Consistent investment process
Each portfolio manager at Oakmark applies a consistent investment philosophy and process to building and managing the funds. Our research team works to identify companies that are priced at a substantial discount to what we consider to be their underlying business value -- what a rational investor would pay to own the entire business -- and then we patiently wait for the gap between price and value to narrow.
We want our best investment ideas to have a meaningful impact on performance. Our approach focuses fund assets in relatively few individual securities and, as a result, our funds may experience more short-term fluctuations than more diversified funds in the same investment category.
While all of The Oakmark Funds typically hold fewer than 75 securities, Oakmark Select and Oakmark Global Select are designed to be our most concentrated funds, each holding securities of approximately 20 companies.
We invest alongside our shareholders
When selecting investments for The Oakmark Funds, one of the traits we look for is a high level of stock ownership by management. We believe that stock ownership by those running the company correctly aligns their interests with those of shareholders.
Fund shareholders may look at share ownership by fund managers as a gauge of focus and commitment to protecting their interests. As of December 31, 2018, the portfolio managers and employees of Harris Associates, as well as the Funds’ Trustees, have personal investments of over $430 million in the Oakmark Funds.
Value is all we do
At Oakmark, value isn't just a style of investing -- it's the only way of investing. All of our funds employ the same value investment philosophy and process because we believe that it is the best way, over a long time period, to maximize profit potential while reducing risk.
The Oakmark, Global and International Fund portfolios tend to be invested in a relatively small number of stocks. As a result, the appreciation or depreciation of any one security held by the Fund will have a greater impact on the Fund’s net asset value than it would if the Fund invested in a larger number of securities. Although that strategy has the potential to generate attractive returns over time, it also increases the Fund’s volatility.
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.