| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 13.0% | 8.4% | 14.4% |
| 2025 |
|---|
| 14.4% |
Harris Associates' U.S. Concentrated Strategy delivered strong Q4 2025 performance with an 8.36% net return, significantly outperforming the Russell 1000 Value Index's 3.81% return. The portfolio benefited from major contributors including Warner Bros Discovery, which surged on multiple acquisition offers including Netflix's purchase of its Streaming and Studios business and Paramount Skydance's $30 per share offer. Alphabet contributed through impressive earnings driven by strong search revenue growth and robust Cloud segment performance fueled by AI compute demand. First Citizens Bancshares delivered solid results with healthy loan and deposit growth while maintaining steady share repurchases. Key detractors included Equifax despite strong fundamentals, affected by FICO's new licensing program concerns, and Paycom Software due to broad application software sector underperformance. The firm initiated a position in Targa Resources, a leading midstream natural gas company with significant competitive advantages and fee-based earnings stability. The managers remain focused on bottom-up fundamental analysis to construct their concentrated portfolio, emphasizing quality businesses trading at discounts to intrinsic value.
Harris Associates employs bottom-up fundamental analysis to construct a concentrated portfolio of undervalued U.S. large-cap companies, focusing on identifying quality businesses trading at discounts to intrinsic value with strong management teams capable of unlocking sustained long-term value.
We have argued that for too long of a period the weight of money invested globally was heavily skewed to a handful of U.S. growth names. Despite this, we've remained focused on using our bottom-up, fundamental analysis to inform portfolio construction.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 26 2026 | 2025 Q4 | CHTR, EFX, FCNCA, GOOGL, LBRDK, PAYC, TRGP, WBD | AI, Banking, Buybacks, energy, Media, Midstream, technology, value | - | Warner Bros Discovery was a major contributor as multiple parties submitted acquisition offers, with Netflix acquiring the Streaming and Studios business while Global Networks spins… |
| Oct 28 2025 | 2025 Q3 | CRM, GOOG, IQV, KDP, MOH, WBD | Artificial Intelligence, Cloud, healthcare, Media, U.S. Equities |
WBD GOOGL IQV KDP MOH CRM WBD GOOGL IQV KDP MOH CRM |
U.S. equities rose on tech strength, with key contributors Warner Bros Discovery and Alphabet benefiting from M&A speculation and AI-driven cloud growth. IQVIAs analytics and… |
| Jul 22 2025 | 2025 Q2 | COF, COP, CRL, CRM, GOOG, ICLR, IQV, SCHW, WTW | downside protection, fundamentals, Mean reversion, valuation dispersion, Value Investing |
SCHW COF GOOG COP IQV |
The letter centers on intrinsic value investing amid extreme valuation dispersion between popular growth stocks and unloved franchises. Management argues that patience and concentration in… |
| Mar 31 2025 | 2025 Q1 | COP, DE, FIZN, GOOG, ICE, IQV, MOH | - | - | - |
| May 4 2024 | 2024 Q1 | CHTR, COF, DE, DIS, KKR, LAD, PSX | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIThe extended federal government shutdown added volatility during what was otherwise a risk-on environment, with a mid-quarter shift in market behavior for AI-related equities as the exuberant narrative evolved to one more balanced in assessing the technology's enormous potential against staggering capital spending plans and high expectations. The team initiated a position in Credo Technology as a more diversified way to gain exposure to strong trends in AI-connectivity. |
Connectivity Semiconductors Infrastructure Capital Spending |
MediaWarner Bros Discovery was the top contributor as multiple parties submitted acquisition offers, with Netflix acquiring the Streaming and Studios business while Global Networks spins to shareholders. Paramount Skydance made a $30 per share offer for the entire company, creating a bidding war that unlocked shareholder value. |
Streaming M&A Content Entertainment Bidding | |
MidstreamThe midstream energy industry is healthy with declining leverage, stronger balance sheets, and shareholders being rewarded through higher dividends and share buybacks. New tailwinds have developed including natural gas exports, data centers, and electrification trends driving demand growth. |
Pipelines Natural Gas LNG Cash Flow Infrastructure | |
Regional BanksFirst Citizens Bancshares was a contributor with solid results exceeding consensus expectations. Loans and deposits grew healthily while management continues steady share repurchases. The manager believes it's a high-quality regional bank with strong management that can unlock sustained long-term value. |
