At the end of the quarter, however, the Oakmark Global Fund portfolio benefited from its first takeover offer since 2019. The Fund began purchasing shares of CoreLogic (CLGX, Financial), a software and database company serving the U.S. real estate industry, in December 2017. We believed that management’s efforts to increase profit margins to industry-standard levels would bear fruit and increase the company’s intrinsic value per share, along with its share price. Our analysis also showed that CoreLogic sold for a significant discount to the valuations at which similar businesses had been purchased. In late June, a private equity group saw the opportunity in the company and proposed a cash takeover at a significant premium. Although we regret having to say farewell to CoreLogic, we are gratified to have our intrinsic value estimate justified. As always, our investment process attempts to identify issues selling for less than our estimate of their intrinsic value and to hold such issues until price and value come together. Although no one can predict when exactly price and value will converge, history demonstrates that this happens often enough to generate acceptable investing outcomes. We cannot claim that the CoreLogic offer marks the start of a new M&A cycle, but we believe that the Fund’s portfolio holdings offer good value to potential acquirers.
From David Herro (Trades, Portfolio)'s Oakmark Global Fund second-quarter 2020 shareholder commentary.
Also check out:
