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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Oakmark Fund 2023 Q3 Investor Letter | Buyside Digest

Back to Fund Profile (Oakmark Fund)

Primary Source Intelligence • Q3 2023 Letter Analysis

Oakmark Fund Quarterly Analysis

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

Fund Returns

QTD-1.31%

YTD+15.91%

Annualized+12.4%

Positioning StanceConstructive

Market CapLarge Cap

GeographyUS

Digest Analysis

Quick Take

"Adding six new positions in quality companies facing temporary pressures."

Executive Summary

The Oakmark Fund returned -1.31% in Q3 2023 but delivered strong fiscal year performance of 27.84%, outperforming the S&P 500's 21.62% despite significant headwinds for value investing. The fund continues finding opportunities in companies trading at discounts to intrinsic value estimates. Key contributors included ConocoPhillips and Charter Communications in Q3, while Meta Platforms and Oracle drove fiscal year performance. The fund initiated six new positions including Danaher (life sciences tools), Corteva (agricultural chemicals), Centene (managed care), Phillips 66 (downstream energy), Cisco Systems (networking), and CVS Health (healthcare conglomerate). Each represents a high-quality business trading at attractive valuations due to temporary headwinds. The portfolio benefits from exposure to secular growth trends in healthcare, energy infrastructure, and technology modernization. Management emphasizes disciplined capital allocation and expects these investments to generate attractive risk-adjusted returns as temporary pressures subside and fundamental value is recognized by the market.

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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%)

High conviction evidenced by concentrated portfolio with detailed thesis explanations for six new named positions, specific valuation metrics (10x EPS for Centene, 7x EPS for Phillips 66), and willingness to hold detractors given discount to intrinsic value. Clear position-level conviction with sized holdings.

Growth Outlook

25%

BearishBullish

Bearish (25%)

The manager acknowledges challenging conditions for value investing with growth outperforming value by 2,300 basis points, but maintains a constructive view on finding opportunities in cheap stocks on traditional value metrics for long-term attractive returns.

Risk Appetite

40%

DefensiveAggressive

Defensive (40%)

The fund initiated six new positions while eliminating three, showing selective risk-taking. The manager continues to own detractors given their discounts to business value estimates, indicating moderate risk appetite despite headwinds.

Capital Deployment

20%

De-riskingDeploying

De-risking (20%)

Net modest deployment with six new positions initiated and three eliminated. This represents selective capital rotation rather than aggressive deployment, as proceeds from sales likely funded new purchases without significant cash level changes.

Forward Guidance

30%

CautiousExpansionary

Cautious (30%)

The manager expresses confidence in finding cheap stocks and driving attractive risk-adjusted returns over the long term, but acknowledges the challenging environment for value investing without indicating aggressive deployment plans.

Language Signal

35%

BearishBullish

Bearish (35%)

Language is balanced with opportunity-focused terms like 'attractive,' 'discounted valuation,' and 'cheap stocks' offset by acknowledgment of 'headwinds,' 'pressured,' and 'challenging environment.' Slightly more constructive than bearish overall.

Perceived Risk

45%

Low RiskElevated

Moderate Risk (45%)

Moderate risk acknowledgment with specific mention of value investing headwinds and company-specific challenges like Covid normalization for Danaher and legislative concerns for CVS. Risks are identified but not characterized as systemic threats.

Opportunity Density

65%

ScarceAbundant

Abundant (65%)

Manager demonstrates ability to find multiple attractive opportunities despite challenging environment, initiating six new positions and stating they are 'finding cheap stocks on traditional value metrics.' Suggests selective but available opportunity set.

Time Horizon

70%

Short-TermLong-Term

Decade+ (70%)

Multi-year investment horizon evidenced by focus on long-term secular tailwinds, willingness to hold through temporary headwinds, and emphasis on attractive risk-adjusted returns 'over the long term.' No urgency for near-term catalysts expressed.