Davis Selected Advisers Q1 2026 13F Holdings and Activity Report

I. Institutional Overview

The scale of the institution has remained relatively stable, reflecting a mature asset management business that prioritizes capital preservation and long-term compounding over aggressive, short-term asset gathering. The investment style is characterized by a "buy and hold" mentality, evidenced by the fact that many of their top positions have been in the portfolio for over ten years. However, the first quarter of 2026 shows that even the most patient value investors are not immune to the need for portfolio optimization. We see a clear pattern of "trimming the hedges"—taking profits from high-flying sectors like technology and reinvesting that capital into areas where the valuation-to-quality ratio has become more attractive, such as energy, materials, and specific healthcare providers.

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II. Sector Allocation Analysis

The most striking feature of the Davis portfolio is the overwhelming concentration in Financials , which accounts for 30.73% of the total reported value. When combined with Healthcare and Communication Services, the top three sectors represent nearly 60% of the entire portfolio. This high level of concentration indicates a firm that does not believe in "closet indexing." Instead, Chris Davis is making a massive macro bet on the resilience of the banking system and the long-term profitability of financial intermediaries. In a world of fluctuating interest rates, Davis appears to view financials not just as a value play, but as a structural beneficiary of a "higher-for-longer" rate environment where net interest margins can remain robust.

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III. Top 10 Holdings Deep Dive

Capital One remains the crown jewel of the Davis portfolio, despite a significant drop in its portfolio weight from 9.38% to 7.15% . It is important to note that the actual share reduction was a mere 0.87% , indicating that the decline in weight was primarily driven by the stock's underperformance relative to the rest of the portfolio or a broader market correction in the financial sector during the quarter. Davis has held this position for over a decade, qualifying it as a "conviction holding" of the highest order. The investment logic here is centered on Capital One's unique position as a technology-forward bank with a dominant presence in the credit card market. While the market often worries about credit card delinquencies during economic slowdowns, Davis likely views Capital One's sophisticated data underwriting and its pending acquisition of Discover Financial as long-term catalysts that will solidify its market share and profitability. The decision to hold steady (with only a fractional trim) suggests that Davis believes the current valuation more than compensates for the cyclical risks.

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IV. Major Buys/Additions

The most significant move this quarter was the initiation of a massive new position in LyondellBasell , with an estimated investment of over $450 million . This is a classic "distressed reversal bet" combined with "valuation trough mining." As one of the world's largest plastics, chemicals, and refining companies, LyondellBasell is highly sensitive to the global manufacturing cycle. By entering this position now, Davis is making a bold statement that the global industrial downturn is nearing its end. The company trades at a significant discount to the broader market and offers a compelling dividend yield. From a fundamental perspective, LYB's advantage lies in its low-cost feedstock in North America and its leading position in circular economy technologies. This is not a speculative trade; it is a strategic entry into a high-quality industrial giant at a point of maximum pessimism.

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V. Major Sells and Exits

The most consequential move of the quarter was the 71.51% reduction in Applied Materials , resulting in an estimated cash-out of over $1 billion . This is a classic "High amount + high weight" strategic retreat. Applied Materials has been a stellar performer for Davis, held for over a decade. However, the semiconductor equipment industry is notoriously cyclical and currently trades at historically high valuation multiples due to the AI fervor. By slashing this position so aggressively, Davis is signaling that the "risk-reward" profile has shifted unfavorably. This is not necessarily a bet against AI, but rather a disciplined value investor's refusal to hold a cyclical company at peak-cycle valuations. The capital recouped from this single sale funded nearly all the major additions mentioned in Section IV, representing a massive pivot from "high-multiple tech" to "low-multiple value."

This section shows only part of the complete report. View the app for the full analysis, position-level detail, and quarter-over-quarter tracking.

VI. Investment Insights and Risk Warnings

The logic chain is clear: 1. Sold what : Aggressively reduced exposure to late-cycle technology winners, specifically semiconductor equipment (Applied Materials). 2. Why sell : To harvest massive long-term gains and avoid the risk of a cyclical downturn in a sector trading at peak multiples. 3. Bought what : Initiated a massive position in diversified chemicals (LyondellBasell), tripled down on managed healthcare (Cigna), and expanded into global protein production (JBS) and energy (Coterra). 4. Why buy : To capture "valuation repair" in sectors that provide essential services and goods, which are currently trading at a significant discount to the broader market. 5. Overall portfolio change : The portfolio has become more "offensive" in terms of its value orientation, with a higher sensitivity to a global industrial recovery and a lower sensitivity to the AI-driven tech trade.

This section shows only part of the complete report. View the app for the full analysis, position-level detail, and quarter-over-quarter tracking.

Sources and limitations

This report uses public U.S. Securities and Exchange Commission Form 13F disclosures and structured data maintained by 13F Hub. A 13F filing is a quarter-end snapshot of reportable long positions, is normally published with a delay, and does not disclose every short position, cash balance, bond, derivative, or non-U.S. asset.

Narrative content is prepared from the same-period SEC disclosure and 13F Hub structured data, then checked before publication. This material is for research and education, not personalized investment advice.