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The Oakmark Fund, in its Investor Class, delivered a commendable performance in the first quarter of 2026, surpassing its benchmark, the S&P 500 Index, both for the quarter and since its inception. This success was notably fueled by robust performances in the energy and materials sectors. Despite a landscape marked by heightened market fluctuations, geopolitical tensions, and significant disparities in stock performance, the fund's managers adhered to a steadfast investment philosophy. They prioritized companies valued below their inherent worth, emphasizing long-term fundamental strength over transient market trends and speculative crowd behavior. This strategic foresight allowed the fund to navigate a challenging economic environment successfully, positioning its portfolio for sustained growth based on solid underlying business values rather than ephemeral market sentiments.

In the first quarter of 2026, the Oakmark Fund's Investor Class demonstrated a strong outperformance against the S&P 500 Index, a trend that has persisted since the fund's establishment. A granular analysis of sector contributions reveals that the energy and materials sectors were the primary drivers of this favorable outcome. Conversely, the financials and information technology sectors acted as the largest drag on performance. This period was characterized by substantial market volatility, a flurry of geopolitical news, and extreme divergences in stock movements. These factors contributed to an environment where equity markets appeared more swayed by immediate reactions and collective sentiment than by the true underlying value of businesses.

Against this backdrop, the fund's management team maintained a disciplined and patient approach to portfolio construction. Their strategy centered on identifying and investing in companies whose market valuations significantly underestimated their intrinsic worth. The core belief guiding these decisions was that long-term fundamentals, rather than fleeting headlines, are the ultimate determinants of investment returns. This philosophy proved instrumental in the fund's ability to not only withstand market pressures but also to generate superior returns. By focusing on deep fundamental analysis and intrinsic value, the Oakmark Fund aims to mitigate risks associated with short-term market noise and capitalize on the enduring strength of well-managed businesses.

Several companies were pivotal in shaping the fund's performance during this quarter. ConocoPhillips emerged as the leading contributor, benefiting from a supportive macroeconomic climate and operational results that aligned with expectations. The surge in energy prices, partly due to ongoing geopolitical conflicts, significantly boosted its stock. The fund continues to hold a positive outlook on ConocoPhillips, recognizing its high-quality assets and adept management. On the other hand, Salesforce was the biggest detractor, as concerns about potential AI disruption weighed on its stock. Despite these fears, Salesforce maintained strong quarterly results and showed improving margins. Management's confidence in future subscription revenue growth and strategic share repurchases underscore a belief in the company's resilience against AI-related market anxieties.

During the quarter, the fund strategically acquired stakes in several new companies, including Accenture, Adobe, Marsh & McLennan, Netflix, Raymond James Financial, Roper Technologies, Synchrony Financial, and Sysco. These additions reflect a diversified approach, targeting sectors such as technology, financial services, and consumer goods. For instance, Accenture and Adobe were identified as global leaders in their respective fields, undervalued due to what the fund perceived as exaggerated fears of AI disruption. Marsh & McLennan, a dominant force in insurance brokerage, was seen as capable of sustained growth despite industry pressures. Netflix was acquired at a historically low valuation, with the fund confident in its strong engagement and long-term prospects. Similarly, Raymond James Financial, Roper Technologies, Synchrony Financial, and Sysco were chosen for their robust business models, market leadership, and attractive valuations, showcasing the fund's commitment to intrinsic value investing.

The Oakmark Fund's steadfast commitment to value investing, coupled with meticulous research and a patient, disciplined approach, enabled it to achieve strong results in a volatile market. By concentrating on companies trading at a discount to their fundamental value and led by strong management, the fund effectively capitalized on market inefficiencies. This strategy emphasizes resilience and long-term appreciation, proving effective in shielding investments from short-term market turbulence and focusing on sustainable growth.