Our best-performing sectors for the second quarter were energy and information technology, and from these sectors, Apache (APA) and Intel were the Fund’s two strongest individual contributors.
The energy sector got a lift from rising commodity prices, and Apache enjoyed better than expected earnings and some value-maximizing capital allocation decisions. Apache is selling what we think are fully valued oil and gas assets and using the proceeds to repurchase undervalued shares of the company. We are always thrilled to see management teams allocate capital to the highest return alternatives.
Even with strong recent gains for Apache and Intel, the two stocks still sell at a significant discount to our estimate of intrinsic value.
From Bill Nygren (Trades, Portfolio)'s Second Quarter 2014 Shareholder Letter.
