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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Oakmark Fund International Small Cap 2023 Q1 Investor Letter | Buyside Digest

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Primary Source Intelligence • Q1 2023 Letter Analysis

Oakmark Fund International Small Cap Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Oakmark Fund International Small Cap. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD+6.6%

Annualized+8.76%

Positioning StanceConstructive

GeographyEurope, Asia

Digest Analysis

Quick Take

"Oakmark International Small Cap outperformed in Q1 2023 driven by enterprise software holdings TeamViewer and Software AG. The team opportunistically added Colliers International, Kansai Paint, and Medmix, capitalizing on macro-driven selloffs in quality businesses."

Executive Summary

The Oakmark International Small Cap Fund returned 6.6% in Q1 2023, outperforming its benchmark by 160 basis points. The fund's performance was driven by strong results from enterprise software holdings, particularly TeamViewer which exceeded expectations with 18% SMB growth and 42% Enterprise billing growth. Software AG also delivered solid fundamentals despite margin compression from SaaS transition. The managers initiated three new positions during the quarter: Colliers International in commercial real estate services, Kansai Paint in specialty chemicals, and Medmix in precision delivery devices. These additions reflect the team's opportunistic approach to investing in quality businesses trading at attractive valuations due to macro concerns or temporary issues. The portfolio remains concentrated in Europe (80.1%) and Asia (10.6%), consistent with the fund's international small-cap mandate. The managers continue to focus on companies with strong competitive moats, capable management teams, and the ability to compound returns over time through both organic growth and strategic acquisitions.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

68%

CautiousHigh

Moderate (68%)

The fund demonstrates moderate-high conviction through concentrated positioning in 15-20 holdings with detailed thesis explanations for each position. Managers provide specific financial metrics, management assessments, and clear rationale for additions and exits, though the diversified nature across multiple sectors and geographies prevents maximum conviction scoring.

Growth Outlook

25%

BearishBullish

Bearish (25%)

The managers acknowledge macroeconomic concerns affecting sectors like commercial real estate but frame these as creating attractive investment opportunities rather than systemic risks. They view current conditions as providing entry points into quality businesses.

Risk Appetite

50%

DefensiveAggressive

Balanced (50%)

The fund initiated three new positions during the quarter and maintains concentrated exposure to international small caps. The managers are selectively deploying capital into opportunities created by market dislocations while maintaining their core geographic and size focus.

Capital Deployment

35%

De-riskingDeploying

Net Neutral (35%)

The fund initiated three new positions during the quarter while exiting one (MGM China Holdings), indicating selective deployment activity. No cash level changes are disclosed, but the addition of multiple new names suggests moderate capital deployment into attractive opportunities.

Forward Guidance

40%

CautiousExpansionary

Neutral (40%)

The managers express confidence in their portfolio companies' ability to execute strategic plans and improve performance. They view current market conditions as providing ongoing opportunities to invest in quality businesses at attractive valuations.

Language Signal

35%

BearishBullish

Bearish (35%)

Language is balanced with positive terms like 'attractive opportunity,' 'compelling,' and 'quality businesses' offset by acknowledgment of 'concerns,' 'disappointed,' and 'adverse impact.' Overall tone is constructive but measured.

Perceived Risk

45%

Low RiskElevated

Moderate Risk (45%)

The managers acknowledge macroeconomic concerns affecting commercial real estate and geopolitical risks impacting individual holdings like Medmix. However, these risks are discussed as creating opportunities rather than systemic threats, indicating moderate risk awareness without alarm.

Opportunity Density

65%

ScarceAbundant

Abundant (65%)

The managers identify multiple attractive opportunities across different sectors and geographies, adding three new positions in the quarter. They frame market dislocations as creating entry points into quality businesses, suggesting a relatively rich opportunity set in their international small-cap universe.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

The fund demonstrates a multi-year investment horizon with detailed discussions of long-term competitive advantages, management quality, and strategic positioning. The managers focus on companies' ability to compound returns over time rather than near-term catalysts, indicating patience and long-term orientation.