An example of this prospecting activity is our new U.S. purchase, Flowserve (FLS, Financial), a company that was previously owned in other Oakmark funds. Flowserve is an industrial concern that manufactures pumps, valves, seals and related products for fluid-handling industries. Energy industry companies are important customers, but they are far from the entire story. Nevertheless, the stock fell in sympathy with energy stocks as the pandemic spread across the world and suppressed energy demand. We have long experience with Switzerland’s Sulzer and the John Crane division of U.K.-based Smiths Group, two of Flowserve’s important international competitors. Our contacts all speak favorably of the company’s product offerings and market position. New management joined Flowserve three years ago, undertaking a corporate reorganization and a culture reboot. The company’s balance sheet is strong, in our opinion, which has enabled it to act offensively during this difficult economic environment. Our analysis shows the stock to be cheaply priced today compared to our estimate of intrinsic value and previous private market transactions.
From David Herro (Trades, Portfolio)'s Oakmark Global Fund second-quarter 2020 shareholder commentary.
