Andrew Wellington’s Q3 2026 13F Analysis: Capital Reallocation and Valuation Disconnects at Lyrical Asset Management

During the third quarter of 2026, Lyrical Asset Management, under the leadership of founder Andrew Wellington, executed a deliberate capital reallocation, acting as a net seller of $352.5 million in equities. The firm completely liquidated major positions in F5, Inc. ($383.5 million prior value) and Gen Digital Inc. ($198.7 million prior value), while redeploying liquidity toward aggressive expansions in NXP Semiconductors N.V. (+$88.5 million; +42% share count) and SS&C Technologies Holdings, Inc. (+$84.3 million; +49% share count). For long-term value investors, these portfolio shifts offer a case study in practical portfolio management: balancing quantitative owner-earnings models against forward-looking fundamental expectations, enforcing price discipline when stocks appreciate past fair value, and reallocating capital to capture superior risk-adjusted opportunity sets.

The investor: philosophy, fund and lifetime work#

Andrew Wellington founded Lyrical Asset Management in 2008. Managing approximately $8 billion in assets under management (AUM), the firm operates a concentrated value strategy categorized by DeepValues as traditional value investing.

Lyrical’s investment framework is built around a disciplined "value + quality + low-volatility" paradigm executed through a systematic three-step process: 1. Quant-Overlay Screening: Filtering the broader equity universe to isolate stocks trading in the cheapest decile based on Price-to-Earnings (P/E) multiples. 2. Fundamental Analysis: Conducting deep qualitative research to ensure low valuation multiples reflect transient market dislocations rather than permanent structural decline, confirming underlying business quality and balance sheet durability. 3. Portfolio Construction: Applying strict risk-management constraints to control sector, position, and factor exposures while maintaining conviction-weighted concentration.

This process enabled Lyrical to deliver resilient performance during the 2017–2020 cycle when traditional value strategies faced severe market headwinds. A defining operational characteristic of the firm is its quarterly investor communications, which consistently feature detailed attribution analysis.

The portfolio at quarter end: size, concentration, core holdings#

As of September 30, 2026 (filed via Form 13F-HR on November 13, 2026), Lyrical Asset Management’s reported US long equity portfolio totaled $7.44 billion across 38 positions. This represents a contractive shift from Q2 2026, when reported long equities stood at $7.88 billion across 41 positions.

The portfolio remains highly concentrated, with the top ten holdings accounting for 51.2% of total reported US long equity value.

Core Holdings Breakdown (as of Q3 2026)#

Beyond the top ten, notable holdings within the top 15 include: * HCA (HCA Healthcare, Inc.): $284.1M (3.8% of portfolio; +2% share change) * ARW (Arrow Electronics, Inc.): $278.5M (3.7% of portfolio; -1% share change) * NRG (NRG Energy, Inc.): $260.8M (3.5% of portfolio; +1% share change) * SSNC (SS&C Technologies Holdings, Inc.): $255.4M (3.4% of portfolio; +49% share change) * CPAY (Corpay, Inc.): $238.8M (3.2% of portfolio; +4% share change)

What changed: new, added, trimmed and sold-out positions#

During Q3 2026, Lyrical initiated 0 new positions, added to 25 existing holdings, trimmed 12 positions, and completely liquidated 3 positions. Aggregate buying activity equaled approximately $271.6 million, against total selling activity of $624.0 million (evaluated at quarter-end prices). Portfolio turnover was ~3.5%, resulting in net selling of approximately $352.5 million.

Institutional Analytical Disclaimer: SEC Form 13F filings report quarterly changes in position sizing. Commentary regarding the operational motivations of Andrew Wellington or Lyrical Asset Management reflects analytical inferences derived from quarterly disclosures and quantitative valuation modeling.

All position adjustments during the quarter, ordered strictly by descending absolute dollar magnitude:

1. FFIV (F5, Inc.) — Full Exit: Liquidated 100% of the position (-$383.5M prior value at Q2 end; 0% of portfolio).
2. GEN (Gen Digital Inc.) — Full Exit: Liquidated 100% of the position (-$198.7M prior value at Q2 end; 0% of portfolio).
3. NXPI (NXP Semiconductors N.V.) — Major Addition: Added 42% more shares (+$88.5M change); total position expanded to $299.4M (4.0% of portfolio).
4. SSNC (SS&C Technologies Holdings, Inc.) — Major Addition: Added 49% more shares (+$84.3M change); total position expanded to $255.4M (3.4% of portfolio).
5. LAD (Lithia Motors Inc.) — Trim: Trimmed share count by 7% (-$10.0M change); position reduced to $135.4M (1.8% of portfolio).
6. CNC (Centene Corporation) — Addition: Added 6% more shares (+$9.6M change); total position reached $161.8M (2.2% of portfolio).
7. CPAY (Corpay, Inc.) — Addition: Added 4% more shares (+$8.6M change); total position reached $238.8M (3.2% of portfolio).
8. GPN (Global Payments Inc.) — Addition: Added 6% more shares (+$8.3M change); total position reached $158.2M (2.1% of portfolio).
9. CI (The Cigna Group) — Addition: Added 4% more shares (+$8.0M change); total position reached $210.1M (2.8% of portfolio).
10. FLEX (FLEX LTD.) — Trim: Trimmed share count by 2% (-$7.8M change); position reduced to $502.0M (6.7% of portfolio).
11. FIS (Fidelity National Information Services, Inc.) — Addition: Added 6% more shares (+$7.6M change); total position reached $128.2M (1.7% of portfolio).
12. UBER (Uber Technologies, Inc.) — Addition: Added 3% more shares (+$7.5M change); total position reached $230.9M (3.1% of portfolio).
13. NTAP (NetApp, Inc.) — Trim: Trimmed share count by 1% (-$7.0M change); position reduced to $511.0M (6.9% of portfolio).
14. ICLR (ICON plc) — Addition: Added 5% more shares (+$7.0M change); total position reached $156.8M (2.1% of portfolio).
15. HCA (HCA Healthcare, Inc.) — Addition: Added 2% more shares (+$5.0M change); total position reached $284.1M (3.8% of portfolio).