Banking Deposits Loans Buybacks Quality | |
| 2025 Q3 |
AIThe extended federal government shutdown added volatility during what was otherwise a risk-on environment, with a mid-quarter shift in market behavior for AI-related equities as the exuberant narrative evolved to one more balanced in assessing the technology's enormous potential against staggering capital spending plans and high expectations. The team initiated a position in Credo Technology as a more diversified way to gain exposure to strong trends in AI-connectivity. |
Connectivity Semiconductors Infrastructure Capital Spending |
HealthcareHealthcare was the strongest relative contributor in the quarter with holdings increasing nearly +16% compared to benchmark returns of roughly +12%. Exact Sciences was acquired for a significant premium by Abbott Laboratories resulting in an +86% return, while other strong performers included Tarsus Pharmaceuticals, Glaukos following approval of a new product, Penumbra, and Repligen driven by strong earnings results. |
M&A Product Approval Earnings Biotech | |
MediaEntravision was the fund's top performer in Q4, owning 49 television stations and 44 radio stations targeting Hispanic audiences. The company also operates a rapidly growing Advertising Technology & Services segment through Smadex subsidiary. Deregulation in broadcast television and radio should encourage industry consolidation. |
Advertising Media Broadcasting | |
| 2025 Q2 |
ValueThe manager continues to find attractive value opportunities despite expensive markets, purchasing undervalued companies like Centene, GlaxoSmithKline, Carrefour and PayPal trading at low multiples with strong fundamentals. |
Undervalued Low Multiples Contrarian Opportunistic |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 28, 2025 | Fund Letters | Tony Coniaris | KDP | Keurig Dr Pepper Inc. | Consumer Staples | Beverages | Bull | NASDAQ | Beverages, Coffee, deleveraging, restructuring, spin-off, synergy, valuation | Login |
| Oct 28, 2025 | Fund Letters | Tony Coniaris | MOH | Molina Healthcare Inc. | Health Care | Managed Health Care | Bull | NYSE | Cost control, healthcare, managed care, Medicaid, recovery, valuation | Login |
| Oct 28, 2025 | Fund Letters | Tony Coniaris | CRM | Salesforce Inc. | Information Technology | Software | Bull | NYSE | — | Login |
| Oct 28, 2025 | Fund Letters | Tony Coniaris | WBD | Warner Bros Discovery Inc. | Communication Services | Media & Entertainment | Bull | NASDAQ | Content, Earnings momentum, entertainment, leverage, media, merger, Streaming, synergy, valuation | Login |
| Oct 28, 2025 | Fund Letters | Tony Coniaris | GOOGL | Alphabet Inc. | Communication Services | Interactive Media & Services | Bull | NASDAQ | AI, antitrust, cloud, growth, monetization, Search, Sum-of-the-Parts, valuation | Login |
| Oct 28, 2025 | Fund Letters | Tony Coniaris | IQV | IQVIA Holdings Inc. | Health Care | Health Care Services | Bull | NYSE | AI, Data Analytics, Digital transformation, growth, margin expansion, pharma, research | Login |
| Oct 28, 2025 | Fund Letters | Tony Coniaris | KDP | Keurig Dr Pepper Inc. | Consumer Staples | Beverages | Bull | NASDAQ | Beverages, Coffee, deleveraging, restructuring, spin-off, synergy, valuation | Login |
| Oct 28, 2025 | Fund Letters | Tony Coniaris | MOH | Molina Healthcare Inc. | Health Care | Managed Health Care | Bull | NYSE | Cost control, healthcare, managed care, Medicaid, recovery, valuation | Login |
| Oct 28, 2025 | Fund Letters | Tony Coniaris | CRM | Salesforce Inc. | Information Technology | Software | Bull | NYSE | — | Login |
| Jul 22, 2025 | Fund Letters | Tony Coniaris | SCHW | The Charles Schwab Corp. | Financials | Investment Banking & Brokerage | Bull | New York Stock Exchange | Assetgathering, Brokerage, Deposits, Netinterestmargin, Wealthmanagement | Login |
| Jul 22, 2025 | Fund Letters | Tony Coniaris | COF | Capital One Financial Corp. | Financials | Consumer Finance | Bull | New York Stock Exchange | Capital, Consumerfinance, creditcards, Regulation, synergies | Login |
| Jul 22, 2025 | Fund Letters | Tony Coniaris | GOOG | Alphabet Inc. Class C | Communication Services | Interactive Media & Services | Bull | NASDAQ | advertising, AI, buybacks, cloud, Margins, Search | Login |
| Jul 22, 2025 | Fund Letters | Tony Coniaris | COP | ConocoPhillips | Energy | Oil & Gas Exploration & Production | Bull | New York Stock Exchange | buybacks, Commodities, energy, Freecashflow, Upstream | Login |
| Oct 28, 2025 | Fund Letters | Tony Coniaris | WBD | Warner Bros Discovery Inc. | Communication Services | Media & Entertainment | Bull | NASDAQ | Content, Earnings momentum, entertainment, leverage, media, merger, Streaming, synergy, valuation | Login |
