The Oakmark Fund increased 7% during the past quarter, which brings the gain to 27% for the fiscal year ended September 30. The S&P 500 gained 5% in the quarter and gained 19% for the fiscal year. While we are thrilled with these strong results, we remind shareholders that our style doesn’t typically lead to such dramatic outperformance in periods of broad market gains.
Looking back at the fiscal year, we outperformed a very strong 19% return for the S&P 500 with leading performance from the financials and information technology sectors. We still find these two sectors to be attractively valued, and they currently represent a combined 47% of our portfolio. For the fiscal year, 26 of the Oakmark Fund’s holdings gained over 30%, and only Apple declined by more than 20%. Despite Apple’s poor full fiscal year performance, it was one of the Fund’s top two performers for the third quarter, gaining 21%. After a period of skepticism surrounding the company’s ability to create compelling new products, Apple is once again experiencing strong demand for its recently introduced iPhones. We remain pleased that the company is allocating more of their $145B cash balance to share repurchases and dividends. Throughout the market, even as equity valuations have increased, we are still finding attractive opportunities in businesses with strong balance sheets, high free cash flow, and a management committed to return a substantial portion of excess capital to shareholders through dividends and share repurchases. Continue Reading »