Davenport Asset Management Launches New Mutual Fund Offering
November 2023
We are pleased to announce the launch of the Davenport Insider Buying Fund (DBUYX), a new no-load mutual fund that utilizes insider buying activity as a key driver for its investment strategy. The Fund will be co-managed by Adam Bergman, CFA, and Kevin Bennett, CFA.
Click below to read the full press release.
The Home Stretch
September 2023
Stocks seemed to run out of gas in the third quarter. The S&P 500® Index and Russell 2000® Index lost 3.3% and 5.1%, respectively. Most of the losses were concentrated in September, which historically is the worst month of the year for stocks. It wasn’t surprising to see equity markets stall a bit, especially after a surprising first half rally. Even large cap technology stalwarts cooled off as the artificial intelligence (AI) craze seemed to fade. Year-to-date, the S&P and Russell finished the period up 13.1% and 2.5%, respectively.
Core Leaders Portfolio: Durable Growth Engines of the Future
August 2023
The Davenport Core Leaders Portfolio seeks to invest in industry leading companies with wide competitive moats and above average growth prospects. Artificial intelligence, cybersecurity, the clean energy transition, and cell & gene therapy are investable themes we believe can power returns into the future. Read on as Jeffrey Omohundro, Portfolio Manager for the Core Leaders Portfolio, dives into the details on our reasoning behind why we feel these growth engines will be durable in the long-term.
What Makes Us Different
August 2023
Davenport Asset Management’s competitive advantages come from our history, partnership, independence, experience, and process refined over the 160-year history of our firm. Read on to learn why our clients have entrusted us with the privilege of managing over $10 billion of their hard-earned assets.
Value & Income Portfolio: The Value in Being Contrarian
August 2023
Significant ink and airtime has been devoted to the domination that a few high-growth technology stocks have exerted on US markets in the first half of 2023. The question, in our minds is: what next? Read on as Adam Bergman, Portfolio Manager for the Value & Income Portfolio, lays out the reasons for why we think valuations are looking especially attractive in high-quality dividend paying stocks right now.
Thoughts on AI
June 2023
The introduction of Generative AI platforms such as ChatGPT has sparked an arms race in the Artificial Intelligence industry. Read on as Brian Ward, Research Analyst, dives into the AI landscape, and what the future may hold in this rapidly developing space.
Barron’s: 2 Small Cap Funds That Could Ride the Market’s Next Big Move
May 2023
Are small caps due for a turn-around? The Davenport Small Cap Focus Fund (DSCPX) was recently profiled in Barron’s as one of “2 Small-Cap Funds That Could Ride the Market’s Next Big Move.” Read on to find out why.
Barron’s Live Podcast – Managing Your Money: Finding Small Stocks With Big Prospects
May 2023
Small caps have suffered this year, but the good news for investors is that the weakness has left the sector looking especially cheap. Listen as Davenport Asset Management’s George Smith and Chris Pearson chat with Lauren Foster, Senior Writer of Barron’s to discuss what they look for in companies and stocks they’re excited about.
Click below to listen to the recorded podcast from Barron’s Live.
Quarterly Updates
2024 Q1 Update
Equity markets continued to be kind to investors as we started 2024. Resilient economic growth and reassuring corporate earnings allowed stocks to build upon last year’s gains. Growth-oriented stocks continued to outperform, although market gains were fairly broad. For the first quarter, the S&P 500® Index gained 10.6% to record highs and the Russell 2000® Index advanced 5.2%. Three primary forces seem to be driving markets: the economy, Fed policy and artificial intelligence (AI).
2023 Q4 Update
Equity markets generated surprisingly robust returns in 2023. The S&P 500® Index gained 26.3% for the year and the Russell 2000® Index returned 16.9%. Much of the gains were fueled by a feverish late-year rally. For the fourth quarter alone, the S&P and Russell returned 11.7% and 14.0%, respectively. As you may recall, we came into 2023 with rampant negativity and widespread calls for a recession. While there were hurdles to surmount along the way, markets largely defied the odds and generated very impressive results.
2023 Q3 Update
Stocks seemed to run out of gas in the third quarter. The S&P 500® Index and Russell 2000® Index lost 3.3% and 5.1%, respectively. Most of the losses were concentrated in September, which historically is the worst month of the year for stocks. It wasn’t surprising to see equity markets stall a bit, especially after a surprising first half rally. Even large cap technology stalwarts cooled off as the artificial intelligence (AI) craze seemed to fade. Year-to-date, the S&P and Russell finished the period up 13.1% and 2.5%, respectively.
2023 Q2 Update
The year is halfway over and equity returns have probably surprised many investors. We came into 2023 with predictions for a recession and rampant negativity; yet, the major indices have managed to post impressive gains so far. For the second quarter, the S&P 500® Index and Russell 2000® Index advanced 8.7% and 5.2%, respectively, bringing year-to-date gains to 16.9% and 8.1%. Even more impressive, the tech-heavy NASDAQ 100® Index is up 39.4% year-to-date, the best start to a year for the index since 1985.
