Financials: Misunderstood Durability

金融板块：被误解的韧性

Financial companies represent DNYVF’s largest sector weighting and reflect a theme we describe as “Misunderstood Durability.” Since the Great Financial Crisis (GFC), investor sentiment has tended to view financial companies in general and banks in particular as fragile, volatile and prone to disaster. That two large banks (neither of which we ever owned), Silicon Valley Bank and First Republic, collapsed less than two years ago due to company-specific mismanagement reinforced a perception of fragility for all banks. This perception is understandable but inaccurate with regards to the select banks we own, such as Wells Fargo, Capital One and U.S. Bancorp. They actually grew their customer bases through both the GFC and the regional banking crisis of 2023. What’s more, throughout the last decade, a combination of higher capital ratios, larger market shares and tighter regulation have reduced the riskiness of these well-run institutions while increasing their durability and competitive advantages. Their quarterly and even annual earnings can be volatile. However, such “lumpiness” does not diminish the fact that these companies generate capital throughout the business cycle at an attractive rate and use the capital they generate to increase shareholder value by steadily increasing dividends and buying in shares at discounted prices.

金融公司构成了 DNYVF 最大的行业权重，体现了我们所称的“被误解的韧性”主题。自全球金融危机（GFC）以来，投资者普遍将金融公司、尤其是银行视为脆弱、多变且易出险。不到两年前，两家大型银行——硅谷银行和第一共和银行（我们均未持有）因自身管理不善而倒闭，这进一步加深了银行普遍脆弱的印象。对于我们所持有的精选银行（如富国银行、第一资本和美国合众银行）来说，这种观念可以理解但并不准确。这些银行在 GFC 及 2023 年的地区银行业危机期间仍实现了客户基础增长。更重要的是，在过去十年里，更高的资本充足率、更大的市场份额以及更严格的监管减少了这些管理良好机构的风险，同时增强了其耐久性和竞争优势。它们的季度乃至年度盈利可能波动，但这种“坎坷”无损于这样一个事实：这些公司在整个商业周期内以可观速度创造资本，并通过持续提高股息、折价回购股票来提升股东价值。

Technology: Resilient, Reasonably-Priced Growth

科技板块：韧性强、估值合理的增长

Technology, broadly defined, makes up the portfolio’s next largest theme. As with financials, the term technology covers a broad range of companies with diverse types of business models. Within the tech universe, we focus on a select few companies that combine proven long-term growth with reasonable valuations. This valuation discipline has led us to avoid many of the market darlings that have driven the S\&P 500 Index in recent years, including the majority of the so-called Magnificent Seven tech darlings that today represent a concentration of over 33% of the S\&P 500 Index.¹⁰

从广义上看，科技板块构成了组合中的第二大主题。与金融板块类似，“科技”涵盖了商业模式多样的广泛企业。在这一领域，我们专注于少数兼具长期增长记录与合理估值的公司。正是这种估值纪律，使我们避开了许多近年来推动标普 500 指数上涨的市场宠儿，包括如今占标普 500 指数权重逾 33% 的所谓“七巨头”中的大部分公司。¹⁰

In fact, while others have been piling into companies like Meta and Alphabet which we have owned for many years, we have used their outperformance in recent years as an opportunity to reduce our positions in these excellent, but richly valued, companies. Although we now own fewer shares, the strong business models and proven managements of these companies (along with Amazon) have still earned them a place in our portfolio. In addition, instead of market darlings such as Nvidia, Apple or Tesla, our remaining technology investments have been focused in durable, proven but less glamorous parts of the technology sector such as semiconductor manufacturing (Texas Instruments and Samsung) and capital equipment (Applied Materials).

事实上，当其他投资者蜂拥买入我们已持有多年的 Meta 和 Alphabet 等公司时，我们利用其近年来的优异表现减少了对这些优质但估值高企公司的持仓。虽然目前持股较少，但这些公司（以及亚马逊）稳健的商业模式和成熟的管理团队仍使其保留在我们的投资组合中。此外，我们并未投资 Nvidia、Apple 或 Tesla 等市场明星，而是将剩余的科技持仓集中在科技领域中更为耐久、经过验证但不那么耀眼的领域，如半导体制造（德州仪器、三星）和半导体设备（应用材料）。

As we discussed earlier, all investments (not just those in the technology sector) are likely to be affected by the much heralded breakthroughs in artificial intelligence. In preparing for this impact, investors should bear in mind Roy Amara’s famous law that we “overestimate the effect of a technology in the short run and underestimate the effect in the long run.”¹¹ As with the internet, our approach is to avoid the “story stocks” and instead ask which companies can use this powerful new tool most effectively to build the value of their businesses and, just as importantly, which companies are most threatened by the new technology. While AI stocks will likely go through booms and busts, the underlying technology is transformative and seems certain to be a permanent part of the economic landscape going forward. As such, questions about its impact are already a standard part of our research process.

