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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Oakmark Select Fund 2023 Q3 Investor Letter | Buyside Digest

Back to Fund Profile (Oakmark Select Fund)

Primary Source Intelligence • Q3 2023 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+8%

YTD+24.77%

Annualized+11.35%

Positioning StanceConstructive

Market CapLarge Cap

GeographyUS

Digest Analysis

Quick Take

"Outperforming the S&P 500. The concentrated fund added IQVIA at attractive valuations while maintaining its disciplined value approach."

Executive Summary

The Oakmark Select Fund returned 0.08% in Q3 2023 and 30.59% for the fiscal year, outperforming the S&P 500's 21.62% fiscal year return despite significant headwinds to value investing. Growth stocks outperformed value by 2,300 basis points year-to-date, creating a challenging environment for the fund's value-oriented approach. Key contributors included Charter Communications, Alphabet, First Citizens, and Oracle, while detractors were IQVIA Holdings, Capital One Financial, and Meta Platforms. The fund initiated a new position in IQVIA, a leading clinical trials and healthcare technology provider, purchasing shares at approximately 15x normal earnings despite the company's above-average growth prospects. IQVIA benefits from strong data and digital capabilities that enable market share gains as pharma companies outsource to contract research organizations. The managers maintain confidence that their disciplined stock selection approach will generate attractive long-term returns. The fund anticipates paying no capital gains distribution this year for tax efficiency.

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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 its concentrated portfolio structure and detailed analysis of new position IQVIA, including specific valuation metrics (15x normal earnings) and comprehensive thesis. However, the absence of specific position sizing for most holdings and hedged language about long-term expectations prevents a higher score.

Growth Outlook

25%

BearishBullish

Bearish (25%)

The managers acknowledge significant headwinds to value investing with growth outperforming value by 2,300 basis points, but express confidence in their long-term approach and ability to find attractive opportunities like IQVIA at trough multiples.

Risk Appetite

40%

DefensiveAggressive

Defensive (40%)

The fund initiated a new position in IQVIA during a sector decline and maintained all existing positions, showing selective risk-taking. However, they acknowledge the challenging environment for value investing and focus on disciplined selection.

Capital Deployment

25%

De-riskingDeploying

De-risking (25%)

The fund initiated one new position (IQVIA) during the quarter and eliminated no positions, suggesting modest net deployment. However, without specific cash level changes or sizing details, the deployment appears selective rather than aggressive.

Forward Guidance

30%

CautiousExpansionary

Cautious (30%)

Management expects their disciplined approach will drive attractive returns in the long term, showing confidence in their strategy despite current headwinds. They are selectively adding positions like IQVIA when opportunities arise.

Language Signal

20%

BearishBullish

Bearish (20%)

Language is balanced with positive terms like 'pleased,' 'attractive returns,' and 'strong track record' offset by acknowledgment of 'headwinds,' 'detractors,' and challenging value environment.

Perceived Risk

45%

Low RiskElevated

Moderate Risk (45%)

The managers acknowledge meaningful risks including significant value underperformance (2,300 basis points) and sector-specific challenges in healthcare. However, these are presented as temporary headwinds rather than systemic threats, with confidence expressed in long-term strategy.

Opportunity Density

60%

ScarceAbundant

Selective (60%)

The managers found an attractive opportunity in IQVIA at trough valuations despite challenging conditions, suggesting selective opportunities exist. Their confidence in long-term stock selection implies a reasonable opportunity set, though current value headwinds limit immediate prospects.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

The fund emphasizes long-term returns and expects their disciplined approach to drive attractive returns 'in the long term.' The detailed analysis of IQVIA's sustainable growth prospects and focus on fundamental value over short-term performance indicates a multi-year investment horizon.