The Davis difference…a truly global approach

The Davis difference…a truly global approach

Earlier this month, two investment professionals from Davis Advisors visited Australia and presented to a number of financial advisers. Peter Sackmann, Director and member of the Portfolio Review Committee, and Danton Goei, Portfolio Manager of the Pan-Tribal Global Equity Fund, provided an overview of the Davis investment approach, the Fund’s portfolio and answered a range of questions from advisers.

Davis takes a truly global perspective when it comes to investing. Peter and Danton are typical of Davis employees; Peter was born in South Korea, adopted in the US by an Italian/German family, and lived in France. Similarly, Danton was born in Germany, grew up in France, his family is Chinese Indonesian and he is now US citizen.

Why is this important?

Every analyst at Davis is a global analyst. This methodology was introduced in the 1990s, well before most other investment managers adopted a global approach. Davis recognises that a global view is very important as most businesses are now operating and/or competing in the global arena; there is a high degree of interconnectedness and a very competitive landscape.

Each analyst spends a significant amount of time travelling and visiting company management; in fact, Danton Goei spends alternate summers in China and Europe, not only visiting company management but building extensive networks that include industry groups and other investment houses.

Not the benchmark

To be represented in a benchmark, a company needs to meet three requirements:

  1. It needs to exist
  2. It needs to be public
  3. It needs to be large


In Davis’s view, these factors do not help select worthy investments from an opportunity set of 2,500 investment candidates. Focusing on tracking the benchmark is not a recipe for great results, particularly in a global context.

On average, the Fund has just 60 holdings from this broad field. Being benchmark agnostic allows Davis to focus on identifying businesses they want to own and provides a broader opportunity set in terms of geography, market cap and sector allocation.

Active share measures an investment strategy vis-a-vis its benchmark – the higher the active share, the less the strategy is like the benchmark. Not surprisingly, the Davis global equity strategy – and the Pan-Tribal Global Equity Fund – has an average of 90%+ active share.

Ownership in real businesses

The Davis investment philosophy focuses on buying businesses, not stocks. When assessing existing or prospective holdings, the analysts have to answer two fundamental questions:

  1. What sort of businesses would you like to own over 3-5-10 year period? This requires deep thinking and in-depth research to identify those businesses likely to prosper and provide compound returns in excess of GDP over time. Businesses with great management teams, strong competitive advantage, and a solid business model that will ensure the business prospers in the future.
  2. How much do you pay for those businesses? Davis likes to buy cheap, which helps manage risk/reward trade-off decisions, and is recognition that great businesses are only great if the price is right.


It might take a lot of work to identify great compounding machines in all parts of the world, but it is well worth the effort.


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