The AVP was previously called the Aquitaine Model Portfolio. Readers of the old portfolio posts will recognize some of what follows; I took them down to avoid confusion over the rename and to consolidate process notes that had been scattered across several posts and deep dives. “Model portfolio” is the language asset managers use for separately managed accounts, and while I said plainly that mine wasn’t meant to be copied, the name invited exactly that. More importantly, the original was a scorecard attached to published deep dives, two dating to 2024 at Value Punks, which made it a record of my writing rather than a portfolio. The AVP’s measured record therefore starts on November 29, 2025; nothing before that carries forward.
What is the AVP?
The AVP is a concentrated, long-only portfolio consisting primarily of U.S. mid- to mega-cap equities. The objective is straightforward: to significantly outperform the market over the long run without the use of margin, options, or leverage. Every position is held in accounts under my control at broadly the published weights.
It began on November 29, 2025, with four names: Lululemon (LULU) at ~40%, Airbnb (ABNB) and Toast (TOST) at ~25% each, and Match (MTCH) at ~10%. All four are in the portfolio today (though not continuously) and now account for roughly 16% of it, which is the shortest way of saying that it looks very different.
Ten Stocks
The more names you own, the harder it becomes to beat the market. Bill Ruane, Warren Buffett’s longtime friend, summed it up: “I don’t know anyone who can do a really good job investing in a lot of stocks except Peter Lynch.” I am not Peter Lynch, but I do think I can do a good job owning a small number of businesses I’ve studied closely—what Stanley Druckenmiller calls the “put all your eggs in one basket and watch that basket very closely” approach.
Ten is a limit, not a target; in practice I expect to hold fewer. I’ve run far more concentrated in the past, but six is about as low as I’d take the AVP. The limit earns its keep at the top end. Once the portfolio is full, adding a name means selling one, which forces a comparison I might otherwise avoid: the risk-reward at today’s price against every other use of the money, whether that means adding to something I already own or buying something new. It is the best defense I’ve found against what Druckenmiller calls “lazy positions,” the ones you’re no longer sure about and that therefore probably don’t belong in the portfolio.
Concentration of this kind is obviously unsuitable for most investors, because when one of six or eight positions goes against you, you feel it in a way you wouldn’t with one of twenty or thirty. For better or worse, however, I don’t—or at least not to anything like the degree that seems typical. Part of that is knowing exactly what I own; part is simply how I’m wired. Nor do I get especially excited when a position works, since working is what I expected it to do. The excitement, such as it is, comes earlier, at the point where I think I may have found a home run.
As it happens, the AVP is at full capacity as of this writing: ten names, plus a little cash.
Management vs. Moats
“When a management with a reputation for brilliance tackles a business with a reputation for bad economics,” Buffett wrote in his 1980 letter, “it is the reputation of the business that remains intact.” I have yet to find a convincing counterexample. The reverse holds too, if less quotably: a great business asks only for competence, though a sufficiently determined chief executive can still turn a great one into a not-so-great one. So does this mean we can safely underweight management quality?
Buffett’s favorite holding period, famously, is forever, and if that is yours as well then the answer is probably yes. He has conceded as much, noting that several of his worst mistakes were good businesses he passed on because he disliked the people running them. (I have made the same mistake, and regrettably not just once.) My own holding period is open-ended: if a business keeps compounding at an attractive rate, I have no reason to sell it. But that is a policy for holding rather than a test for buying.
When I buy, it’s because I think the stock will be worth substantially more within roughly 18 to 24 months and, more importantly, because I think it won’t be worth much less if I’m wrong. Chris Hohn put it as well as anyone: “Investing is all about risk and return. Most investors focus on return. To me, risk was always the first thing that mattered.” That horizon is impatient next to Buffett’s, though unusually patient by today’s standards. As Bill Ackman observed:
“The vast majority of asset management firms have very short-term money … Even for hedge funds, about half the money can leave every year. It’s hard to be a long-term investor if your money can leave overnight.”
I have no redemptions to manage, which is the one structural advantage I hold over most institutional investors. But the window is still 18 to 24 months, and over a stretch that short the manager can matter as much as the business, if not more. Gavin Baker, who runs Atreides, made the point about his own industry: inside any investment organization, however large, there are between two and ten people you could remove and get entirely different results, without touching a line of the process. For an operating company, I’d go further: sometimes the number is one.