| Jul 22, 2025 | Fund Letters | Tony Coniaris | IQV | IQVIA Holdings Inc. | Health Care | Life Sciences Tools & Services | Bull | New York Stock Exchange | analytics, Cro, Data, growth, lifesciences, Outsourcing | Login |
| Oct 28, 2025 | Fund Letters | Tony Coniaris | GOOGL | Alphabet Inc. | Communication Services | Interactive Media & Services | Bull | NASDAQ | AI, antitrust, cloud, growth, monetization, Search, Sum-of-the-Parts, valuation | Login |
| Oct 28, 2025 | Fund Letters | Tony Coniaris | IQV | IQVIA Holdings Inc. | Health Care | Health Care Services | Bull | NYSE | AI, Data Analytics, Digital transformation, growth, margin expansion, pharma, research | Login |
| TICKER | COMMENTARY |
|---|---|
| CHTR | Charter Communications was sold during the quarter as it was not tracking to plan. |
| EFX | We divested our position in Equifax during the quarter following a strategic shift by FICO, a leading provider of credit scores to the mortgage industry. FICO announced plans to sell its credit scores directly to mortgage underwriters, bypassing the credit bureaus and thereby pressuring the economics that EFX has historically captured in the credit-scoring value chain. |
| FCNCA | First Citizens Bancshares was a contributor during the quarter. The U.S.-headquartered diversified bank's stock price rose after it delivered solid results, with earnings per share exceeding consensus expectations. Loans and Deposits grew healthily, and management continues to repurchase stock at a steady pace. We continue to believe that First Citizens is a high-quality regional bank with a strong management team that we think can help it unlock sustained long-term value. |
| GOOGL | In the third quarter, Google, Kairos Power, and the Tennessee Valley Authority announced a major collaboration centered on a novel power purchase agreement. Google followed this announcement with another significant step forward. On October 27, Google and NextEra Energy announced plans to restart the Duane Arnold Energy Center. |
| LBRDK | Liberty Broadband was a detractor during the quarter. The U.S.-headquartered cable and satellite company's stock price declined as it is merging with Charter Communication in 2026 and its share-price now trades similarly to the Charter share-price. Charter reported weak earnings at the end of October. Broadband subscriber numbers and adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) declined. Still, management is guiding to flat full-year EBITDA. Positively, broadband average revenue per user, free cash flow, and capital returns were strong. |
| PAYC | Paycom Software was the top detractor during the quarter. The U.S.-headquartered human resources and employment services company's stock price declined alongside peers due to broad underperformance in the application software sector. We continue to believe Paycom has a long runway for future growth and that system-of-record software companies like Paycom will not be replaced by AI. We appreciate management's focus on ramping share repurchases, which we believe will add significant per-share value at today's stock price. |
| TRGP | Targa Resources is a leading midstream natural gas and natural gas liquids (NGL) company. Targa is part of a group that controls 90% of the fractionation capacity in the largest hub for NGLs in the world, known as Mont Belvieu. Thanks to the region's unique topography and proximity to the Gulf Coast, Targa benefits from meaningful cost advantages and significant barriers to entry. We like that Targa generates approximately 90% of its earnings through multi-year fee-based arrangements with its customer base, which provides protection against oversupply or re-contracting. Uncertainty around Permian oil production growth has recently weighed on the share price. However, in our view, Targa remains well-positioned to grow, even if the Permian slows dramatically. We were happy to purchase shares at a discount to peers based on normalized earnings power and our estimate of intrinsic value. |
| WBD | Warner Bros Discovery (WBD) was the top contributor during the quarter. The U.S.-headquartered media company's stock price surged as multiple parties submitted offers to acquire all or part of the business. Following several rounds of bidding, WBD announced an agreement to sell its Streaming and Studios business to Netflix, while spinning the Global Networks business to shareholders. Paramount Skydance subsequently made a direct $30 per share offer to shareholders for the entire company. We are pleased with the steps the WBD board has taken thus far to unlock shareholder value. We will continue to closely monitor developments as this bidding war unfolds. |
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