Bill Nygren

Bill Nygren

Last Update: 2014-08-08

Number of Stocks: 57
Number of New Stocks: 3

Total Value: $13,956 Mil
Q/Q Turnover: 19%

Countries: USA
Details: Top Buys | Top Sales | Top Holdings  Embed:

Bill Nygren Watch

  • Bill Nygren Comments on Intel

    Our best-performing sectors for the second quarter were energy and information technology, and from these sectors, Apache and Intel (INTC) were the Fund’s two strongest individual contributors.


    Intel shares were also strong following their announcement of better than expected PC sales and profit margins, which should lead to higher earnings for the year. Despite lingering PC concerns and substantial investments in the ramp-up of their tablet PC offerings, Intel is still producing profit margins that are near the high end of their historical range.

      


  • Bill Nygren Comments on Apache

    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.

      


  • Bill Nygren Comments on News Corp

    News Corp (NWSA) is a global media conglomerate with renowned and highly valuable content, cable, information services and publishing assets. We believe that News Corp, which was spun-off from 21st Century Fox last summer, is being misperceived and inappropriately valued as a print newspaper publisher. To the contrary, our research suggests that the significant majority of News Corp’s fair value is supported by its ownership positions in high quality cable sports networks, pay TV and digital content properties that enjoy dominant market share and compelling growth profiles. Continued subscriber and advertising growth coupled with the transition from print to digital media across various operating subsidiaries should drive consistent margin expansion over the next several years. Selling at a significant discount to our estimate of intrinsic value and at only a modest premium to tangible book value, we think News Corp offers a compelling risk/reward profile.


    From Bill Nygren (Trades, Portfolio)'s Second Quarter 2014 Shareholder Letter.

      


  • Bill Nygren Comments on Monsanto Company

    Monsanto (MON) is a leading global provider of seeds, biotechnology traits, herbicides and data analytics for farmers. We believe Monsanto is a very high quality company with above-average growth prospects and an exceptionally strong competitive position in a large and consolidated industry. In our view, Monsanto’s lead is likely to widen as successful traits are combined and as the company maintains its distribution advantages. Additionally, Monsanto’s precision agriculture platform, led by its recent purchase of The Climate Corporation, could provide significant upside and further differentiate Monsanto from its competitors, since growers are only in the early stages of using this technology to improve yields. For the past year and a half, management considered a more aggressive capital structure, and they recently announced a plan to add leverage to the balance sheet while using the proceeds for a large share repurchase program. Low corn prices, challenges in valuing their biotech pipeline and the difficulty of quantifying upside from precision agriculture have caused Monsanto to sell for materially less than our estimate of its intrinsic business value.


    From Bill Nygren (Trades, Portfolio)'s Second Quarter 2014 Shareholder Letter.

      


  • Bill Nygren Comments on Amazon

    That brings me to our newest position, which will no doubt make some question our credentials as value investors: Amazon (AMZN).


    Consensus forward earnings for Amazon are a little over a dollar. At the median forward P/E multiple, Amazon would be priced in the low $20s. So, even though the stock fell $124 from its January high of $408 to a May low of $284, its P/E ratio remained in nosebleed territory. But we have never believed the P/E ratio was the be-all and end-all for valuation. Amazon is a retailer – a very efficient retailer. When we compare stocks in the same industry, we often compare their market caps to their sales rather than their earnings. Since 2001, Amazon has generally traded at a cap-to-sales ratio of two to four times that of the average bricks-and-mortar retailer. Having fallen to just under two recently, one might say that, as an advantaged retailer, Amazon looks somewhat attractive.

      


  • Bill Nygren's Oakmark Fund - Second Quarter 2014 Letter

    June 30, 2014


    With 2014 now more than half over, it seems like a good time to look ahead to next year. The consensus S&P 500 earnings estimate for 2015, as computed by FactSet, is $133. That results in a forward P/E ratio of just less than 15x. Relative to the index’s long-term historical average, which is in the mid-teens, the current valuation level suggests to us neither unusual opportunity nor risk. Given that, why is there so much talk about the market being overvalued? I think three main reasons explain many investors’ negative outlook.

      


  • Bill Ngren Commentary: Oakmark Select Fund - Second Quarter 2014; Buys Amazon, Citigroup, Fidelity National, Google

    The Oakmark Select Fund increased 6% for the quarter, compared to 5% for the S&P 500 Index. Three quarters into our 2014 fiscal year, the Oakmark Select Fund has returned 25%, compared to 18% for the S&P 500 Index. Our best performers in the quarter were Apache and Intel, up more than 20% each, while a couple of our financial stocks, Bank of America and JP Morgan Chase, led the laggards with losses of 11% and 4%, respectively.


