David Giroux’s Contrarian Strategy: 17 Years of Market-Beating Returns at T. Rowe Price
Staff Editor David Giroux’s Contrarian Investment Strategy Yields Record-Breaking Returns
David Giroux, renowned for his contrarian and valuation-sensitive investment approach, has led the T. Rowe Price Capital Appreciation Fund to outperform its peers for an unprecedented 17 years. His strategy of buying undervalued stocks and selling overvalued ones has proven highly successful, setting a new benchmark in the investment world.
Among over 3,000 US-domiciled funds, Giroux’s performance streak stands unmatched under a single manager. An initial $100,000 investment in 2008 would have grown to an impressive $490,000 by 2024, outperforming the Morningstar US Fund Moderate Allocation category by a staggering 94%.
Giroux’s portfolio management philosophy diverges from market trends, instead focusing on select attractive stocks. A prime example of this approach was his decision to sell Costco when it reached an overvalued 50 times earnings. Even in high-valuation markets, Giroux consistently seeks hidden value opportunities.
However, Giroux cautions against predicting future performance based on past stock trends. In response to current market conditions, he is reducing equity allocation and increasing fixed income investments. He particularly favors Treasurys for their safety, liquidity, and protection against market volatility. Currently, his portfolio allocates 15% to five- and 10-year Treasurys.
Giroux’s strategy also involves investing in underloved areas of the stock market. He avoids big names like Nvidia due to expected competition and remains skeptical of financials due to high earnings multiples. Instead, he focuses on undervalued sectors such as software, healthcare, and utilities.
The software sector, in particular, has caught Giroux’s attention. Often overlooked by investors, it presents cheap valuations with potential for 10%+ revenue growth, especially with the advent of AI. Giroux highlights Workday (WDAY) as a prime example, citing its growth potential and low valuation.
For investors looking to capitalize on these undervalued sectors, options include the iShares Expanded Tech-Software Sector ETF (IGV), Health Care Select Sector SPDR Fund (XLV), and Vanguard Utilities ETF (VPU).
As the investment landscape continues to evolve, Giroux’s contrarian approach offers a unique perspective for investors seeking to navigate market volatility and uncover hidden opportunities.
