Additionally, we initiated a position in Capital One Financial (COF, Financial) (U.S.) during the quarter. Capital One is one of the largest issuers of Visa and Mastercard credit cards in the U.S. The company also has a banking network, offers auto and home loans, and manages assets for institutional and high-net-worth clients. We like that Capital One possesses a strong capital position and a common equity tier-1 ratio that exceeds both regulators’ requirements as well as the company’s own internal target. We appreciate the company’s good underwriting track record and its history of lower than expected loss rates given its business mix and yield. In our view, Capital One’s management team is focused on the long term as evidenced by its consistent reinvestment in technology development, and its online/branch bank provides a stable deposit base with decent funding cost. At roughly 5x 2022 consensus earnings and 1.1x tangible book value per share, the stock trades at a significant discount to the market and our estimate of intrinsic value.
From David Herro (Trades, Portfolio) and Bill Nygren (Trades, Portfolio)'s Oakmark Global Select Fund fourth-quarter 2022 commentary.
