Oakmark Equity and Income Fund is Excited to Invest in Allison Transmission Holdings (ALSN). Here’s Why

Soumya Eswaran

Tue, Jul 15, 2025, 8:45 AM 3 min read

Oakmark Funds, advised by Harris Associates, released its “Oakmark Equity and Income Fund” Q2 2025 investor letter. A copy of the letter can be downloaded here. The equity portfolio returned 4.67% in the second quarter compared to 10.94% for the S&P 500 Index. An underweight in technology stocks and an overweight in value and mid-cap stocks led to the underperformance of the fund. The fixed income portfolio returned 1.97% compared to 1.21% for the Bloomberg U.S. Aggregate Bond Index. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its second quarter 2025 investor letter, Oakmark Equity and Income Fund highlighted stocks such as Allison Transmission Holdings, Inc. (NYSE:ALSN). Allison Transmission Holdings, Inc. (NYSE:ALSN) designs, builds, and sells fully automatic transmissions for medium- and heavy-duty commercial vehicles, U.S. defense vehicles, and electrified propulsion systems globally. The one-month return of Allison Transmission Holdings, Inc. (NYSE:ALSN) was -2.91%, and its shares gained 9.11% of their value over the last 52 weeks. On July 14, 2025, Allison Transmission Holdings, Inc. (NYSE:ALSN) stock closed at $91.53 per share, with a market capitalization of $7.649 billion.

Oakmark Equity and Income Fund stated the following regarding Allison Transmission Holdings, Inc. (NYSE:ALSN) in its second quarter 2025 investor letter:

"Allison Transmission Holdings, Inc. (NYSE:ALSN) is a leading manufacturer of automatic transmissions for medium-and heavy-duty commercial and defense vehicles. In our view, ALSN’s dominant market share provides the company with above-average pricing power and has resulted in a long history of attractive returns and free cash flow. Management has historically returned most of the company’s free cash flow to shareholders through dividends and share repurchases, part of a sound capital allocation track record. Although ALSN already has high market share in the United States, we think there is ample room to grow in adjacent markets and internationally, where automatic transmission adoption is lower. We were excited to invest in Allison at a single-digit multiple of our estimate of normal earnings – a greater than 50% discount to where other high-quality industrial companies trade."

A carpenter installing an aluminum die cast component in the engine of a commercial vehicle.

Allison Transmission Holdings, Inc. (NYSE:ALSN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 33 hedge fund portfolios held Allison Transmission Holdings, Inc. (NYSE:ALSN) at the end of the first quarter, which was 37 in the previous quarter. While we acknowledge the potential of ALSN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.