Chris Davis sees several key similarities between his day job as chairman of Davis Advisors, an investment management firm with approximately $30 billion in client assets, and his new duties as a member of the board of directors for The
“Both businesses are shifting to adapt to changing times, while holding on to the enduring values that got them this far,” Davis said during an interview in Atlanta. “The next 20 years won’t look like the past 20, at either
Davis, 52, was elected to the
He is the third generation at the helm of an asset management firm that was founded by his grandfather, Shelby Cullom Davis. The elder Davis turned $100,000 into $800 million over the course of his career. Since its inception, Davis Advisors has had a sharp focus on long-term, value investing.
“We don’t invest as traders or activists,” Davis said. “And we tend to have a time horizon and an investment horizon that ideally is forever. Some of our investments are companies that we’ve held for decades.”
When Davis looks for businesses to include in his funds, he evaluates not only pricing and their ability to generate high returns over time but the management team’s culture, character, incentives and integrity.
“We also focus on durabilit... whether the company’s products or services can stand the test of time,” he said. As a result, he looks for what he calls “economic moats” that surround a business.
“What I mean by economic moats is recognizing that a company has a line of protection or defense – things like a long history and experience, geographic diversity and a formidable footprint, an entrenched position – all characteristics that would make it very difficult for someone else to dislodge,” Davis said.
He paused for a moment and realized that he could very well be describing the attributes of
But, he cautioned, many businesses – such as newspapers and video stores, for example – had moats that didn’t prove effective over time.
“There are structural changes in this industry, and what really matters with Coke is not what they’ve done the last 50 years,” he said. “It really matters how well they can adapt to the changing world.”
Adjusting to Change
Davis understands the challenges, and not only at
“We’ve had to shift to new realities,” he said. “We began looking for investment opportunities outside the U.S. and in different industries. Value investors like us never used to consider companies that didn’t have earnings, but that would have meant missing out on enormous value creators like cable TV providers and companies like Amazon.”
Davis said he is “in awe” of
In a crash course about the company, meeting with executives and touring stores, Davis said he recognized and appreciated a very powerful shift in terms of valuing a culture that can be adaptable and responsive. “It’s clear from everyone I’ve met in Atlanta that there’s a responsiveness to the field and the people out in the markets.”
The total beverage company focus is another manifestation of what he sees.
“It’s a recognition of what’s happening in the world,” Davis said. “For years, consumer product companies were focused on the killer brands, the largest products – if it wasn’t a billion dollars, it wasn’t worth holding on to. Now, we’re seeing Coke move to embrace grass-roots products, what consumers want.”
As he sips one of the white-label beverages that the lab in Atlanta is tinkering with, Davis said he’s excited to see new products in the months and years to come. “I’m passionate to see what
For now, to pick a favorite drink, he cites Mexican Coke. “It’s the most unlikely thing you can imagine – buying a Coke made in Mexico on a shelf in a convenience store in New York or in a Walmart in Atlanta or anywhere,” he said. “I love the classic glass bottle.”
Joining the Board
Davis said he’s approaching his duties on the board in terms of the long-term, value-creation perspective that underscores his investment philosophy.
“Many companies confuse Wall Street and their shareholders, but what Wall Street wants isn’t necessarily the same as what long-term shareholders want,” he said. “Too many companies think about unlocking value today or the next quarter, and I hope that what I bring to the board is the perspective of shareholders – who care about the creation of value for decades and generations.”
And he’s excited to learn from the company’s global reach and experience.
“What I get in return is exposure to the most global company on earth, with insight and experience on handling and thriving in the widest possible variety of challenges,” Davis said. “There have been people on this board who are the people I have admired most in business for their own success, perspective and value system. It’s an honor to help guide