Philosophy
We are value investors, which means that we invest in companies that we believe trade at a substantial discount to what we consider to be their true business value. We are patient investors, not market timers. We believe that, over time, the price of a stock will rise to reflect the value of the underlying company. Every stock purchase is viewed as if we were buying a piece of a business, not just a stock certificate. We believe that this approach to investing allows for significant investment returns while reducing risk.

Process
Because our analysts and portfolio managers seek to identify undervalued companies, the investment process is not based on macro-economic factors, such as the performance of the economy or the direction of interest rates. Nor is it based solely on technical factors, such as the performance of the stock market itself. Instead, we employ an intensive, in-house research process to identify companies that meet our value criteria.

While some value investors may search only for stocks with low price-earnings ratios irrespective of the companies' underlying worth, Oakmark takes a more in-depth approach. In evaluating potential investments, we focus on the following characteristics:

- A company's stock price and whether it is a significant discount to our estimate of underlying business value
- Free cash flows & intelligent investment of excess cash
- High level of manager ownership