Harris Associates L.P. was founded in 1976 by dedicated investment professionals who believed that delivering successful investment results for clients requires a consistent investment philosophy, a commitment to superior investment research and a high level of customer service. Our roster of clients has grown over the years, but these basic beliefs remain unchanged. We are value investors who believe that, over time, the price of a stock will rise to reflect the value of the underlying company. In construc ...

Core Viewpoint - Harris Associates L.P. emphasizes a consistent investment philosophy focused on value investing, believing that stock prices will eventually reflect the underlying value of companies [1] Company Philosophy - The company was founded in 1976 by investment professionals committed to superior investment research and customer service [1] - Harris Associates identifies companies trading at significant discounts to their intrinsic value, aiming for substantial profit potential [1] - The investment approach is framed as owning a piece of a business for the long term, highlighting the importance of intensive, fundamental research [1] Research Process - The research process involves a disciplined quantitative and qualitative screening method [1] - Analysts at Harris Associates are independent thinkers who do not rely on Wall Street for insights, evaluating companies based on fundamental characteristics [1]

Harris Associates L.P. was founded in 1976 by dedicated investment professionals who believed that delivering successful investment results for clients requires a consistent investment philosophy, a commitment to superior investment research and a high level of customer service. Our roster of clients has grown over the years, but these basic beliefs remain unchanged. We are value investors who believe that, over time, the price of a stock will rise to reflect the value of the underlying company. In construc ...

Harris Associates L.P. was founded in 1976 by dedicated investment professionals who believed that delivering successful investment results for clients requires a consistent investment philosophy, a commitment to superior investment research and a high level of customer service. Our roster of clients has grown over the years, but these basic beliefs remain unchanged. We are value investors who believe that, over time, the price of a stock will rise to reflect the value of the underlying company. In construc ...

Harris Associates L.P. was founded in 1976 by dedicated investment professionals who believed that delivering successful investment results for clients requires a consistent investment philosophy, a commitment to superior investment research and a high level of customer service. Our roster of clients has grown over the years, but these basic beliefs remain unchanged. We are value investors who believe that, over time, the price of a stock will rise to reflect the value of the underlying company. In construc ...

Core Insights - Recent market volatility has drawn parallels to the meme stock phenomenon of 2021, with significant price fluctuations observed in companies like Kohl's and Opendoor [2] - Maintaining discipline and focusing on fundamental analysis is crucial for investors during chaotic market conditions [3] Company Overview - Korn Ferry (KFY) is positioned as an industry leader with a strong alignment of executive and shareholder interests, high yield supported by robust cash flows, and an undervalued stock [4][5] - The company has a proprietary dataset that has expanded significantly, increasing from 4 billion data points in fiscal 2Q20 to over 10 billion by fiscal 4Q25 [8] Financial Performance - Korn Ferry's total fee revenue grew 4% year-over-year in fiscal 4Q25, with a long-term growth trend of 10% and 9% compounded annually over the last 10 and 20 years, respectively [12] - The company has achieved revenue and net operating profit after-tax (NOPAT) growth of 8% and 13% compounded annually since fiscal 1999 [14] - Korn Ferry's Core Earnings increased from $82 million in fiscal 2015 to $228 million in fiscal 2025, reflecting an 11% compounded annual growth rate [15] Market Position and Growth Opportunities - Korn Ferry operates in five business segments and is recognized as the 1 executive recruiting firm in the U.S. as of 2025 [10] - The HR and recruitment services market is projected to grow 15% compounded annually from 2024 to 2034, providing a favorable environment for Korn Ferry [13] Profitability and Shareholder Returns - Korn Ferry boasts industry-leading profitability, with a return on invested capital (ROIC) increasing from 12.3% in fiscal 2015 to 13.6% in fiscal 2025 [19] - The company has returned over $240 million in dividends since fiscal 2020 and has repurchased $457 million in shares during the same period, indicating strong capital return strategies [23][24] Financial Stability - Korn Ferry generated $1.1 billion in free cash flow from fiscal 2020 to fiscal 2025, equating to 35% of the company's enterprise value, ensuring the ability to fund dividends and share repurchases [26] - The company maintains a strong balance sheet and an attractive credit rating, positioning it well to navigate economic uncertainties [28][30] Challenges and Market Dynamics - A tight labor market may pose challenges for recruitment service providers, with hiring trends showing a decline since mid-2020 [31] - Despite these challenges, Korn Ferry's focus on high-level executive roles provides some insulation against broader hiring slowdowns [32]

Research Funding & Innovation - Fundamental research in universities is of irreplaceable value to the United States [2] - Government funding from departments like Defense, Energy, NIH, and NSF supports fundamental research in universities [3] - University research leads to two types of breakthroughs: commercializable innovations and those requiring longer development [3] - Industry may not be prepared to undertake all types of fundamental research [4] Potential Risks & Considerations - Halting university research, even with mistakes, could endanger something of high value to the United States [1] - It is important to be careful when considering actions that could impact university research [1] - The AI revolution exemplifies how long it can take for fundamental research to translate into practical applications [4]

Core Insights - The investment approach emphasizes fundamental, valuation-driven strategies focusing on businesses with potential for long-term growth and significant terminal value [1] - Key factors in evaluating businesses include competitive moat, unit economics, reinvestment opportunities, and management quality, which are crucial for long-term free cash flow generation and shareholder value [1] - The analyst aims to provide accessible and analytical insights to help readers identify high-quality, long-term investment opportunities [1] Investment Focus - The analyst specializes in sectors that exhibit strong secular tailwinds, indicating a preference for industries poised for sustained growth [1] - The investment strategy is rooted in fundamental research, highlighting the importance of understanding core business economics [1] Professional Background - The analyst has a decade of experience in investment banking and is currently managing personal funds sourced from friends and family [1] - The motivation for sharing insights on platforms like Seeking Alpha is to engage with fellow investors and enhance the understanding of long-term equity value drivers [1]

Core Insights - The consumer staple index has shown strong performance during the recent broader market correction, outperforming the broader market over the last couple of quarters [1]. Group 1: Market Performance - The returns of the consumer staple index are not significantly different from those of the broader market (SPY) [1]. Group 2: Investment Focus - The company focuses on value investing, conducting fundamental research across various sectors including chemicals, homebuilders, building materials, industrials, and metals & mining [1]. - The investment strategy emphasizes acquiring stocks that are undervalued and have near-term catalysts [1]. - The investment horizon for the company ranges from one quarter to two years [1].