Oakmark is the mutual fund family launched in 1991 by Harris Associates, the Chicago deep-value firm founded in 1976 (about $105bn AUM). Bill Nygren runs the flagship Oakmark Fund and David Herro the Oakmark International Fund, buying businesses at large discounts to intrinsic value and holding them like owners — publishing quarterly fund commentaries, market commentaries and insight articles.
This report says the U.S. stock market rally is driven by only a handful of hot stocks, leaving many good companies behind. Chasing those popular stocks is risky because they may be overpriced. Meanwhile, overlooked but solid companies could be bargains. For ordinary investors, the key is to avoid following the crowd and instead look for undervalued opportunities—that's where the real value might be.
Oakmark's Robert Bierig notes that the recent market rally has been primarily driven by a small number of high-momentum stocks, presenting investors with unique challenges and opportunities. The report emphasizes that this trend toward concentration may cause valuations to deviate from fundamentals,
This chapter focuses on the current structural divergence in the U.S. stock market, where gains are highly concentrated in a small number of high-momentum stocks. The report argues that this concentration trend is distorting market valuations but also creating contrarian opportunities for value investors.
The author, Robert Bierig, makes a central judgment: the breadth of the market rally is extremely narrow, which presents both risks and opportunities. The counterintuitive point is that when most investors chase momentum stocks, overlooked high-quality companies may offer a greater margin of safety due to valuation mispricing.
No specific company names are mentioned. The report only refers to "high-momentum stocks" in a general sense, without explicitly bullish or bearish stances on any particular assets.