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Hello All -- I've been a long-time investor in Oakmark's funds (Global, E&I, Interational...etc.). They see to be underperforming for quite a while, even relative to other value shops' funds. Wonder if anyone can provide some insight into what's going on, or share their thoughts on Oakmark, or value investing more generally.
I owned OAKIX for years. I'm not sure you should pay any attention to my experience or opinion but since you asked . . . . That fund is exceptionally volatile. Periods of outperformance were always followed by periods of underperformance. Talk about reversion to the mean. Over the past 15 years it has delivered 2% annual returns. (Of course it's in an asset class that has similarly anemic short, medium, and long term returns.) It's awfully expensive for that level of performance. I've sort of assumed that the gold star it gets from M* has something to do with hometown bias. Having sold it all I have no regrets. I went index. That hasn't exactly boomed but at least I'm paying over 90% less in annual operating expenses.
Oakmark/Harris is a value-oriented boutique shop based in Chicago (not far from M* offices but I don't think that impacts M* ratings). Some of its managers follow concentrated, high-conviction strategy. Hero (OAKIX) and Nygren (OAKMX, OAKLX) are often quoted in the media. Moderate-allocation OAKBX also has had some portfolio manager changes and had some changes in its fixed-income strategy (from older Treasury emphasis to more diversified). Several portfolio managers will be retiring in 2023.
Value investing covers a lot of territory if you're just going by the M* style boxes. SCHD fits their large cap value box, but that isn't what guides the strategy. Per etf.com:
SCHD is a market-cap-weighted fund whose selection universe only includes firms with a 10-year history of paying dividends. Within that universe, SCHD uses fundamental screens (cash-flow to debt ratio, ROE, dividend yield, and dividend growth rate) to build its portfolio. The objective is to focus on quality companies with sustainable dividends. As such, this approach gives the fund a modest large cap tilt and excludes REITs entirely. Individual securities are capped at 4% and sectors capped at 25% of the portfolio.
I'll add that they're lighter on energy companies than a lot of dividend funds.
Read their prospectuses to see if their theses still make sense to you. Look at the companies they own to see if they make sense to you.
OAKEX seems to have perennially underperformed. OAKGX, OAKWX, and OAKBX seem to have had long stretches of being solid to strong performers. Certainly value has taken it on the chin, but shops such as D&C seem to have muddled through (although DODBX had it's rough patches as well).
Was not aware of the OAKIX --> ARTKX migration. Good to know. I always wondered about Artisan performance given it's buyout.
Value investing. I can't comment from experience as we've not taken that path over the years. This David Einhorn 3 minute video interview may provide some new insight for those inclined toward value investments. He's been involved in this world of investments for many years, and is well versed. This short interview is from 1 day ago.
ARTKX is run by former Oakmark alums and seems to have beaten OAKIX at its own game.
Glad you brought up ARTKX, LB. Haven't thought about it in years; it was once a kingpin in the portfolio. Samra is still there after 20 years, it's open after being closed for quite a while, and the shape of the portfolio (at least the geography of it) looks pretty similar to what it was when I owned it. Putting it on the watchlist ...
That's too bad about ARTKX. I didn't know that. It seems like they're working on two other funds,a global value one, ARTGX, and an international small-cap one, ARDBX, but they're not the same.
@AndyJ, I believe that ARTKX closed to new Investors some months back.
Good catch, @Mona. I was going by M*, which shows it open, but the Artisan site says closed. Oh well.
I owned some ARTGX for a while too, but back then (must have been late Bush II administration) ARTKX was the real thoroughbred. ARTGX may be worth a look again; it's still open.
That's too bad about ARTKX. I didn't know that. It seems like they're working on two other funds,a global value one, ARTGX, and an international small-cap one, ARDBX, but they're not the same.
I own ARTKX and SIGIX. While I realize that they fill different slots, I am more comfortable with the slow but steady SIGIX. What do you (and AndyJ) like about ARTKX?
@Mona, for me, I'm not familiar with ARTKX's more recent iteration; my experience was pretty far back. I liked then how it was positioned, with some U.S., quite a bit of UK and Europe, and odds and ends of riskier fare, using a more relative value approach. It was top of the line then with moderate risk.
But your experience is more recent than mine, so I'd go with that. I wasn't ready to buy it, just to watch and learn what it's like now.
I invested with David Herro’s Oakmark International fund back in the 90’s, but found better substitutes since then. Herro’s concentrated approach, often in financial sector, has volatile swings in both directions. Not my type of investing as the fund trailed the developed market index badly in some year. Think Oakmark funds today are team-managed as part of their succession plan.