    During the quarter we added four new positions to the Fund (Amazon, Citigroup, Fidelity National, and Google) and eliminated four others (Cenovus, Comcast, DIRECTV, and Kennametal). While this is an unusual amount of activity for us, it was driven by the attractiveness of the new additions, discussed individually below. As we’ve said before, we don’t manage the Fund to meet artificial criteria such as turnover ratios, sector weightings, or style boxes. Our investment process is to buy a business at a significant discount to our estimate of intrinsic value, where we believe that value will grow over time on a per-share basis, led by management teams focused on maximizing this per-share value. The consistent application of this process is what drives our position changes.

      


  • Bill Nygren's Second Quarter 2014 Shareholder Letter

    The Oakmark Fund increased 5% during the second quarter, which was in line with the S&P 500’s gain of 5%. Through the first three quarters of our fiscal year, the Oakmark Fund was up 20%, compared to a gain of 18% for the S&P 500. This was another unusually strong quarter for the market and for the Oakmark Fund, and during the quarter the Fund hit another all-time high price. As Bill Nygren (Trades, Portfolio) mentioned in hissecond quarter letter , despite very strong performance since the stock market bottomed in 2009, the forward P/E multiple for the S&P 500 is still within a typical range. While stocks aren’t as attractive as they were a couple of years ago, we continue to think that equities dominate other asset classes. Our great team of research analysts continues to find attractively valued companies to add to the portfolio. Over the past two quarters, we have added seven new companies to the portfolio.

    With strong recent performance, we have also exited several positions as their prices approached our estimate of intrinsic value. During the quarter, we eliminated positions in 3M, Cummins, DirecTV, ExxonMobil and Forest Labs. Both DirecTV and Forest were sold following news that they would be acquired. As described below, we initiated new positions in Amazon, Monsanto and News Corp. (See Bill’s Nygren’s letter for our thoughts on Amazon.) Our biggest detractors for the second quarter were Bank of America and JPMorgan Chase, but we continue to see tremendous unrecognized value in our financial holdings.   


  • Bill Nygren's Low-P/E Stocks

    Discount to intrinsic value is a central component of Bill Nygren (Trades, Portfolio)’s investing strategy at Oakmark Funds, where he has a track record of beating indices. In a recent interview with Barrons, he stated the key to his success:

    “We bring a private-equity perspective to public-equity investing. By that, I man 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.”  


  • Oakmark’s Bill Nygren's Top Holdings Led by Bank of America and Oracle

    Also reported today, Oakmark’s Bill Nygren shared his first quarter portfolio which highlighted a rather eventful quarter for the guru. Nygren purchased five new stocks over the past quarter bringing his total number of stocks to 59. Nygren’s Oakmark Fund portfolio is currently valued at over $12.5 billion.


    The following five companies are Nygren’s five largest holdings.

      


  • Oakmark Funds' Bill Nygren Buys 4 New Stocks

    Bill Nygren (Trades, Portfolio)’s Oakmark fund beat the S&P 500 for the first quarter with a 5% gain compared to the index’s 2% rise. In his first quarter letter, he attributed the strong quarter primarily to Forest Laboratories being acquired by Actavis Plc (ACT), and large exposure to auto-related cyclical and financials.

    Nygren is the manager of the Oakmark Select Fund (OAKLX), the Oakmark Fund (OAKMX) and the Oakmark Global Select Fund (OAKWX) at the Oakmark Funds. Oakmark employs a long-term, value philosophy, buying stocks at what are thought to be discounts to intrinsic business value.  


  • A Few Lessons from Bill Nygren

    Renowned value investor Bill Nygren (Trades, Portfolio) from Oakmark Fund gave a great presentation at the CFA dinner held two days before the Berkshire Hathaway annual shareholder meeting. The title of his presentation is "Perspectives on Value Investing." Below are my notes from the presentation.


    1. It's not enough to study just the great value investors. It's also very important to study the successful non-value investors. You may be surprised to find out that you may learn a lot from them. Nygren has learned tremendously from the following investors:

      


  • Oakmark's Bill Nygren Discusses Financials, Favorite Stocks



  • Bill Nygren Comments on Franklin Resources

    We established a position in Franklin Resources (BEN), one of the world’s largest global mutual fund companies, with leading products in both equities and fixed income. For starters, we believe asset management is an attractive business and Franklin has a history of strong fund performance across various asset classes and geographies. The company is selling for less than 14x our estimate of this year’s EPS and just over 11x adjusting for net cash and securities. In our view, this is a cheap price for a well-run company in such an attractive industry. Management has historically returned capital to shareholders through stock buybacks and dividends, and with insiders owning 35% of outstanding shares, we expect Franklin to continue to be good stewards of shareholders’ capital.

