Kristi Rowsell - December 31, 2015
The year 2015 proved to be challenging for U.S.-based stock investors. While the fourth quarter’s performance was strongly positive, the calendar year ended with most benchmark indexes in negative territory. Market participants encountered a full mix of negative headlines during the year, such as slowing global growth, declining commodity prices, volatile currencies and reduced monetary stimulus in the United States. However, not all of the news today is negative. The U.S. unemployment rate continues to fall. Global inflation and interest rates remain low. And both households and companies around the world benefit from today’s lower energy prices. These factors, plus significant monetary stimulation from many non-U.S. countries, lead most estimates of global growth to be between two and three percent.
Your Oakmark Funds also had a challenging performance year. Our managers discuss the factors and individual companies that impacted the portfolios in their letters this quarter. They provide valuable context for our shareholders, reflecting on their experience through full market cycles and their long tenure as managers for the Funds. We have always believed that the key to capturing equity market returns is to stay disciplined and focused. We invest in companies that we believe are priced below our estimate of intrinsic value. Our research teams use fundamental analysis to identify companies that we believe offer excellent business models, good management teams, strong balance sheets and attractive valuations. Our conviction in this philosophy is unwavering and has been repeatedly affirmed over our company’s 40-year history as investment managers. Experience tells us that in weak performance periods like last year, good opportunities often arise and that our patience is typically rewarded.
One of our central investment tenets is to invest in companies that have management teams whose interests are aligned with their shareholders. This principle applies at Harris Associates with respect to the Oakmark Funds as well. Each year, we voluntarily report the level of personal assets the employees of the firm and trustees of the Funds collectively invest in the Oakmark Funds because we believe it demonstrates our commitment to our investing philosophy. This alignment of our interests with yours fosters stewardship of the Funds, a responsibility that we take very seriously. We are proud to tell you that, as of December 31, 2015, the employees of Harris Associates, our families and the Funds’ trustees have more than $440 million invested in the Oakmark Funds, reflecting significant share purchases during the year. We hope that this level of investment demonstrates to you our confidence that the Funds remain attractive investments for the future.
Happy New Year to you all! We wish you a healthy and prosperous 2016.
President of The Oakmark Funds
President of Harris Associates L.P.
The discussion of the Funds’ investments and investment strategy (including current investment themes, the portfolio managers' research and investment process, and portfolio characteristics) represents the Funds’ investments and the views of the portfolio managers and Harris Associates L.P., the Funds' investment adviser, at the time of this letter, and are subject to change without notice.