We’re focusing on several categories across this underappreciated sector, with durable business models and low valuations


Chris Davis: I'll dive quickly in on financials. It's a big area for us, in terms of holdings, the higher capital is lower risk, they're cheap, they're underestimated. Of course within financials there's enormous diversity. Let me give you an example of what I mean. If I look, it's four of our largest holdings, they are in the banking sector, Capital One, we'll do a deep dive on these as we go through. These are all household names, but I don't want to lose the thread that says financials is a broad sector. I mean look here, these are our financial holdings
They are in very different categories. They benefit, some have real estate exposure, some don't, some benefit from high rates, some benefit from low rates, some have trading operations and so on. There's diversity within the sector, but they're enormously low valuations. But what they do have in common is this, it's just about the cheapest sector in the market
I mean, certainly energy has such exposure to changes in oil prices that could distort that, but the idea of buying these at a 20 to 30 or 35 or 40% discount from a lot of the averages given the characteristics of the businesses we own. We love that combination of the durability of the business models and the valuation here with that resiliency from these high capitals and high capital ratios and of course, what you've seen in things like the fed stress test and so on

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