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Excess Returns
High Conviction Value Investing with Chris Davis
Jan 11, 2024
Chris Davis, Chairman and Portfolio Manager of Davis Advisors, discusses his process for analyzing companies and his owner earnings-based approach. He shares his biggest lessons from his successful investors family, how Charlie Munger changed his life, and his thoughts on concentration and position sizing. They explore concepts like owner earnings, business growth, and the role of directors in creating shareholder value. They also touch on the influence of David Swenson and Jeff Bezos' strategies, as well as the importance of thinking like an owner and owning a business, not just a stock.
01:04:07
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Quick takeaways
- Understanding cash flow and owner earnings is crucial in valuing businesses beyond surface-level financial statements.
- Thinking independently and assessing the long-term cash dynamics and value creation of businesses is more valuable than relying solely on traditional accounting metrics.
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Lessons from Family and Influences
Chris Davis reflects on the influence of his grandfather and father, both successful investors. He highlights the importance they placed on thinking like owners of businesses, rather than viewing stocks purely as numbers on a balance sheet. Davis learned early on that the value of a business goes beyond surface-level financial statements and involves understanding cash flow and owner earnings. This concept of owner earnings shaped his investment approach. He also emphasizes the need for constant learning and open-mindedness to adapt to the ever-changing market.
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