1Q2023 – Focus Growth Commentary

We believe owning cash-rich, competitively advantaged businesses avoids the perils of leverage and lack of differentiation

In the first quarter of this year, we saw a flight to quality that was more consistent with past market drawdowns, in our opinion, as market participants became more focused on recession risk.
The Focus Growth Composite Portfolio (the “Portfolio”) performed in line with the Russell 1000 Growth Index and outpaced the S&P 500 Index.
The top absolute contributors in the first quarter were Amazon, Salesforce, and Airbnb, and the top absolute detractors were UnitedHealth, Abbott Laboratories, and Gartner.
On a relative basis, the top performers in the quarter were Salesforce, Airbnb, and Amazon. The leading relative detractors were three companies we don’t own: NVIDIA, Apple, and Tesla.
During the first quarter, we trimmed our holdings in Alphabet and Adobe to take advantage of what we believe is a significant mispricing in Amazon.
In 2023, we expect our Portfolio to see strong and accelerating EPS growth, and longer term, we believe our Portfolio will continue to have meaningfully faster and more durable earnings growth than the Indexes.