The financials sector has begun to shine, outperforming the previous market leaders. Investors just now getting into the space however must ask themselves whether or not the run upwards still has legs.
In the upcoming webcast, Mispriced Markets? Long-Term Opportunity in Financials, Chris Davis, Portfolio Manager and Chairman, Davis Advisors, will outline why the financial sector still has room to run and could be on the cusp of a decade of outperformance.
To help investors take a targeted approach to the financial sector, Davis Advisors offers the actively managed Davis Select Financial ETF (NasdaqGM: DFNL), which is backed by a focus on long-term opportunities and incorporates the money manager’s judgment experience, high conviction, low turnover, accountability, and alignment. The Davis team screens for fundamental characteristics, including cash flows assets and liabilities, as well as other criteria.
The management team looks to durability, adaptability, and resiliency of a company for substantial competitive advantages, superior business models, attractive financials, and superior free cash flows. They also select those with proven, capable management with a track record of good decisions, intelligent capital allocators, and alignment of interests. Additionally, the team focuses on discount to real value by calculating owner earnings to arrive at the actual value of a company.
Davis Advisors’ management style primarily targets durable businesses with above-average margin returns, strong competitive advantages, and durability. Companies also must show strong management that has been in place for over five years as long-term investors want to be sure that these are ethical, honest people that will help the business last. The management team will determine valuation or the right price of the company, targeting long-term free cash flow of businesses, owner earnings, and how durable the available cash really is.
Active managers are also able to exploit market inefficiencies through time arbitrage; intangibles such as management, capital allocation, or competitive moats; sector inefficiencies; accounting arbitrage; business bias versus profession; and geographic inefficiencies, like knowledge of foreign markets.
Financial advisors who are interested in learning more about opportunities in financials can register for the Wednesday, June 23 webcast here.