Former Oakmark managers, David Samra and Daniel O'Keefe left to ARTKX and ARTGX. Both have better record than Herro and being more consistency. @AndyJ is right that ARTGX is still open while ARTKX is closed to new investors. I do wish Artisan management fees could be a tad lower.
Sven nailed it...Financials. Oakmark, as a firm, typically has a higher allocation to Financial Stocks in most of it's funds. That hasn't been the best sector over the past decade and can be impacted by rising interest rates. Also, OAKIX is overweight Cons Cyclicals buy 17% realtive the index. As far as the GOLD rating...M* has a unique criteria and I'm not using that to make investment choices. They love Oakmark, most of us found better performing, lower cost alternatives to OAKIX!
Current Barron's has a Q&A with David Hero. LINK1LINK2
David HERO, Harris (international CIO; OAKIX). There are attractive values in EUROPE and CHINA (several big Chinese companies have dual-listed in the US and HK). Rising dollar is a headwind for international investing. ENERGY crisis in Europe is hurting big companies while smaller companies are getting relief. Some of these stocks are near their March 2009 and March 2020 valuations. European banks and German autos are very cheap. Several euro-zone countries are having troubles. European unemployment is low.
I'll never forget Nygren buying WaMu hand over fist at the outset of the GFC while people I knew in Seattle said it was the butt of all jokes at the time. (Of course the jokesters were right, Nygren was wrong.)
Nygen's colossal error with WaMu made me believe the entire "shop" was and is suspect.
this ranks with the Sequoia disaster, and I can never understand/forgive the board of directors for allowing this to happen.
While there are many articles ( mainly form M*) about Hero's "genius" I never found that to be believable. Sorta like the Davis father and son's "brilliance" in managing Clipper funds.
Open the hood, look around and run for the hills
Start a small position and wait and see. If in three years, you are significantly underwater and all they do is blame "market conditions" sell
Very different story from Valley Capital that states up front they will not buy unless they see real value. They underperform wildly in some markets, but at least you know why and you don't loose money, only opportunity cost
Comments
Value investing covers a lot of territory if you're just going by the M* style boxes. SCHD fits their large cap value box, but that isn't what guides the strategy. Per etf.com: I'll add that they're lighter on energy companies than a lot of dividend funds.
Read their prospectuses to see if their theses still make sense to you. Look at the companies they own to see if they make sense to you.
Was not aware of the OAKIX --> ARTKX migration. Good to know. I always wondered about Artisan performance given it's buyout.
This David Einhorn 3 minute video interview may provide some new insight for those inclined toward value investments. He's been involved in this world of investments for many years, and is well versed. This short interview is from 1 day ago.
Remain curious,
Catch
I owned some ARTGX for a while too, but back then (must have been late Bush II administration) ARTKX was the real thoroughbred. ARTGX may be worth a look again; it's still open.
But your experience is more recent than mine, so I'd go with that. I wasn't ready to buy it, just to watch and learn what it's like now.
Cheers, AJ
Former Oakmark managers, David Samra and Daniel O'Keefe left to ARTKX and ARTGX. Both have better record than Herro and being more consistency. @AndyJ is right that ARTGX is still open while ARTKX is closed to new investors. I do wish Artisan management fees could be a tad lower.
As far as the GOLD rating...M* has a unique criteria and I'm not using that to make investment choices. They love Oakmark, most of us found better performing, lower cost alternatives to OAKIX!
David HERO, Harris (international CIO; OAKIX). There are attractive values in EUROPE and CHINA (several big Chinese companies have dual-listed in the US and HK). Rising dollar is a headwind for international investing. ENERGY crisis in Europe is hurting big companies while smaller companies are getting relief. Some of these stocks are near their March 2009 and March 2020 valuations. European banks and German autos are very cheap. Several euro-zone countries are having troubles. European unemployment is low.
Nygen's colossal error with WaMu made me believe the entire "shop" was and is suspect.
this ranks with the Sequoia disaster, and I can never understand/forgive the board of directors for allowing this to happen.
While there are many articles ( mainly form M*) about Hero's "genius" I never found that to be believable. Sorta like the Davis father and son's "brilliance" in managing Clipper funds.
Open the hood, look around and run for the hills
Start a small position and wait and see. If in three years, you are significantly underwater and all they do is blame "market conditions" sell
Very different story from Valley Capital that states up front they will not buy unless they see real value. They underperform wildly in some markets, but at least you know why and you don't loose money, only opportunity cost