Portfolio activity was modest during the quarter. While the markets’ advance has been nothing short of breathtaking over the last two quarters, and bargains are harder to come by, the top 25 holdings in all three of our Funds continue to trade on average at forward price/earnings multiples of between approximately 12 and 13 times earnings and have dividend yields of between 3% and 4.5%.
Banks and technology stocks have accounted for an outsized part of the market’s overall return over the last two quarters. We exited most of our banking positions in late 2007 and in 2008 and have not made any new investments to this group recently. From our point of view, this is a case where the market has moved well ahead of underlying fundamentals. Bank balance sheets for the most part continue to be seriously impaired as they work through their troubled loan portfolios, while a commercial real estate crisis continues to loom over the industry, threatening further losses as deeply distressed loans have to be rolled over in the next year or two. The technology sector, which also delivered strong returns over the last couple of quarters, is not an area where we typically have a lot of exposure. We rarely find pricing opportunities in these stocks, and are often sceptical of their long-term growth projections in the face of rapid rates of change.
Read the complete shareholder letter
Banks and technology stocks have accounted for an outsized part of the market’s overall return over the last two quarters. We exited most of our banking positions in late 2007 and in 2008 and have not made any new investments to this group recently. From our point of view, this is a case where the market has moved well ahead of underlying fundamentals. Bank balance sheets for the most part continue to be seriously impaired as they work through their troubled loan portfolios, while a commercial real estate crisis continues to loom over the industry, threatening further losses as deeply distressed loans have to be rolled over in the next year or two. The technology sector, which also delivered strong returns over the last couple of quarters, is not an area where we typically have a lot of exposure. We rarely find pricing opportunities in these stocks, and are often sceptical of their long-term growth projections in the face of rapid rates of change.
Read the complete shareholder letter
