Discover Financial (DFS, Financial), the third-largest credit card issuer in the country, contributed 191 basis points to the Fund's return, as its stock soared from our average purchase price of $49.40 to $90.53, for a total return of 84.3%. We first bought shares in June, following the pandemic-induced sell-off, as investors feared that surging unemployment numbers would lead to a wave of credit losses at the bank. In actuality, credit performance was nowhere near as bad as anticipated, due to the powerful triple effects of government stimulus, conservative household balance sheets and the rapid economic recovery. Discover's record of disciplined underwriting also paid off, as monthly net charge-offs were consistently better-than-expected and even ended the year at rates lower than before the pandemic began.
From Jerome Dodson (Trades, Portfolio)'s Parnassus Endeavor Fund (Trades, Portfolio) fourth-quarter 2020 commentary.
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