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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Oakmark Select Fund 2024 Q2 Investor Letter | Buyside Digest

Back to Fund Profile (Oakmark Select Fund)

Primary Source Intelligence • Q2 2024 Letter Analysis

Oakmark Select Fund Quarterly Analysis

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

Fund Returns

QTD-6.19%

Annualized+12.08%

Digest Analysis

Quick Take

"Oakmark Select underperformed in Q2 as growth stocks outperformed, but managers see this as creating value opportunities. Alphabet contributed on strong results and AI progress while Paycom detracted on weak results despite attractive 4x revenue valuation."

Executive Summary

The Oakmark Select Fund returned -6.19% in Q2 2024 versus 4.28% for the S&P 500, as growth stock outperformance weighed on relative returns. However, the managers view this environment as creating opportunities to purchase undervalued securities. Alphabet was the top contributor, rising on strong operating income growth and promising AI initiatives showcased at Google I/O. Paycom Software was the top detractor due to mixed results and executive departure, though management believes the 4x revenue valuation is too cheap for this profitable software business. The fund initiated a position in Centene, a leading health insurer benefiting from secular tailwinds in government-sponsored programs, purchased at a single-digit P/E multiple after adjusting for Medicare losses. Portfolio activity included sales of American Express, EOG Resources, and KKR. The managers remain confident that their value-oriented approach will generate strong returns over the long term as they continue to find attractively valued opportunities in the current market environment.

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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

72%

CautiousHigh

High Conviction (72%)

The fund demonstrates high conviction through concentrated positioning with named holdings and specific position sizing (Alphabet 8.5%, Centene 3.4%). Managers provide detailed thesis explanations for key positions and express confidence in long-term prospects despite near-term volatility. The willingness to initiate Centene and hold Paycom through weakness shows conviction, though the diversified nature across multiple sectors prevents a higher score.

Growth Outlook

25%

BearishBullish

Bearish (25%)

The managers acknowledge near-term headwinds from growth stock outperformance but frame this as creating opportunities. They express confidence in long-term value generation, showing mildly positive outlook despite current challenges.

Risk Appetite

40%

DefensiveAggressive

Defensive (40%)

The fund initiated a new position in Centene and continues to hold existing positions despite underperformance, showing selective risk appetite. They sold three positions but added one, indicating measured but positive positioning.

Capital Deployment

0%

De-riskingDeploying

De-risking (0%)

The fund showed balanced activity with one new purchase (Centene) and three sales (American Express, EOG Resources, KKR). This represents capital rotation rather than net deployment or de-risking, as proceeds from sales likely funded the new position.

Forward Guidance

30%

CautiousExpansionary

Cautious (30%)

Managers express confidence in long-term value generation and see current environment as creating opportunities to purchase undervalued securities. They indicate continued focus on finding attractive investments.

Language Signal

20%

BearishBullish

Bearish (20%)

Language includes positive terms like 'opportunities,' 'attractive,' 'undervalued,' and 'strong returns,' but also acknowledges 'headwinds' and 'weighed on returns.' Net balance is mildly positive.

Perceived Risk

25%

Low RiskElevated

Low Risk (25%)

Managers acknowledge some risks including growth stock headwinds and weak macro environment for payroll software, but these are discussed briefly and not central to the letter. Risk discussion is limited and balanced with opportunity identification.

Opportunity Density

65%

ScarceAbundant

Abundant (65%)

Managers explicitly state that current market conditions have 'created opportunities to purchase shares in a diversified set of undervalued securities.' They initiated a new position and continue to see upside in existing holdings, indicating a reasonably rich opportunity set.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

The fund emphasizes long-term value generation and secular tailwinds for holdings like Centene. Managers express confidence in long-term prospects despite near-term volatility, indicating a multi-year investment horizon typical of value-oriented strategies.