Giverny Capital Asset Management, LLC, an investment management company, recently published its fourth-quarter 2023 investor letter. A copy of the same can be downloaded here. The firm’s model portfolio returned 16.26% (net) in the fourth quarter compared to an 11.69% return for the S&P 500 Total Return Index. The fund had an annual return of 29.07% compared to the 26.29% return for the Index during the same period. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Giverny Capital Asset Management featured stocks such as The Charles Schwab Corporation (NYSE:SCHW) in the fourth quarter 2023 investor letter. Headquartered in Westlake, Texas, The Charles Schwab Corporation (NYSE:SCHW) is a savings and loan holding company. On February 5, 2024, The Charles Schwab Corporation (NYSE:SCHW) stock closed at $62.37 per share. One-month return of The Charles Schwab Corporation (NYSE:SCHW) was -6.56%, and its shares lost 23.18% of their value over the last 52 weeks. The Charles Schwab Corporation (NYSE:SCHW) has a market capitalization of $113.674 billion.
Giverny Capital Asset Management stated the following regarding The Charles Schwab Corporation (NYSE:SCHW) in its fourth quarter 2023 investor letter:
“We added to our holding in The Charles Schwab Corporation (NYSE:SCHW) several times during the year in the mid-$50s. Schwab finished the year above $68 before declining a bit in January. At year-end, Schwab was our sixth-largest position at 5.7% despite an overall price drop of 18% for the year and a steep earnings decline. I believe in this business and its earnings power over the next few years. However, Schwab qualifies as a poor manager of its own balance sheet. If I listened to Warren Buffett on this, I might sell the stock.
Have I ever mentioned that one of my favorite aphorisms is “consistency is the hobgoblin of little minds?” Like First Republic Bank, Schwab bought a huge volume of extremely low-yielding government bonds during the pandemic. As rates rose, the bonds lost resale value while also generating anemic income. If the bonds were marked down far enough, Schwab might not have enough capital to support its business.
Unlike First Republic Bank, however, Schwab continued gathering billions of dollars of brokerage assets all year, shoring up its capital position. The flow of new money into Schwab meant it had plenty of capital on hand, even after marking down the value of longer-dated bonds. Schwab’s acquisition and integration of TD Ameritrade has been rocky – we use Schwab as our primary custodian and sometimes feel the pain. But Schwab retains a tremendous level of trust with retail investors and remains a great value partner to investment advisors like me. I think the business has earnings power well beyond recent results and will power through its mishap(s).”
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, 77 hedge fund portfolios held The Charles Schwab Corporation (NYSE:SCHW) at the end of third quarter which was 88 in the previous quarter.
We discussed The Charles Schwab Corporation (NYSE:SCHW) in another article and shared the list of best low-cost stocks to buy under $75. In addition, please check out our hedge fund investor letters Q4 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.