正如前文所述，所有投资（不仅仅是科技板块）都可能受到备受关注的人工智能突破的影响。为应对此影响，投资者应牢记罗伊·阿马拉的著名定律：“我们高估一项技术的短期影响，却低估其长期影响。”¹¹ 与互联网类似，我们的做法是回避“故事股”，转而思考哪些公司能最有效地利用这一强大的新工具来提升企业价值，并同样重要的是，哪些公司最有可能受到这一新技术的威胁。虽然 AI 概念股可能经历繁荣与萧条，但 AI 技术本身具有变革性，未来必将成为经济格局的永久组成部分。因此，关于其影响的问题已成为我们研究流程的标准环节。

Healthcare: Durability vs. Speculation

医疗保健：耐久性与投机性

For decades, healthcare spending relentlessly rose from 5% of U.S. GDP in 1960 to roughly 17% in 2010. However, reflecting the wisdom of Herb Stein’s famous observation that “if something cannot go on forever, it will stop,” the rollout of the Affordable Care Act in 2010, along with a range of other public and private initiatives, has led to a flattening of this growth since then. Today, while healthcare spending remains a political hot button, it is somewhat encouraging that 15 years later, its percentage of GDP still stands at 17% despite the invention of many expensive new therapies in the interim.

几十年来，美国医疗保健支出从1960年占GDP的5%持续上升到2010年的约17%。然而，正如赫伯·斯坦著名的箴言所言，“如果一件事无法永远持续，它就会停止”，2010年《平价医疗法案》的推出以及众多公共和私营领域举措的实施，使这一增长曲线趋于平缓。如今，尽管医疗支出依旧是政治热点话题，但令人稍感宽慰的是，15年过去，尽管期间发明了许多昂贵的新疗法，医疗支出占GDP的比例仍保持在17%。

To offset the rising costs of novel treatments and innovative (and patented) pharmaceutical therapies, the healthcare system has needed to constantly find savings elsewhere. As a result, our investments in this important sector have focused on those companies that play a part in moderating or reducing the natural rate of increase in healthcare spending. Companies such as Cigna and Humana, for example, offer programs like Medicare Advantage which deliver patients a higher quality of care at a lower cost. Given the inefficiencies and incentives of government agencies versus the private sector, we are not surprised that such companies have long records of success. Similarly, lab-testing companies like Quest Diagnostics and branded generics companies like Viatris continue to reduce costs in the healthcare system. On the other side of the ledger, while we marvel at the enormous profits created by novel pharmaceutical and biotech breakthroughs, we find it difficult and risky to try to predict the next winners while also quantifying the duration of those profits given the development of me-too competitors and evolving drug reimbursement policies.

为了抵消新疗法及创新（且受专利保护）药物治疗成本的上升，医疗体系必须不断在其他方面寻找节省空间。因此，我们在这一重要领域的投资聚焦于那些能够减缓或降低医疗支出自然增速的公司。例如，信诺（Cigna）和 Humana 等公司推出 Medicare Advantage 等项目，以更低成本为患者提供更高质量的护理。考虑到政府机构与私营部门在效率和激励机制上的差异，这类公司长期以来的成功轨迹并不令人意外。同样，Quest Diagnostics 这类实验室检测公司和 Viatris 这类品牌仿制药企业也在持续为医疗体系降本。另一方面，尽管我们对新药和生物技术突破所创造的巨额利润叹为观止，但考虑到“跟随”竞争者的出现及药物报销政策的变化，预测下一批赢家并量化其利润持续期既困难又风险高。

Industrials: Resilient, Non-Linear Growth

工业板块：韧性强、非线性增长

In an age of digitization, software, AI, content creation, advertising and hot consumer brands, companies that operate railroads and generate electricity (Berkshire Hathaway), extract copper (Teck Resources), manufacture insulation (Owens Corning), supply food (Tyson) or produce oil (Tourmaline Oil) may sound dull, but our civilization cannot function without their products. The necessity of these products and, in many cases, the environmental risks of producing them, create regulatory and legal complexity. Their production often requires large upfront capital investment. In any short-term period, their demand and supply may be subject to cyclical swings, resulting in earnings volatility for producers. Further, as such products are not especially differentiated, price and availability are often the only drivers of customer preference, making it difficult for any one company to maintain high returns without attracting new competition.