    From Bill Nygren (Trades, Portfolio)'s Oakmark Select Fund first quarter 2014 investor letter.   


  • Bill Nygren Comments on TI

    We also eliminated the remainder of our investment in TI (TI) as the final tranche of shares went long term. TI offers another example of a management team that we believe puts its shareholders first in a situation where many do not. Since its acquisition of National Semiconductor in 2011, TI has been generously returning excess capital to shareholders while maintaining a prudent, but not lazy, balance sheet. This likely contributed to their shares approaching our estimate of fair value. Many large technology companies today simply grow their already immense cash positions and offer little insight into their plans for distributing that excess capital. We believe TI set a terrific example for other companies in the technology sector. Finally, we also sold Newfield Exploration after we came to believe that its effort to transition the company to liquids was a low-return proposition that would limit its ability to grow per-share value.

    From Bill Nygren (Trades, Portfolio)'s Oakmark Select Fund first quarter 2014 investor letter.   


  • Bill Nygren Comments on Forest Laboratories

    After returning 40% last quarter, Forest (FRX) returned another 52% in the first quarter as the company agreed to be acquired by Actavis for both cash and stock. We believe the acquisition price was full and fair. While our investment thesis – that Forest’s new drug launches would be successful and leverage the company’s expenses – did not have the chance to transpire, we are more than pleased that the stock price reached our estimated value in short order. It’s not uncommon for the management of companies in transition to resist being acquired before their strategies to create value are fully realized. We applaud the leaders at Forest for their willingness to pull forward this value, even if it denied them the personal satisfaction of seeing their efforts realized in the coming years. We believe this could serve as a lesson for the leadership of other public companies. If someone wants to pay a fair price on a risk-adjusted basis for ‘what could be’ in your business, you owe it to your shareholders to realize this value so that they can recycle their capital into other attractively valued investments.

    From Bill Nygren (Trades, Portfolio)'s Oakmark Select Fund first quarter 2014 investor letter.   


  • Bill Nygren's Oakmark Select Fund - First Quarter 2014 Letter

    For the quarter, the Oakmark Select Fund gained 5%, compared to 2% for the S&P 500 Index. We are pleased to report the Fund ended the quarter at a new all-time high NAV, meaning that as of 03/31/14, all current Select shareholders have unrealized gains in their holdings. These strong absolute and relative results were due in large part to Forest Laboratories (Forest) agreeing to be acquired by Actavis Plc in the quarter. Our relatively large exposure to auto-related cyclicals and financials continued to benefit our results. The largest detractors were MasterCard, Kennametal and FedEx. As discussed below, we eliminated our positions in Forest, Texas Instruments (TI) and Newfield Exploration, and we established new positions in Franklin Resources and CBRE Group (CBRE).


    After returning 40% last quarter, Forest (FRX) returned another 52% in the first quarter as the company agreed to be acquired by Actavis for both cash and stock. We believe the acquisition price was full and fair. While our investment thesis – that Forest’s new drug launches would be successful and leverage the company’s expenses – did not have the chance to transpire, we are more than pleased that the stock price reached our estimated value in short order. It’s not uncommon for the management of companies in transition to resist being acquired before their strategies to create value are fully realized. We applaud the leaders at Forest for their willingness to pull forward this value, even if it denied them the personal satisfaction of seeing their efforts realized in the coming years. We believe this could serve as a lesson for the leadership of other public companies. If someone wants to pay a fair price on a risk-adjusted basis for ‘what could be’ in your business, you owe it to your shareholders to realize this value so that they can recycle their capital into other attractively valued investments.

      


  • Bill Nygren Comments on Merck

    We eliminated our position in Merck (MRK) as the shares appreciated to our estimate of fair value.

    From Bill Nygren (Trades, Portfolio)'s Oakmark Fund first quarter 2014 commentary.  


  • Bill Nygren Comments on General Motors

    Our worst performer was General Motors (GM), down 15%, due to what we believe was the market’s overreaction to GM’s handling of a recent product recall.

    From Bill Nygren (Trades, Portfolio)'s Oakmark Fund first quarter 2014 commentary.  


  • Bill Nygren Comments on Bank of America

    Another top performer was our largest position, Bank of America (BAC). We still think the financial services sector is attractively valued, and with Bank of America, we are pleased to see investors recognize better visibility of higher future earnings and an enhanced capacity to return excess capital to shareholders.

    From Bill Nygren (Trades, Portfolio)'s Oakmark Fund first quarter 2014 commentary.  


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