The Oakmark Fund increased 5% during the second quarter, which was in line with the S&P 500’s gain of 5%. Through the first three quarters of our fiscal year, the Oakmark Fund was up 20%, compared to a gain of 18% for the S&P 500. This was another unusually strong quarter for the market and for the Oakmark Fund, and during the quarter the Fund hit another all-time high price. As Bill Nygren
) mentioned in hissecond quarter letter
, despite very strong performance since the stock market bottomed in 2009, the forward P/E multiple for the S&P 500 is still within a typical range. While stocks aren’t as attractive as they were a couple of years ago, we continue to think that equities dominate other asset classes. Our great team of research analysts continues to find attractively valued companies to add to the portfolio. Over the past two quarters, we have added seven new companies to the portfolio.
With strong recent performance, we have also exited several positions as their prices approached our estimate of intrinsic value. During the quarter, we eliminated positions in 3M, Cummins, DirecTV, ExxonMobil and Forest Labs. Both DirecTV and Forest were sold following news that they would be acquired. As described below, we initiated new positions in Amazon, Monsanto and News Corp. (See Bill’s Nygren’s letter
for our thoughts on Amazon.) Our biggest detractors for the second quarter were Bank of America and JPMorgan Chase, but we continue to see tremendous unrecognized value in our financial holdings. Continue Reading »