Investment management company LVS Advisory, a New York City-based full-service investment firm, recently released its first-quarter 2023 investor letter. A copy of the same can be downloaded here. The defensive portfolio of the fund gained 0.6% (net of all fees and expenses) in the first quarter compared to the 4.2% gain for its benchmark the High-Yield Bond Index. On the other hand, its Growth Portfolio gained 8.1% in the quarter compared to 7.5% for its benchmark, S&P 500 Total Return Index. For more information on the fund’s top picks in 2023, please check its top five holdings.
LVS Advisory highlighted stocks like The Charles Schwab Corporation (NYSE:SCHW) in the first quarter 2023 investor letter. Headquartered in Westlake, Texas, The Charles Schwab Corporation (NYSE:SCHW) is a savings and loan holding company. On April 13, 2023, The Charles Schwab Corporation (NYSE:SCHW) stock closed at $51.49 per share. One-month return of The Charles Schwab Corporation (NYSE:SCHW) was -8.72%, and its shares lost 37.78% of their value over the last 52 weeks. The Charles Schwab Corporation (NYSE:SCHW) has a market capitalization of $94.428 billion.
LVS Advisory made the following comment about The Charles Schwab Corporation (NYSE:SCHW) in its Q1 2023 investor letter:
“We exited The Charles Schwab Corporation (NYSE:SCHW) during the week leading up to the Silicon Valley Bank failure at a price in the high $60s. I sent an ad hoc note to partners on March 11 discussing our decision to sell the stock but I will add some additional context here. We invested in Charles Schwab during the summer of 2022 (discussed in our Q3 2022 letter) shortly after making our investment in Interactive Brokers. While Interactive Brokers is focused on faster-growing international markets and more sophisticated traders, Charles Schwab is a more mature US business focused on retirement accounts and wealth managers. Our investment thesis was that Schwab would benefit from higher interest rates and after years of investment would begin returning a significant amount of capital to shareholders.
My view changed when it became clear that liquidity would become a greater issue for all banks in early March. We believe Schwab has enough liquidity to operate its business, but we no longer believe the company is in a position to return capital. Furthermore, Schwab saw a higher degree of deposit flight in Q4 than we expected leading us to believe the problem could get worse before it gets better. Schwab may even need to raise additional equity capital to reassure the market of its liquidity position which would drastically change the risk/reward calculation of investing in the stock. While we realized a ~6% loss on our investment, our ability to quickly recalibrate our views during the early stages of the March banking crisis prevented us from losing an additional 20%+ if we had held on until today.”
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The Charles Schwab Corporation (NYSE:SCHW) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 74 hedge fund portfolios held The Charles Schwab Corporation (NYSE:SCHW) at the end of the fourth quarter which was 75 in the previous quarter.
We discussed The Charles Schwab Corporation (NYSE:SCHW) in another article and shared Fiduciary Management Inc.’s views on the company. In addition, please check out our hedge fund investor letters Q1 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
