Giverny Capital Asset Management, LLC, an investment management company, recently published its third-quarter 2023 investor letter. A copy of the same can be downloaded here. The firm’s model portfolio returned -3.01% (net) in the third quarter compared to -3.27% return for the S&P 500 Total Return Index. YTD, the fund returned 11.02% compared to the 13.07% return for the Index. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Giverny Capital Asset Management highlighted stocks like The Charles Schwab Corporation (NYSE:SCHW) in the third quarter 2023 investor letter. Headquartered in Westlake, Texas, The Charles Schwab Corporation (NYSE:SCHW) is a savings and loan holding company. On November 6, 2023, The Charles Schwab Corporation (NYSE:SCHW) stock closed at $55.62 per share. One-month return of The Charles Schwab Corporation (NYSE:SCHW) was 7.42%, and its shares lost 30.15% of their value over the last 52 weeks. The Charles Schwab Corporation (NYSE:SCHW) has a market capitalization of $101.29 billion.
Giverny Capital Asset Management made the following comment about The Charles Schwab Corporation (NYSE:SCHW) in its Q3 2023 investor letter:
“I have written about The Charles Schwab Corporation (NYSE:SCHW) in prior letters, but at the risk of being repetitive I believe it offers a strong value proposition both to individual investors and professional investment advisors who run their businesses on the Schwab platform. It has chosen to reduce the fees it charges for trading and other services to win investor trust and fuel growth. Consequently, it may be overly dependent on its practice of sweeping customer cash balances into its bank, where it reinvests those deposits into safe fixed income securities and pockets the interest. As interest rates have risen over the past 18 months, many Schwab customers are leaving less idle cash in their accounts and putting more of their funds into US Treasuries or money market funds. This leaves Schwab with lower earnings.
Importantly, Schwab continues to add hundreds of thousands of new accounts every month. The issue of customers leaving less cash in their accounts has leveled off recently, meaning Schwab should begin growing again as it keeps adding accounts. Even if so-called cash sorting never levels out, Schwab has significant pricing power it could tap while remaining a low-cost provider for customers, including charging more for some trades, margin loans or wealth management services, or perhaps charging modest custodian fees to investment advisors, a common industry practice. It has tools in the toolbox to offset a long-term loss of interest income, even if it prefers not to use them. The combination of steady account growth and pricing power tell me Schwab’s earnings won’t be permanently impaired.”
Photo by Brendan Church on Unsplash
The Charles Schwab Corporation (NYSE:SCHW) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 88 hedge fund portfolios held The Charles Schwab Corporation (NYSE:SCHW) at the end of second quarter which was 87 in the previous quarter.
We discussed The Charles Schwab Corporation (NYSE:SCHW) in another article and shared the list of most valuable financial companies in the world. In addition, please check out our hedge fund investor letters Q3 2023 page for more investor letters from hedge funds and other leading investors.
Suggested Articles:
- 15 Best Cheap Wireless Earbuds Under $50
- 12 Best Programming Languages for High School Students
- Top 20 Most Valuable Esports Companies
Disclosure: None. This article is originally published at Insider Monkey.
