Chris Davis's Davis Selected Advisers ran a concentrated $15.8B portfolio of just 20 holdings in Q1 2026, reaffirming its philosophy of high-conviction value investing. The quarter's standout move was a bold $451M new entry into chemical giant LyondellBasell. Simultaneously, the firm made deep cuts to cyclical materials and technology positions, signaling a clear directional shift in the portfolio.
Top 5 Holdings — Q1 2026
- COF: $1.6B (7.2%)
- CTRA: $1.3B (6.0%)
- USB: $1.2B (5.3%)
- VTRS: $1.1B (4.9%)
- META: $984M (4.5%)
3 Key Trades in Q1 2026
Financials continue to dominate the top of the portfolio. COF (7.2%) and USB (5.3%) held first and third place, respectively, while CTRA (6.0%) represented the energy sector in second. Notably, CTRA's weighting was increased by 14% this quarter, underscoring Davis's constructive long-term view on natural gas. Healthcare and consumer staples names — VTRS, CVS, and TSN — filled the mid-tier, adding a defensive tone to the book. While META and GOOGL remain in the portfolio, their combined weight of just 8.6% reflects a deliberate cap on technology exposure.
- LyondellBasell — New $451M position initiated as a contrarian bet on a deep-value chemical large-cap
- CTRA — Weighting increased 14%, reinforcing a long-term bullish natural gas thesis; now the #2 holding
- DAR cut 93% · LRCX cut 77% — Major liquidation of growth-premium names; capital redeployed into value
Among new buys, LyondellBasell stands out decisively. One of the world's largest polyolefin producers, the stock offers a low valuation and a high dividend yield — a textbook Davis contrarian target. Meanwhile, DAR was slashed by 93% and LRCX by 77%, effectively exiting the portfolio. The strategic intent is clear: trim names reliant on growth narratives — biofuels, semiconductor equipment — and redeploy capital into traditional industrials trading at a discount to asset value.
Davis's Next Move: Value Stocks Built for a Higher-for-Longer Rate Regime
In a prolonged high-rate environment, financials like COF and USB share a key trait with low-P/E materials names like LyondellBasell: earnings visibility. The portfolio is structured to outperform on a relative basis when the growth-stock rally stalls. That said, a 20-stock concentrated strategy significantly amplifies idiosyncratic risk — making it essential to monitor the earnings trajectory of structurally challenged names like VTRS and CVS on an ongoing basis.
