We had an insightful, wide-ranging discussion with Tony Coniaris of Oakmark Funds. Highlights included:
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An overview of Oakmark’s three requirements for finding opportunities:
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Deep discount to intrinsic value
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Clear path to value growth
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High quality management team
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How Oakmark evaluates risks, opportunities, and volatility in real-time during crises like Ukraine and Covid-19.
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Looking at the three tech giants Oakmark invests in:
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Deconstructing why Alphabet (Google) is a terrific value.
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How they determine whether to buy Netflix after its steep January stock price decline
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The episodic and secular challenges to Meta (Facebook), including the Metaverse
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How Oakmark values companies in China and other countries where there are risks like rule of law and government intervention
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Due to the interest rate and regulatory environment, the banking industry is underappreciated. Banks, particularly Bank of America, are in a much stronger position today.
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When considering inflation, there are three types of companies:
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Avoid those with little pricing power.
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Quick hitters like oil and commodities companies that receive an immediate jolt, but things will come back down to Earth.
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Good businesses like Coca-Cola, which pass the price rises to consumers. Initially, the effect can be negative. Then, when commodity prices come down, businesses don’t lower their prices and profits grow.
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Investing is a long-game, and you have to find firms that have that perspective. Then your plan should include rebalancing through volatility, which has been found to add a lot to investor returns.
We find it fascinating to hear Tony describe how much process, consideration, and analysis goes into building Oakmark portfolios.
We encourage everyone who missed the webinar to watch the replay. Let us know if you have any questions or feedback on the discussion.
Burton Enright Welch is an independent, fee-only financial planning and investment management firm based out of Walnut Creek, California.
