PODD - Oakmark Fixed Income Market Q1 2025 Commentary

2025-04-08 11:55:00 ET

Summary

• We are value investors. In constructing portfolios for our clients, we seek out companies that we believe are trading in the market at significant discounts to their underlying value. These businesses must offer significant profit potential and be run by managers who think and act as owners.
• We believe in the importance of intensive, fundamental research. Our research process is based on a disciplined quantitative and qualitative screening process.
• Tariffs and news headlines are driving uncertainty, and now markets are pricing in the impacts, which is creating opportunity for value investors.
• Credit markets aren’t broadly cheap, but compelling dislocations are emerging, which makes those markets far more interesting than they were just one quarter ago.
• Macro policy will determine how much disruption gets priced into the market, but our focus remains on bottom-up security selection and finding companies with management teams that can weather a wide range of scenarios.

Today’s uncertainty gets priced into the market

Headlines don’t reflect the whole story

One day we’re told tariffs are “coming back stronger than ever.” The next, negotiations may “ease tensions for good.” By Friday, it’s back to “global realignment.” The latest? Widespread, large tariffs are expected to be implemented by our president. Reading these daily macro alerts feels like trying to interpret a seismograph during one of my daughter’s bounce house birthday parties....

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