News & Insights from Oakmark

News & Insights

Learning from…“The Simpsons?"

June 6, 2018

Tony Coniaris is a Partner, Co-Chairman, Portfolio Manager and U.S. Investment Analyst at Harris Associates. He is currently a co-manager of the Oakmark Select Fund (OAKLX), the Oakmark Global Fund (OAKGX) and the Oakmark Global Select Fund (OAKWX). Tony joined the firm in 1999, previously serving as both an Associate Analyst and Research Associate at Harris. He earned a BA from Wheaton College (1999) and an MBA from Northwestern University (2005).

Most of us have been told watching TV will “rot your brain.” True or not, the writers of “The Simpsons” offer some real business wisdom. Mike Reiss, one of the original creators of the cartoon, recently penned an article in The Wall Street Journal1 titled, “How to Succeed like ‘The Simpsons.'” In it, Reiss discussed four attributes that contribute to the unique and enduring success of the series that has been running on Fox for nearly three decades and remains one of the top-rated shows on the network.  Although we are in two very different industries, I couldn’t help but see parallels to how Oakmark has approached investing over a similar period of time.
 
  1. “Nobody tells us what to do.”  From the beginning, no studio or network executives were allowed to meddle in the creative effort of “The Simpsons” writers. As a result, the writers have had more freedom to take risks with the content to delight their viewers. Similarly, at Oakmark we take business risk in executing our unique, high-conviction and long-duration value investment process. We invest this way to seek to maximize long-term after-tax returns to our clients and, in turn, delight them. The unique affiliate structure with our parent company Natixis provides us with the necessary independence to remain focused on our research-driven process so that we can continue to perform for our clients.
  2. “Everyone knows they’re replaceable.”  “The Simpsons” writing staff has turned over at least three times since the show first aired and yet its success has continued. Clearly, no one person has been responsible for this creative success. In fact, there are dozens of writers at any given moment working on the show. Harris Associates has been in business for 42 years and over that time, our deep and experienced investment staff has also turned over in several instances with little fanfare. We have a research-driven investment process, which means our analysts in most all cases identify and develop each new investment idea. Every analyst is given the creative freedom to do this on their own, guided only by our three investment tenets of: 1) significant discount to intrinsic value, 2) clear path to a growing per share value and 3) a trustworthy and capable management team – not industry or sector assignment. As a result, we are not reliant on any one person to source ideas or provide an informed view on a given industry or sector.
  3. “It’s a team effort.”  Reiss said, “most of the work on ‘The Simpsons’ isn’t writing – it’s ‘rewriting’… by ‘a gang of writers.’” Writers who cannot handle this sort of input from the team do not thrive. At Oakmark, we formally discuss the merits of every investment idea as a team. In the same way a writer’s jokes may be reworded to seek more laughter, an Oakmark analyst’s assumptions will be challenged and refined as we seek to maximize returns for our clients. Our analysts understand that this process isn’t designed to minimize alterations to their thesis, but rather to seek the truth. We believe this team-based approach leads to better and more durable results, but recognize it isn’t for everyone. To be successful at Oakmark, you definitely need to be a team player.
  4. “It’s a nice, boring place to work.”  Reiss offers this tongue-in-cheek description as a contrast to what most people expect a writers’ room to be – “a raucous madhouse.” Instead, he illustrated a serious business environment with “introspective, hardworking people,” which has disappointed visiting news crews seeking more drama. Expectations of what it’s like at a performance-driven investment firm like Harris Associates may too be warped. TV shows like “Billions” give the impression our business is populated by an unruly bunch of flashy dressed egomaniacs shouting and bullying in an effort to sound smarter than their colleagues. Our office attire is more Gap than Barney’s and sounds more like a library than a locker room. We expect our employees to treat one another with respect. This doesn’t mean we cannot disagree. We disagree all the time, but we do so in a “nice, boring” manner.
Who knew TV could be this good for you?
 

 

1The Wall Street Journal, "How to Succeed like ‘The Simpsons.’"

The discussion of the Fund’s investments and investment strategy (including current investment themes, the portfolio managers' research and investment process, and portfolio characteristics) represents the Fund’s investments and the views of the portfolio managers and Harris Associates L.P., the Fund’s investment adviser, at the time of this letter, and are subject to change without notice.

The Oakmark Funds are distributed by Harris Associates Securities L.P.  Member FINRA.  Before investing in any Oakmark Fund, you should carefully consider the Fund's investment objectives, risks, management fees and other expenses. This and other important information is contained in a Fund's prospectus and summary prospectus. Please read the prospectus and summary prospectus carefully before investing. For more information, please visit oakmark.com or call 1-800-OAKMARK (625-6275).

Copyright©2018 Harris Associates Securities L.P., Member FINRA.


 

 

 

Note:  The closing NAVs reflect the year-end distributions of Thursday, December 13, 2018. View Historical Distributions.

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Before investing in any Oakmark Fund, you should carefully consider the Fund's investment objectives, risks, management fees and other expenses. This and other important information is contained in a Fund's prospectus and summary prospectus. Please read the prospectus and summary prospectus carefully before investing. For more information, please call 1-800-OAKMARK (625-6275).

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