The biggest moves, valued#

To evaluate the rationale behind Lyrical’s major portfolio adjustments, DeepValues performed owner-earnings Discounted Cash Flow (DCF) and reverse DCF modeling based on ten years of SEC XBRL data.

Comparative Valuation Overview#

F5, Inc. (FFIV) — Full Exit Above Intrinsic Value#

• Status & Data Quality: Fully liquidated. Single-source estimate (stock compensation input lacks second-source confirmation).
• Valuation Inputs: Share price $309.54; TTM Owner Earnings $0.7 billion; Net Cash $1.6 billion (Cash & Marketable Securities $1.6B less Debt $0.0B); Shares Outstanding 0.057 billion.
• DCF Valuation Output (10.0% Discount Rate):
• Conservative Case (1.3% growth): $190.17 per share (Price is 62.8% above value).
• Base Case (2.6% growth): $202.39 per share (Margin of safety: -52.9%; Price is 52.9% above base value).
• Optimistic Case (6.6% growth): $245.34 per share (Price is 26.2% above value).
• Reverse DCF Analysis: At the exit price of $309.54, the market implied five-year annual owner-earnings growth of 11.4% (fading to 2.5% terminal), significantly exceeding FFIV’s historical 10-year growth rate of 2.6%.
• Analytical & Framework Takeaway: Over the 10-year historical period, FFIV’s revenue grew modestly from $2.0 billion in FY16 to $3.3 billion in TTM 2026. This modest top-line ceiling confirms that a market-implied cash flow growth rate of 11.4% was structurally unsupportable over a full cycle. In accordance with Lyrical’s process, Wellington fully exited the stock as market pricing expanded well beyond fair value ($202.39 base intrinsic value), capturing profits when equity multiples decoupled from underlying fundamental trends.

Gen Digital Inc. (GEN) — Full Exit Below Intrinsic Value#

• Status & Data Quality: Fully liquidated. Double verified across independent data sources.
• Valuation Inputs: Share price $30.36; TTM Owner Earnings $1.5 billion; Net Debt -$7.3 billion (Cash & Marketable Securities $1.0B less Debt $8.3B); Shares Outstanding 0.593 billion.
• DCF Valuation Output (10.0% Discount Rate):
• Conservative Case (4.4% growth): $27.13 per share (Price is 11.9% above value).
• Base Case (8.8% growth): $37.85 per share (Margin of safety: +19.8%).
• Optimistic Case (12.8% growth): $49.97 per share (Margin of safety: +39.2%).
• Reverse DCF Analysis: At the market price of $30.36, the market implied five-year annual owner-earnings growth of 5.8%, below its historical 10-year average of 8.8%.
• Analytical & Framework Takeaway: Lyrical liquidated GEN despite a positive 19.8% margin of safety relative to base intrinsic value ($37.85). This exit highlights how Wellington’s qualitative assessment (Step 2) overrides purely quantitative screens (Step 1). GEN carries a substantial net debt load of -$7.3 billion ($1.0B cash against $8.3B debt). Heavy financial leverage introduces balance sheet risk and ongoing interest expense friction, prompting Wellington to reallocate capital away from highly leveraged businesses into cleaner balance sheets with higher relative risk-adjusted upside.

