity, the higher growth rate of the earnings of our portfolio companies, and then the fact that they're trading at a meaningful discount to the index. That underpins why we are so optimistic about the Davis Global Portfolio going forward.

Thank you for your time, and as you meet with clients in the year ahead, I hope we were able to provide you useful information and share why we are so confident in the Davis Global Portfolio going forward.

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