Oakmark Fund: Fourth Quarter 2025

Theme and Background

This chapter summarizes the investment performance and portfolio adjustments of the Oakmark Fund in the fourth quarter of 2025. The report notes that the fund outperformed the S&P 500 Index during the quarter and continued to seek undervalued investment opportunities across multiple sectors, with a particular focus on areas that lagged behind in the momentum-driven market over the past year.

Core Views

The author's core judgment is that despite the overall market favoring momentum stocks, excess returns can still be achieved by taking a contrarian approach to undervalued assets (such as media, aircraft leasing, IT solutions, and building materials). The counterintuitive point is that the fund did not reduce its position in Fiserv, its biggest detractor, but instead believes its risk-reward ratio is attractive.

Key Arguments and Data

Warner Bros Discovery (WBD) was the largest contributor for the quarter, with its stock price surging due to multiple acquisition offers: Netflix agreed to acquire its streaming and studio businesses, and Paramount Skydance subsequently proposed a full acquisition offer of $30 per share to shareholders.
Fiserv was the largest detractor for the quarter. The new CEO believes that medium-term revenue growth and margin targets are unachievable, but management upgrades and insider buying are encouraging. The report expects mid-single-digit organic revenue growth and double-digit EPS growth, with the current stock price trading at a single-digit P/E.
AerCap was purchased at a price slightly above book value or a single-digit P/E, with a historical ROE in the low to mid-teens. The author believes its asset book value is undervalued, given the significant increase in aircraft and engine values in recent years.
CDW was bought at an attractive valuation due to the challenging backdrop for IT services and hardware distributors. Its software services business (driven by cybersecurity and generative AI demand) is expected to continue expanding margins.
Amrize is an independent company formed after Holcim spun off its North American business. It is the largest cement producer in the U.S. and Canada, the second-largest commercial roofing product manufacturer, and one of the top five aggregates producers. It benefits from pricing power due to its scale, regional positioning, and supply constraints.

Companies/Assets Involved

Company/Asset	Role	Key Data	Bullish/Bearish
Warner Bros Discovery (WBD)	Largest contributor	Stock price surged due to Netflix's acquisition of streaming/studio businesses and Paramount Skydance's full acquisition offer of $30 per share	Bullish (optimistic about the board's actions to unlock shareholder value)
Fiserv	Largest detractor	New CEO believes medium-term revenue growth and margin targets are unachievable; expects mid-single-digit organic revenue growth and double-digit EPS growth; stock price at single-digit P/E	Bullish (management upgrades, insider buying, attractive risk-reward ratio)
AerCap	New purchase	World's largest aircraft lessor; purchased at slightly above book value or single-digit P/E; historical ROE in low to mid-teens	Bullish (scale advantage, undervalued asset book value)
CDW	New purchase	Leading IT solutions company; bought due to challenging backdrop for IT services/hardware distributors	Bullish (software services expansion, cybersecurity and generative AI demand)
Amrize	New purchase	Largest cement producer in U.S./Canada, second-largest commercial roofing manufacturer, top five aggregates producer	Bullish (pricing power, long-term potential, overlooked by most U.S. investors)

Investment Insights

Contrarian allocation to undervalued assets: In a momentum-driven market, focus on companies undervalued due to short-term negative factors (e.g., management changes, industry cycles), such as Fiserv and CDW.
Event-driven opportunities: The acquisition battle for WBD shows that asset restructuring in the media industry can unlock significant value; investors should monitor similar potential acquisition targets.
Spin-off and standalone listing opportunities: Amrize, as an independent company after Holcim's spin-off, offers a buying window due to low market attention; similar spin-off cases are worth tracking.
Asset book value revaluation: The AerCap case suggests that when asset prices rise significantly (e.g., aircraft and engines), book values may be undervalued, providing a margin of safety.