During the quarter we added two new positions to the Fund, Harley-Davidson and the aforementioned LinkedIn. Harley-Davidson (NYSE:HOG) is one of America’s great brands, yet at 11x 2016 earnings per share, it is priced as if it’s a distressed retailer. The company’s new CEO has increased product development and marketing spending, seeking to provide long-term benefits at the expense of current margins, and is expanding into markets such as China, India and Vietnam with encouraging early results. A pervasive concern cited about Harley-Davidson is the aging of its core Baby Boomer rider base, but motorcycle ownership amongst people ages 25-50 today is as high per capita as it was when Boomers were in that demographic. We believe the long-term future of this company is bright and that the current price of the stock will prove a bargain.
From Bill Nygren (Trades, Portfolio)'s Oakmark Select Fund second quarter 2016 commentary.
