General Dynamics (GD, Financial)
General Dynamics is one of the leading U.S. defense contractors and controls the world’s premier business jet franchise (Gulfstream). Short-term fears that the coronavirus will hurt demand for business jets drove down the share price, so we were able to purchase this high-quality business at a large discount to both its historical and peer valuation levels. Taking a longer term view, we believe the company is poised to benefit from new product introductions within its business jet division, an improvement in free cash flow conversion and a highly visible, decade-long increase in deliveries of next generation nuclear-powered submarines. As these positives come into clearer view, we believe the discount to intrinsic value will close.
From Bill Nygren (Trades, Portfolio)'s Oakmark Fund second-quarter 2020 shareholder commentary.