NXP Semiconductors N.V. (NXPI) — Aggressive Buy via Cyclical Cash Flow Inflection#

• Status & Data Quality: Added 42% more shares. Double verified across independent data sources.
• Valuation Inputs: Share price $264.00; TTM Owner Earnings $3.1 billion; Net Cash $1.9 billion (Cash & Marketable Securities $3.9B less Debt $2.0B); Shares Outstanding 0.252 billion.
• DCF Valuation Output (10.0% Discount Rate):
• Conservative Case (0.0% growth): $152.84 per share.
• Base Case (0.0% growth): $152.84 per share (Margin of safety: -72.7%; Price is 72.7% above base value).
• Optimistic Case (4.0% growth): $188.86 per share (Price is 39.8% above value).
• Reverse DCF Analysis: At $264.00, the market price implies five-year owner-earnings growth of 10.3%, compared to a historical 10-year base growth assumption of 0.0%.
• Analytical & Framework Takeaway: Wellington expanded NXPI (+42%) despite the quantitative baseline DCF model showing a negative margin of safety (-72.7%). This move illustrates the synthesis between Step 1 (Quant P/E screening) and Step 2 (Fundamental quality assessment). While backward-looking 10-year metrics reflect a flat historical growth baseline (0.0%), NXPI's TTM Owner Earnings surged to $3.1 billion, representing a major operational inflection from FY25 ($2.0B) and FY24 ($1.6B). Combined with a pristine balance sheet ($1.9B net cash), Wellington’s aggressive capital commitment reflects a conviction in forward-looking cyclical earnings recovery that static historical models fail to reflect.

Track record: the ten-year 13F clone against the S&P 500#

A 10-year backtest analyzing a 13F-clone strategy of Lyrical Asset Management (evaluating 41 filings from November 14, 2016, to November 13, 2026) offers insight into the implementation of Wellington's framework over a full market cycle.

Performance Comparison (2016–2026)#

• Lyrical 13F Clone: 14.4% CAGR | +285.0% Total Return | Maximum Drawdown: -39.4%
• S&P 500 Benchmark (SPY): 15.1% CAGR | +306.8% Total Return | Maximum Drawdown: -23.9%
• Annualized Net Difference: -0.6 percentage points per year vs. SPY.

Year-by-Year Returns#

* partial year data

Behavioral Characteristics#

Lyrical’s portfolio profile reveals a high-beta, economically sensitive posture that systematically amplifies broader equity market cycles. The strategy experiences wider volatility and deeper drawdowns during market contractions (e.g., 2018 max drawdown of -20.7% vs. SPY -4.6%), but generates significant upside capture during cyclical expansions (e.g., 2021 return of +37.1% vs. SPY +28.7%, and 2026 YTD of +19.0% vs. SPY +11.2%).

Over the decade, the clone portfolio averaged 36 holdings, a top-ten concentration of 46.9%, and an average quarterly turnover of 9.7%.

Methodological Caveats of 13F Cloning#

1. Scope Exclusions: 13F filings record only US-listed long equity positions. They exclude short positions, cash reserves, foreign non-US listed equity, fixed income instruments, options, and intra-quarter execution trades.
2. Reporting Lag: Filings are subject to a reporting lag of up to 45 days post quarter-end.
3. Price Coverage: Historical pricing was established for an average of 87.3% of reported portfolio value; positions lacking pricing data were dropped and the remaining assets reweighted.

What a patient investor can learn#

1. Disciplined Profit Taking: Lyrical’s complete exit from F5, Inc. illustrates the necessity of liquidating holdings when market pricing implies cash flow growth rates (11.4% implied) that far outpace structural revenue trends (2.6% historical).
2. Dynamic Capital Reallocation: The liquidation of Gen Digital demonstrates that fundamental investors must remain willing to exit discounted equities (+19.8% margin of safety) if balance sheet risks ( -$7.3B net debt) or superior risk-adjusted opportunities warrant capital redeployment.
3. Concentration Balanced by Risk Controls: Lyrical maintains portfolio concentration (~51% in top 10) to drive capital growth, relying on quantitative risk rules to mitigate single-stock tail risks.
4. Navigating Cyclical Volatility: Value strategies frequently endure sharper drawdowns (-39.4% vs -23.9%) during broad market contractions. Capitalizing on deep value requires long-term horizon patience to capture fundamental business recoveries.

Key numbers: a short bulleted list of the most important figures#

• Total Reported US Long Equity Value (Q3 2026): $7.44 billion across 38 positions.
• Top 10 Concentration: 51.2% of reported US long equities.
• Q3 Net Trading Activity: Net seller of $352.5 million (Bought ~$271.6M; Sold ~$624.0M).
• Quarterly Portfolio Turnover: ~3.5%.
• Largest Portfolio Holding: NetApp, Inc. (NTAP) at $511.0 million (6.9% of portfolio).
• Largest Capital Allocations: NXP Semiconductors (+$88.5M; +42% shares) and SS&C Technologies (+$84.3M; +49% shares).
• Largest Liquidations: F5, Inc. ($383.5M prior value) and Gen Digital Inc. ($198.7M prior value).
• 10-Year 13F Clone Performance (2016–2026): 14.4% CAGR vs. S&P 500 15.1% CAGR (Total Return: +285.0% vs. +306.8%).

Closing Note on the Limits of Form 13F#

Institutional holdings disclosures on Form 13F are static snapshot reports reflecting long US equity holdings as of September 30, 2026, filed under SEC lag provisions up to 45 days after quarter-end (filed November 13, 2026). They do not record cash levels, short positions, non-US equity holdings, fixed income assets, or trades executed after the quarter concluded. This analysis is prepared strictly for educational and research purposes and does not constitute investment advice or a solicitation to buy or sell securities.