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The Fund’s top contributor for the quarter was a commercial real estate services and investment firm, while a retail conglomerate was the largest detractor.
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The significant negative price movement in the fourth quarter afforded us opportunities to add four new companies to the portfolio – all of which are well regarded in their respective industries for the quality of their management teams and assets.
Long-time shareholders understand that we invest in companies that we believe are selling at large discounts to their intrinsic values, and these stocks are often terribly out of favor with other investors. But if we’re right about these companies’ underlying values, then their cash flows should eventually win out, the market will come around to our view, and the stock prices will eventually rise to our estimate of value.
This quarter, we added a biotech company to the Fund.
We remain steadfast in our mission to focus on maximizing returns over a multi-year, not multi-month, timeframe.
This quarter, we added the world’s largest manufacturer of automotive seating and a telecommunications company to the Fund.
While there were no new names added to the portfolio this quarter, we are pleased to report the Fund ended the quarter at a new all-time high NAV.
This quarter, we added an oilfield services company to the Fund.
While there were no new names added to the portfolio this quarter, we increased our positions in our existing holdings that we felt were still trading at a substantial discount to fair value.
During the quarter we added one new position to the Fund: a financial services company.
In the third quarter, we added a large casino operator to the portfolio.
During the quarter we added two new positions to the Fund: a business-oriented social networking service and a well-known motorcycle manufacturer.
We remain confident in our financial holdings and the same process that has delivered success since the Fund’s inception.
While the Fund’s full-year performance wasn’t as strong as we would’ve liked, it’s worth noting that our pre-tax and after-tax returns were very similar, despite realizing large gains throughout the year.
We have been through difficult periods before and remain thoroughly committed to the same investment process that has delivered success since the Fund’s inception.
During the quarter we added an agricultural company and an automobile manufacturer to the Fund.
We remain steadfast in our commitment to the same investment process that has delivered success since the Fund’s inception.
As the price of many energy-related equities has fallen, their attractiveness has increased.
It goes without saying that we generally welcome takeover activity in any of our holdings.
We continue to believe that universal banks are significantly undervalued relative to their normalized earnings power.
At Oakmark, active management means more than just stock selection – it also involves maximizing after-tax returns and managing risk in special situations.
Looking ahead, we continue to see attractively priced investment opportunities in financials, large cap technology, automotive cyclicals, and the energy sector.
Our strong fiscal-year results were primarily due to stock selection and our relatively large weighting in more economically sensitive sectors such as consumer discretionary and financials.
Our portfolio has been heavily invested in financial services, technology and economically sensitive stocks. Those sectors performed well in the quarter...
In this past quarter, stocks of stable businesses with high dividends tended to be better performers. This trend does not appear to be supported by stock valuations, but rather by investors searching for income who found these stocks to be cheaper than bonds.
For more historic commentaries, available in the Oakmark Quarterly Reports, click here.
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Investing in value stocks presents the risk that value stocks may fall out of favor with investors and underperform growth stocks during given periods.
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Date of first use: January 24, 2013.