Invest Like a Pro: Davis Selected Advisors

Imitation is the sincerest form of flattery, right? Well, when you're learning a new skill, imitation can also be a great way to hone your craft.

If you're learning guitar, you might pick up a book of Jimi Hendrix's licks or download the chords to a couple of Bob Dylan's songs. So when you're trying to become a better investor, it only makes sense to take a peek at what the professional investors are up to.

For Fools who don't have the time or inclination to pick individual stocks on their own, Shannon Zimmerman at the Fool's Champion Funds newsletter has put together a buffet of mutual funds that have collectively outperformed their benchmarks by more than 12%. As for the rest of us, we can tune in directly to what some of the major funds are holding.

You see, the SEC requires institutional investment managers who manage $100 million or more to show their cards via quarterly 13-F filings. This week, I've dug in to look at some of the moves that one of my favorite investment managers, Davis Selected Advisors, has been making. And to make things even more interesting, I cross-referenced its stocks against the opinions of the Fool's CAPS community.

Below are three stocks that Davis bought more of between its March filing and its June filing ...


Percentage Change in Davis Position

Current Market Value of Davis Position

CAPS Rating (out of 5)

General Electric (NYSE:GE)


$73 million


Johnson & Johnson (NYSE:JNJ)


$121 million


Bed Bath & Beyond (NASDAQ:BBBY)


$577 million


Sources: Capital IQ, Yahoo! Finance, and CAPS as of Sept. 18.

... and three on which the firm lightened its position.


Percentage Change in Davis Position

Current Market Value of Davis Position

CAPS Rating (Nasdaq: AMZN  )


$632 million


Wal-Mart Stores (NYSE: WMT  )


$1.5 billion


Altria Group (NYSE: MO  )


$3.3 billion


Sources: Capital IQ, Yahoo! Finance, and CAPS as of Sept. 18.

Now, before you jump to it and make any hasty moves, remember that we're looking at what Davis has done in retrospect. For all we know, since the last 13-F filing, the firm has drastically changed its holdings in any or all of the above stocks. With that in mind, here are some further thoughts to kick off your research.

Slow and steady
You might notice that the sell moves for Davis are rather small. Overall, the fund had only three positions that it pared back by 50% or more during the June quarter, and all were relatively small. This pales in comparison to many other funds, where you might see multiple major positions completely turn over in a month. In fact, on Davis' website, the firm describes itself as having "the same patient, long-term investment discipline for more than 35 years" and says that it looks for "durable, well-managed businesses that can be purchased at value prices and held for the long term."

Talk about Cupid's choke hold -- I think I'm in love.

Looking at the buy side of the equation for Davis, we see that the fund bulked up on its position in retailer and dual Inside Value and Stock Advisor pick Bed Bath & Beyond. If you own a house in a suburban part of the U.S., you probably know Bed Bath & Beyond as a place where you can get just about anything you need for your home -- and many great things you had no idea you needed.

The stock has taken a beating lately on concerns that consumer spending will take a hit from housing turmoil. One of CAPS' top players, Guardian21, saw this and said that "short-term fears of a reduction in consumer spending are presenting us with an excellent buying opportunity. This stock will beat the market over the next 3-5 years."

So has Davis highlighted a great stock deal for us? Or has Bed Bath & Beyond gotten much cheaper for a reason? Hop on over to CAPS and start interacting with the other 65,000-plus CAPS players. While you're weighing in on these stocks, you can also find out more about more than 5,000 other currently rated stocks.

More CAPS Foolishness:

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