Is Oracle (ORCL) a Smart Long-Term Investment?

Oakmark Funds, an investment management firm, published its “Oakmark Fund” second quarter 2022 investor letter – a copy that can be downloaded here.  The Oakmark Fund returned -17.8% during the second quarter, underperforming the S&P 500 Index’s return of -16.1%. In constructing portfolios for its clients, the fund seeks out companies that it believes are trading in the market at significant discounts to their underlying value. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.

In its Q2 2022 investor letter, Oakmark Fund mentioned Oracle Corporation (NASDAQ:ORCL) and explained its insights for the company. Founded in 1977, Oracle Corporation (NASDAQ:ORCL) is an Austin, Texas-based computer software company with a $193.4 billion market capitalization. Oracle Corporation (NASDAQ:ORCL) delivered a -16.76% return since the beginning of the year, while its 12-month returns are down by -19.07%. The stock closed at $72.59 per share on July 20, 2022.

Here is what Oakmark Fund has to say about Oracle Corporation (NASDAQ:ORCL) in its Q2 2022 investor letter:

“The sell-off in the enterprise software sector, combined with the complexity related to the acquisition of Cerner, provided an opportunity for us to re-establish a position in Oracle (NASDAQ:ORCL). Oracle is one of the world’s largest and most profitable software companies-generating more than $42 billion in revenue and 40% operating margins. We have always admired the stability of Oracle’s business and the strength of its customer relationships. Now, the company’s organic growth is beginning to accelerate. Specifically, total revenue grew 7% in fiscal year 2022 and 10% in the fourth fiscal quarter. In addition, management believes that Cerner’s growth and margins can be higher under Oracle’s ownership than it could on a standalone basis. Finally, we commend Oracle’s repurchase of roughly half its share base over the past decade, which has nearly doubled each remaining share’s interest in the business. Trading for only 12x calendar 2023 earnings ex-cash, we believe Oracle’s risk/reward is attractive.”

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Our calculations show that Oracle Corporation (NASDAQ:ORCL) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Oracle Corporation (NASDAQ:ORCL) was in 61 hedge fund portfolios at the end of the second quarter of 2022, compared to 57 funds in the previous quarter. Oracle Corporation (NASDAQ:ORCL) delivered a -9.59% return in the past 3 months.

In January 2022, we also shared another hedge fund’s views on Oracle Corporation (NASDAQ:ORCL) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.

Disclosure: None. This article is originally published at Insider Monkey.