2023 Q1 Update
Stocks managed to perform surprisingly well in the first quarter despite the double whammy of hawkish talk from the Fed and turbulence in the banking system. However, it wasn’t always smooth sailing. In early February, the S&P 500® Index was up 9% and looked to be on its way to a swift recovery from 2022 losses. However, this proved too good to be true, as recession fears ultimately resurfaced and prompted stocks to decline from early February to mid-March. After a late-March rally, the S&P 500 and Russell 2000® Index finished the quarter up 7.5% and 2.7%, respectively. Growth-oriented areas like technology (up 21.8%) dramatically outperformed more cyclical sectors such as energy (down 4.7%) and financials (down 5.6%) as recession risks grew.
2022 Q4 Update
We doubt many investors will be very upset about waving goodbye to 2022. Indeed, it was a tough year for stocks as evidenced by declines of 18.1% and 20.4%, respectively, for the S&P 500® Index and Russell 2000® Index. The NASDAQ® Composite was even worse with a 32.5% swoon, and the top four technology companies (Apple, Microsoft, Alphabet and Amazon) lost roughly $3 trillion of value. Of note, this was the worst year for the major indices since 2008. Was all this to be expected after an impressive multi-year run? Some moderation certainly seemed warranted, but it was painful nonetheless.
2022 Q3 Update
Market action was wild in the third quarter, which turned out to be a tale of two halves. We saw an impressive rally from July through mid-August that coincided with hopes of the Federal Reserve backing off restrictive monetary policy. Then, we witnessed a sharp reversal as discouraging inflation data prompted the Fed to become even more resolute in its battle against rising prices. Ultimately, stocks declined for the quarter and returned to their June lows. The S&P 500® Index finished the period down 4.9% and the Russell 2000® Index declined 2.2%. Year-to-date, the S&P and Russell finished September down 23.9% and 25.1%, respectively.
2022 Q2 Update
Stocks were under significant pressure in the second quarter and officially entered bear market territory. The S&P 500® Index and Russell 2000® Index declined 16.1% and 17.2%, respectively, during the quarter and finished the period down 20.0% and 23.4% year-to-date. This is the S&P’s worst first half since 1970. Market conditions are clearly very different from a year or two ago, when risk taking was rampant and asset values were propped up by rock-bottom interest rates and aggressive economic stimulus spawned by the pandemic. Now, we are on the back side of said stimulus and dealing with the challenging cocktail of rampant inflation, higher interest rates and slowing growth.
2022 Q1 Update
The first quarter brought investors yet another curve ball with Russia’s invasion of Ukraine. This sent shockwaves through global markets and added to already notable inflation pressures, while also casting a new light on international investing. Meanwhile, the Federal Reserve raised interest rates as policymakers began to reign in monetary stimulus. Markets ultimately proved more resilient than one might expect given these circumstances, with energy and commodity-related stocks leading the way. While the S&P 500® Index and Russell 2000® Index were down 12% and 14% at one point during the quarter, they finished down 4.6% and 7.5%, respectively. It’s worth noting, however, that the major indices belie underlying weakness in the market. Many stocks, especially in riskier corners of the market, have experienced steep declines.
2021 Q4 Update
Another year is in the books and what a wild year it was. Indeed, 2021 was quite an encore for 2020. We had a riot at the Capitol, vaccine introduction, economic “re-opening”, meme stock rally, the SPAC craze, supply chain snarls, widespread inflationary pressures, the Delta variant and more recently the Omicron variant. Many, including us, thought it would be difficult for investors’ risk appetites to sustain levels reached in late 2020. While some speculative pockets of the market weakened, there was no broad-based let down and we saw surprising gains powered by improved economic growth, accommodative policy and abundant liquidity. The S&P 500® Index finished the year up a stunning 28.7% while the Russell 2000® Index advanced 14.8%. Our equity portfolios also enjoyed solid gains for the year.
2021 Q3 Update
We are three-quarters of the way through 2021, and stocks are holding onto meaningful gains. As of September 30, the S&P 500® Index was up 15.9% year-to-date while the Russell 2000® Index had gained 12.4%. The third quarter itself was a bit more subdued, with the S&P up 0.6% and Russell down 4.4%. We were pleased to see solid relative performance from our portfolios as market conditions became more tumultuous. Stocks initially powered through headwinds associated with the Delta variant, but weakened late in the quarter alongside fears surrounding supply chain disruptions, waning economic stimulus and rising interest rates. In fact, the S&P was down 4.7% for the month of September. We think such a breather may be healthy given the torrid pace of gains through August, when the S&P seemed on pace for a record number of new highs in a year.
2021 Q2 Update
Equity markets remained strong in the second quarter with the S&P 500® Index and the Russell 2000® Index gaining 8.6% and 4.3%, respectively. Year-to-date, the S&P and Russell finished the quarter up 15.3% and 17.5%, respectively. Most Americans are vaccinated, the economic recovery from COVID has been in full swing and corporate earnings have generally exceeded expectations. More cyclical and value-oriented sectors such as energy and financials have been very strong; however, we’ve seen concurrent strength in durable growth sectors such as technology and communication services. It seems investors have migrated from stay-at-home plays to reopening plays to now buying everything.