Domo Capital ManagementDOMO Capital Management

Decisive | Contrarian | Composed | Resolute

N112 W16298 Mequon Rd. Ste. 111 Germantown, WI 53022



July_31_2020_-_DOMO_Capital_Q2_ 2020_Update


DOMO Capital Q2, 2020 Update

Germantown, WI – July 31, 2020

DOMO Capital significantly outperforms the market in the second quarter, believes 2020 could result in the best annual performance to ever be achieved by the composite to date.


We are pleased to report that the strong March performance carried into the second quarter and our portfolio considerably outperformed the market indexes for many of the reasons that we highlighted last quarter. During the second quarter we returned approximately 44% vs returns of about 21% and 19% for the S&P 500 Total Return and Russell 2000 Small-Cap Value Total Return Indexes. Year-to-date we have returned approximately 6% after fees vs -3% and -24% respectively. The results indicate that although the market recovery mainly took place in large cap stocks (as small-cap value stocks are still down 24% YTD), that our individual selections significantly outperformed.

Last quarter we remarked that although our portfolio experienced massive declines in the first two months of the year – we believed that the market started to realize the value of our positions in March and that our portfolio would continue to recover as the companies we held reported earnings and this is precisely what happened.

We highlighted the following key assumptions that we had as of the end of the first quarter and we believe that each of these assumptions has played out as we anticipated:

  1. The stay-at-home orders are likely to be extended across individual states for some time.

  2. Americans will not immediately return to their prior routines once non-essential stores re-open.

  3. More specifically, Americans are likely to avoid large events, restaurants, and vacations for a prolonged period of time.

  4. Americans are and will be hit financially, and will be more cautious with respect to purchases.

  5. Supply chains are not likely to be as severely impacted as initially feared.

  6. Businesses associated with grocery and pharmacy demand will benefit.

  7. Businesses associated with in-home entertainment will benefit.

  8. Prolonged financial hardship and virus fears could extend the benefits to these businesses.

Despite the strong turnaround in the portfolio, we do not believe that any of our holdings are close to being appropriately valued in the current environment. We believed that the securities we owned were undervalued prior to COVID-19 and, with the exception of one holding, we believe that COVID-19 has and will continue to materially benefit the companies that we own. Therefore, we continue to believe that the market is significantly undervaluing our holdings despite the strong quarterly performance, and we expect the portfolio’s performance to continue to outperform as additional quarterly results are announced.

We believe that our portfolio was positioned extremely well for the COVID-19 crisis, and we would not be surprised if 2020 results in the best annual performance that we have ever achieved. Each stock we own in the portfolio has upside of 100%, at a minimum, from current levels. While each position may not realize that potential this calendar year, we believe it’s a possibility. The best scenario for our portfolio would be a continued reopening of the economy, a fast recovery in the unemployment numbers combined with an enduring trend of working at home and avoidance of major events (sports/concerts). This scenario would significantly benefit each stock we own.

About DOMO Capital Management, LLC

DOMO Capital Management, LLC (“DOMO”) is a Wisconsin-registered investment advisor, founded in 2007 by Justin Dopierala and headquartered in Germantown, Wisconsin. DOMO is the portfolio manager of the DOMO Concentrated All Cap Value composite – a composite of separately managed accounts utilizing the DOMO Concentrated All Cap Value strategy with an inception date of October 8, 2008. DOMO firmly believes that investing in a concentrated portfolio of securities through a bottom-up methodology, focused on undervalued and out of favor stocks with solid fundamentals, leads to a repeatable process to provide superior, risk-adjusted returns over the long-term.


Additional information about DOMO is disclosed in our Form ADV, which is available upon request. All information contained herein is for general informational purposes only and does not constitute a solicitation or an offer to provide investment advisory services in any jurisdiction. The investment strategy discussed herein may not be suitable for everyone. Investors need to review an investment strategy for their own particular situation before making any investment decision. We believe any information obtained from any third-party resources to be reliable, but we do not guarantee its accuracy, timeliness or completeness. Any opinions, estimates, projections, comments on financial market trends and other information contained herein constitute our judgment and are as of the date of the material, are subject to change without notice at any time in reaction to shifting market conditions and other factors and should not be construed as personalized investment advice. DOMO has no obligation to provide any updates or changes to such information. Past performance is not indicative of future results. It should not be assumed that investments made in the future will be profitable or will equal any performance represented herein. The benchmark index reflected herein, the S&P 500 Total Return Index, is a capitalization-weighted index of 500 stocks from a broad range of industries. The benchmark index is shown for comparative purposes only. Investors cannot invest directly in an index. Any references to specific securities is intended to illustrate our investment style, should not be viewed as representative of an entire portfolio, and does not constitute, and should not be construed as, a recommendation to buy or sell specific securities.