Despite being an underperformer this quarter, we continue to hold Verizon Communications (VZ) as we still view it as attractively valued. The company remains a key part of our portfolio strategy, and we believe it has the potential to deliver value in the long term. Our strategy is focused on maintaining positions in companies that we believe are undervalued relative to their peers, and Verizon fits this criterion well.

Verizon, one of the largest telecommunications companies in the U.S., was a primary contributor during the period. After delivering its strongest customer growth in several years, Verizon now serves 96 million postpaid customers and 20 million prepaid connections, further cementing its leadership as the largest wireless carrier in the country. We believe this performance also reflects improving execution following the appointment of new CEO Dan Schulman in October 2025, as well as early signs of a broader strategic shift under his leadership. Furthermore, after completing its $20 billion acquisition of Frontier Communications, the company’s fiber footprint has expanded to over 30 million homes and businesses.

Verizon reported strong 4Q’25 results, highlighted by postpaid phone net additions of 616,000, significantly exceeding expectations and signaling improving execution under new leadership. The company also announced a $25 billion share repurchase program and a dividend increase, alongside the completion of its Frontier acquisition to expand its fiber footprint. Management guided to 750,000–1,000,000 postpaid phone net additions in 2026 and outlined approximately $5 billion in cost savings, supporting confidence in a broader operational turnaround.

Verizon Communications shares climbed as the company benefited from a change in strategy under a new CEO to prioritize subscriber retention, while investors shifted into more defensive stocks over the period due to market volatility. This strategic pivot is expected to enhance the company's competitive positioning and resilience in the market, making it an attractive investment opportunity.

Verizon is mentioned as a current holding that is trading at the higher end of its fair value and has appreciated during the recent selloff. The manager expresses confidence in the current portfolio but also indicates a willingness to capitalize on new opportunities presented by quality companies affected by market turbulence.

We bought Verizon (VZ) with its high and well-covered dividend. The company continues to demonstrate strong fundamentals, making it an attractive addition to our portfolio. Its ability to maintain a robust dividend amidst market fluctuations showcases its financial stability and commitment to returning value to shareholders.