What is value investing?
Value investors search for high-quality companies trading at a discount to our estimate of the company's intrinsic value.
We believe this style of investing is appropriate for a portfolio's core holdings and as part of an asset allocation strategy. All of the Oakmark funds apply the same value investing approach because we believe that, over time, it is the best way to offer profit potential while also reducing risk.
A stock that falls in price without a change in the estimate of its intrinsic value will become more attractive to a value investor because it is available at a greater discount. It is important to keep in mind that a great business can be priced so high that it becomes a bad investment. Likewise, a good company can fall so far down in price that it becomes a great investment.
Value investing is often contrasted with growth investing, but we see that as a false comparison. Value investors weigh a range of business characteristics, including balance-sheet strength, free cash flow and market-share durability. Growth is another element that must be valued – at Oakmark, we want the companies we buy to grow, but we are not willing to overpay for that growth.
The above information should not be considered tax advice. Please consult your tax advisor for detailed information applicable to your unique situation.
The discussion of the investment strategy of The Oakmark Funds represents the views of the portfolio managers and Harris Associates L.P. at the time of this material and are subject to change without notice.