Take Nvidia. Jensen Huang has said that there may be people smarter than him, but nobody is going to outwork him. His intelligence is obvious, as is the work ethic; neither in isolation explains why he is such a singular figure. What truly sets Huang apart is where he sits on the scatter plot of intellectual horsepower and emotional energy (very near the upper-right corner). That makes him a magnet for top talent and a nightmare for competitors, and those are the qualities I am looking for.
For a typical position I’ll work through at least a dozen hours of management audio: earnings calls going back years, fireside chats, and especially podcasts, where executives are less guarded and, as a result, easier to read. That is also where they are most likely to say something they hadn’t planned to, as was the case with Airbnb’s Brian Chesky earlier this year.
Chesky had spent a year describing Airbnb’s new businesses in carefully hedged terms, on earnings calls and across a long media tour, until a January podcast in which he materially departed from the script. That departure was central to my thesis and helps explain why Airbnb subsequently peaked at over 40% of the portfolio. The stock has since crossed $190, from a cost base of ~$119.
I spend a great deal of time on competitors, too, because competitors don’t stand still. Hohn again: “The one important thing I’ve learned in my time investing is that investors underestimate the forces of competition and disruption.” Not all of these hours are logged before I take a position, since the opportunity doesn’t always wait for me to finish listening.
Another reason for interrogating management so closely comes from Barry McCarthy, the former CFO of Netflix and Spotify, and later CEO of Peloton. Having sat on many boards, he observes that no matter how hard you try, you never really know what is going on inside a company: directors are almost entirely dependent on the CEO and the management team for their understanding of the business. If that holds for someone with a board seat and full access, it holds all the more for the rest of us.
“The thing that I learned early in my career is that being a successful investor is all about picking the right guy or gal, because as an outsider, you can’t ever know enough to really make an informed decision. You are almost entirely dependent on the ability of the people you’ve invested behind. So, if you have the pattern-matching skills to know the difference between great and not, then that’s a big step ahead.”
So exceptional management is key. I also want to see attractive economics, or a clear path to them; minimal leverage; and an ample growth runway. When those qualities line up at the right price, I’ve found that the surprises tend to arrive on the upside.
Managing Positions
Martin Taylor is not a household name, though Jack D. Schwager credits him with possibly the best performance record in emerging markets: a compounded net return above 27% a year between 1995 and 2011, more than double the 12% of the index. He is also, unusually for a fundamental investor, entirely unembarrassed about charts.
“Charts are very important. Once I have done the fundamental work and decided to buy a stock, I will first look at the chart before putting on a position. If the stock is very overbought, it won’t stop me from buying, but I will start with a small position because there is a larger chance of a correction. If the stock just keeps on going up, then I am happy that I bought at least some. I will also be more willing to buy more because I bought part of the position at a lower price. Whereas, if I didn’t initially buy anything because the stock was overbought, I would then never buy any of it, which would be a dreadful mistake … I will then go to a full position because the breakout confirms that the market is now seeing the same thing I am seeing.”
That describes my own approach to buying almost exactly, with one wrinkle: overbought entries are the minority of my buys. More often I’m loading up at or near 52-week lows on a company I’ve admired for years that has simply never gone on sale—at least when I’ve been both paying attention and liquid. Netflix at ~$70 is the most recent example.
Letting winners run is another matter, and I’ve been known to trim too much and too soon. Airbnb is the recent and slightly painful example. I trimmed a good chunk of it around $154 ahead of the August 6 earnings, partly because the stock had run up on unremarkable volume, and we’ve already established what happened next. The galling part is that the results landed almost exactly on my base case—I simply underestimated how hard the stock would rally in response. Lululemon, by contrast, was the same instinct applied correctly, as discussed in my recent thesis update.
The shortcoming is partly offset by how readily I cut losers, which I define by thesis invalidation rather than price action. I’ll also sell without hesitation when the thesis is perfectly intact, if that is what the moment demands. Here I can thank Mr. Druckenmiller, whose words evidently left a lasting impression on me: “If all the news is great and the stock isn’t acting well, get out. It’s a pretty easy concept but for some reason most analysts don’t know this.”
