Bill Nygren On His 9 Favorite StocksVW Staff
While many investors think U.S. stocks are fully valued, Bill Nygren of Oakmark Funds sees plenty of opportunity, particularly among financials. Moreover, Nygren says many of America's best companies can be bought at a market multiple.
The self-described “very frustrated Chicago Cubs fan” has hardly frustrated investors, delivering breathtaking long-term returns. Over the past five-, 10-, and 15-year periods, Oakmark Select Fund Class I (MUTF:OAKLX) has generated annual returns of 21.99%, 8.4% and 9.18% easily outpacing the S&P 500 at 18.17%, 7.7% and 4.2%. Year-to-date, the fund has returned 7.59%, compared to the index at 4.2%.
Nygren, who has run the fund since 1996, can also nimbly navigate down markets. In 2001, his fund surged 26%, outpacing the S&P by a staggering 38 percentage points. Morningstar rightly named Nygren its Domestic Stock Fund Manager of the Year. Today, Morningstar rates the fund four stars and assigns it a gold rating.
As a concentrated fund, Oakmark Select may not be for the faint of heart. Its top five holdings comprise roughly 30% of the portfolio, and the fund holds just 20 stocks. Nygren's enviable track record should assuage concerns, however. His secret sauce? Nygren looks for names trading at a large discount to their intrinsic business value; a business value that grows over time; and management that is economically aligned with outside shareholders.
Barrons.com recently spoke with Nygren about his long-term outperformance and where he sees value today.
Barrons.com: What has contributed to your long-term success?
Bill Nygren: We bring a private-equity perspective to public-equity investing. By that, I mean we take the very long-term time horizon that private equity firms typically take, and try to anticipate how investors might view a company differently five years from now. We are very, very long-term investors and being able to buy a great business at an average price is just as much value investing as buying an average business at a great price.
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