在数字化、软件、AI、内容创作、广告和热门消费品牌盛行的时代，经营铁路和发电（伯克希尔哈撒韦）、开采铜矿（泰克资源）、生产保温材料（欧文斯科宁）、供应食品（泰森）或开采石油（Tourmaline Oil）等企业听起来或许乏味，但没有它们的产品，现代文明将无法运转。这些产品的必要性以及在许多情况下其生产所伴随的环境风险，带来了监管和法律的复杂性。其生产往往需要巨额前期资本投入。在任何短期阶段，其供需都可能出现周期性波动，导致生产商盈利波动。此外，由于此类产品差异化不大，价格和可获得性通常是客户偏好的唯一驱动因素，这使得任何公司都难以在不吸引新竞争者的情况下维持高回报。

So how do we find attractive opportunities in such a difficult category? First, because many such dull businesses are overlooked and out of favor in today’s growth-driven market, carefully selected industrials currently sell at extremely low valuations. This is despite their having long-term records of growth, durable earnings power, and competitive advantages driven by low-cost assets or economies of scale, and some inflation protection due to long-lived assets. What’s more, certain long-term trends may be accelerating the growth rates of a number of these companies. For example, in a world of massively expanding computing power, the need for electricity is markedly accelerating. Also, trends like electrification of automobiles and expansion of the electricity grid increase copper demand at a rate that is likely to continue to outstrip growth in supply (a byproduct of the enormous regulatory challenges of permitting and building new mines).

那么，我们如何在如此艰难的类别中寻找有吸引力的机会？首先，由于这些“乏味”企业在当今由增长驱动的市场中常被忽视且不受青睐，经精挑细选的工业公司目前市值处于极低水平。尽管它们拥有长期增长记录、持久盈利能力、依托低成本资产或规模经济构建的竞争优势，并因长期资产而具有一定抗通胀能力。更重要的是，一些长期趋势可能正在加速其中部分企业的增长。例如，在计算能力大幅扩张的世界里，对电力的需求正在显著加速；此外，汽车电动化和电网扩张等趋势使铜需求以可能持续超过供给增长的速度增长（这是受新矿许可与建设监管挑战巨大所驱动的结果）。

Finally, in ways that are hard to anticipate, the advent of AI discussed earlier is almost certain to create enormous disruptions in many white-collar service industries in much the same way that automation and globalization impacted U.S. manufacturing industries and blue collar workers in the 1980s and 1990s. As the services sector faces significant uncertainty in the years ahead, people may be more enthusiastic about our industrial holdings with their low valuations, dull business models and resistance to obsolescence.

Looking Ahead:

展望未来：

A Turning Tide

潮流正在转向

After a long stretch in which our investment discipline was out of favor, we see many indications that the tide is turning. The current combination of economic, technological and geopolitical transitions bodes poorly for momentum/trend-following investors, while high market valuations and extreme concentration bode poorly for the major stock indices and passive investors. In contrast, our highly selective approach and proven long-term investment discipline is becoming more important than ever.

在我们遵循的投资纪律长期不受青睐之后，我们看到许多迹象表明形势正在发生逆转。当前经济、技术和地缘政治的多重转型对动量／趋势跟随型投资者不利，而高市场估值和高度集中度则对主要股票指数和被动投资者不利。相反，我们高度精选的方法和久经考验的长期投资纪律正变得比以往任何时候都更加重要。

While we expect periods of volatility and disruption as we move out of the era of free-money and cheap capital, the combination of above-average growth and below-average valuations that characterizes our portfolio today is rare. It positions us well to reward investors who resisted the bandwagon’s siren song and held fast to our patient, long-term approach to building generational wealth. The key pillars of success in this tumultuous environment are the cornerstones of our investment discipline, based on what we look for in our portfolio companies: cash generation, conservative capital structure, durable business model, low valuation and proven management.

随着我们走出零成本资本时代，我们预计将经历波动和动荡期，但我们当前投资组合所呈现的高于平均水平的增长与低于平均水平的估值这一组合极为罕见。这使我们能够回报那些抵制随波逐流、坚持耐心长期积累世代财富的投资者。在这一动荡环境中取得成功的关键支柱，正是我们投资纪律的基石：现金创造能力、保守的资本结构、稳健的商业模式、低估值以及成熟可靠的管理团队。

For more than 50 years we have navigated a constantly changing investment landscape guided by one North Star: to grow the value of the funds entrusted to us. We are pleased to have achieved strong results thus far and look forward to the decades ahead. With more than \$2 billion of our own money invested in our portfolios, we stand shoulder to shoulder with our clients on this long journey.12  We are grateful for your trust and are well-positioned for the future.

五十多年来，我们在不断变化的投资环境中航行，始终以一个北极星为指引：提升受托基金的价值。我们很高兴迄今取得了优异成绩，并期待未来几十年的发展。我们在自有投资组合中投资逾20亿美元，与客户并肩踏上这段漫长旅程。12 我们感谢您的信任，并已为未来做好充分准备。