Toast is a case in point. All the news was great, albeit broadly in line with consensus: management continued to execute and Toast’s longer-term prospects seemed, at least to me, as bright as ever. Yet after briefly climbing above my ~$33 cost base, the stock was dragged down in the SaaSpocalypse, despite hardware being central to its offering.
Fortunately, I had trimmed in December, sold most of the remainder in January as I sensed which way the wind was blowing, and exited shortly after. When Toast sold off again in May after what I thought was yet another great quarter, and with IGV, the software ETF, recovering somewhat, I couldn’t resist getting back in, albeit at a smaller weight. I’ve trimmed most of that over the past month, though it remains a ~2.5% position as of this writing.
When I’m highly confident a position is going substantially lower in the near term, even with the thesis intact, I see no reason to ride it down. If I’m right that the selling has further to run—and selling pressure tends to be self-reinforcing—I might get back in lower, as I did here, or put the money somewhere else.
Where the Mispricings Come From
Martin Taylor, whom we met earlier, believes the best opportunities are trends the market fails to appreciate because it is “extrapolating history instead of looking forward.” That is the common thread in nearly every mispricing I think I’ve found. Druckenmiller says the same thing, only more emphatically:
“The biggest mistake investors make is investing in the present. Never, ever, invest in the present … Always try to envision the situation as you see it in 18 to 24 months. And if you think the situation will be different, will security prices reflect that?”
Hence the name Variant: the portfolio is built around a variant perception of what the picture will look like 18 to 24 months from now. That does not necessarily mean being conventionally contrarian, bullish while everyone else is bearish, or the reverse. More often it means believing consensus estimates are far too low because the market is “extrapolating history instead of looking forward.”
Peloton is the clearest illustration. When I published my deep dive in 2024, the stock had bottomed near $3 the month before, a long way from its pandemic-era high of ~$167, and Bloomberg’s Mark Gurman had recently declared: “I don’t think people realize how close Peloton is to bankruptcy, right? They’ll be lucky to remain on the stock market much longer, if you ask me.”
Within a few months it traded above $10. Consensus was less apocalyptic but still far too low, pegging FY2027 adjusted EBITDA at around $250 million. My own model had it at $500 million, which is roughly where estimates sit today, though the company is getting there by a different route from the one I had assumed. I sold near the peak a few months later, having reached my target and come across something that undermined the thesis.
Beta
Taylor is also the reason AVP’s beta is intentional rather than accidental:
“Buying low-beta stocks is a common mistake investors make. Why would you ever want to own boring stocks? If the market goes down 40 percent for macro reasons, they’ll go down 20 percent. Wouldn’t you just rather own cash? And if the market goes up 50 percent, the boring stocks will go up only 10 percent. You have negatively asymmetric returns. It is what I call a pigeon-and-elephant trade—you eat like a pigeon and sh** like an elephant. If you have a portfolio of boring stocks and want to make it produce equity-like returns, you have to leverage it up. If the portfolio then goes wrong, the loss is going to be massively asymmetric because of the leverage.”
I don’t target a weighted beta, and I’m not hunting high-beta names so much as I’m wary of boring ones. Measured weekly against SPY since inception, AVP’s beta has been ~1.20, though it is currently higher as the book has rotated. The more useful figure is the R² of 0.40: the index explains only about two-fifths of the portfolio’s weekly variance. AVP has been roughly twice as volatile as SPY, 23.6% annualized versus 12.3%, while being only 1.2 times as market-sensitive. Most of the movement, in other words, is coming from the companies rather than from the market.
“The truth about hedge funds,” Ray Dalio observed, “is that much of what is packaged as alpha is really beta sold at alpha prices.” Through August 26, 2026, AVP is up ~48.1% since inception against ~13.4% for SPY. Beta clearly explains some of that gap; it does not explain most of it, and if that stops being true over the next several years I’ll shut the newsletter down, because at that point I’m not offering anything you can’t buy in an index fund.
Thanks for reading. If you enjoyed this post, a thumbs up or a share with your network really does help. I’ll be publishing a portfolio snapshot for paid subscribers shortly, covering new positions and updates to existing ones. Paid subscribers get the holdings, the weights, and every entry, exit, and trim as it happens. Through September 20, annual subscriptions are available at the Anchor rate of 30% off, locked in for as long as you remain a subscriber.
Disclosure: This is not investment advice. Readers are encouraged to conduct their own due diligence. Past performance is not indicative of future results.