Cole Smead - Smead Capital Management, Inc. Portfolio Q2’2025: Top Holdings & Recent Changes
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Cole Smead, president of Smead Capital Management, continues to showcase his contrarian value discipline amid evolving market conditions. His Q2’2025 portfolio reflects a dynamic approach, with $4.99 billion allocated across 33 positions and notable shifts in several top holdings. Smead’s latest moves reveal a willingness to trim exposure to select consumer, healthcare, and real estate names while selectively adding to energy, underscoring his focus on long-term value and risk management.
Portfolio Overview: Contrarian Value in Action
Portfolio Highlights (Q2’2025): - Market Value: $4,994.7M - Top 10 Holdings: 51.0% - Portfolio Size: 33 -2 - Average Holding Period: 22 quarters - Turnover: 18.2%
The Smead Capital portfolio remains highly concentrated, with just over half of assets in the top ten positions. This concentration signals conviction in select businesses, a hallmark of Smead’s approach. The average holding period of 22 quarters (over five years) reflects a patient, long-term mindset, while a moderate turnover of 18.2% indicates tactical adjustments rather than wholesale shifts.
Smead’s strategy blends deep value with opportunistic rebalancing. The portfolio size decreased by two positions this quarter, suggesting a tightening focus on core ideas. Notably, the allocation image reveals significant exposure to consumer, healthcare, real estate, and energy—sectors where Smead sees enduring value despite broader market volatility.
Top Holdings Analysis: Defensive Plays and Opportunistic Shifts
The portfolio’s top holdings this quarter highlight Smead’s willingness to trim winners and add to undervalued sectors. Among the most significant moves:
- SIMON PPTY GROUP INC NEW 6.6% saw a “Reduce 11.76%” action, reflecting a tactical pullback in real estate exposure.
- American Express Company 5.7% was reduced by 27.97%, signaling caution in consumer finance after a strong run.
- MACERICH CO 5.2% also faced a “Reduce 11.75%,” further trimming real estate risk.
- Merck & Co., Inc. 5.2% was reduced by 2.02%, a modest adjustment in healthcare.
- Amgen Inc. 5.2% saw an 11.76% reduction, continuing the theme of rebalancing in defensive sectors.
- D.R. Horton, Inc. 5.1% and Lennar Corporation 4.6%—both homebuilders—were trimmed by 11.76%, reflecting caution as housing market dynamics shift.
- Cenovus Energy Inc. 4.8% was notably increased by 13.27%, marking a contrarian bet on energy amid sector volatility.
- eBay Inc. 4.4% and NVR, Inc. 4.2% were both reduced by 11.76%, continuing the theme of selective trimming.
- Supplementing these, the portfolio’s top 10 also includes substantial positions in consumer, healthcare, and real estate, with most actions reflecting tactical reductions rather than wholesale exits.
This blend of reductions in real estate, consumer, and healthcare, alongside a meaningful addition to energy, underscores Smead’s willingness to rotate capital toward sectors he views as undervalued or poised for recovery.
What the Portfolio Reveals About Current Strategy
- Quality and Value Focus: Smead’s portfolio demonstrates a preference for established, cash-generative businesses in sectors facing cyclical headwinds, such as energy and real estate.
- Sector Rotation: The notable addition to Cenovus Energy Inc. signals a contrarian stance on energy, while reductions in homebuilders and consumer finance reflect caution amid macro uncertainty.
- Geographic and Sector Diversification: While the portfolio is U.S.-centric, exposure to Canadian energy and diversified real estate provides a buffer against domestic volatility.
- Risk Management: The consistent trimming of top positions suggests active risk management, with Smead locking in gains and reallocating to areas with greater upside potential.
- Dividend and Defensive Tilt: Many holdings offer robust dividend yields and defensive characteristics, aligning with Smead’s value-oriented philosophy.
Portfolio Concentration Analysis
| Position | Value | % of Portfolio | Recent Change |
|---|---|---|---|
| SIMON PPTY GROUP INC NEW | $331.5M | 6.6% | Reduce 11.76% |
| American Express Company | $282.2M | 5.7% | Reduce 27.97% |
| MACERICH CO | $260.1M | 5.2% | Reduce 11.75% |
| Merck & Co., Inc. | $258.6M | 5.2% | Reduce 2.02% |
| Amgen Inc. | $257.7M | 5.2% | Reduce 11.76% |
| D.R. Horton, Inc. | $255.2M | 5.1% | Reduce 11.76% |
| Cenovus Energy Inc. | $239.0M | 4.8% | Add 13.27% |
| Lennar Corporation | $232.0M | 4.6% | Reduce 11.76% |
| eBay Inc. | $218.3M | 4.4% | Reduce 11.76% |
| NVR, Inc. | $210.4M | 4.2% | Reduce 11.76% |
The table above highlights Smead’s concentrated approach, with the top ten holdings comprising 51% of total assets. Most top positions saw reductions this quarter, indicating a disciplined approach to profit-taking and risk control. The lone significant addition—Cenovus Energy Inc.—stands out as a tactical bet on energy, contrasting with the trimming seen elsewhere.
Investment Lessons from Cole Smead’s Value Discipline
- Concentration Reflects Conviction: Smead’s willingness to allocate over half the portfolio to ten positions demonstrates the importance of deep research and high conviction.
- Long Holding Periods Matter: With an average holding period of 22 quarters, Smead exemplifies the value of patience and compounding.
- Active Risk Management: Regular trimming of top positions and selective additions show the importance of adapting to changing market conditions.
- Contrarian Sector Rotation: Adding to energy while trimming consumer and real estate highlights the value of going against consensus when fundamentals justify it.
- Quality and Value: Smead’s focus on established, dividend-paying companies in cyclical sectors underscores the principle of buying quality at a discount.
Looking Ahead: What Comes Next?
With cash freed up from reductions in consumer, healthcare, and real estate, Smead Capital is well-positioned to deploy capital into undervalued sectors. The recent addition to energy suggests further contrarian moves may be on the horizon, especially if macro volatility persists. Investors should watch for new positions in commodities, defensive sectors, or international markets as Smead seeks asymmetric opportunities. The current portfolio sets up for resilience, with flexibility to capitalize on market dislocations.
FAQ about Smead Capital Portfolio
Q: Why did Smead Capital reduce exposure to American Express and homebuilders this quarter?
Smead trimmed American Express by 27.97% and homebuilders like D.R. Horton and Lennar by 11.76% each, likely reflecting concerns over consumer credit cycles and housing market headwinds.
Q: How concentrated is the Smead Capital portfolio?
The top ten holdings account for 51% of assets, with a total of 33 positions. This concentration reflects high conviction in select businesses and sectors.
Q: What is the average holding period for Smead Capital positions?
Smead Capital’s average holding period is 22 quarters (over five years), demonstrating a long-term investment philosophy.
Q: Which sector did Smead Capital add to this quarter?
Smead Capital increased its stake in Cenovus Energy Inc. by 13.27%, signaling a contrarian bet on energy.
Q: How can investors track Cole Smead’s moves?
Investors can follow Smead Capital’s quarterly 13F filings and access real-time portfolio analysis on ValueSense. Note that 13F filings have a 45-day reporting lag, so timely tracking via ValueSense is essential.
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