Bill Nygren

Bill Nygren

Last Update: 2014-11-21

Number of Stocks: 59
Number of New Stocks: 5

Total Value: $15,499 Mil
Q/Q Turnover: 14%

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

Bill Nygren Watch

  • The Best Bargain Plays Right Now - Oakmark's Bill Nygren

    Oakmark's Bill Nygren (Trades, Portfolio) encourages investors to consider that the price you pay determines the risk you are taking.


    Right now he has some opportunities that he thinks are low risk because of valuation. Those include Accenture and Whirlpool.

      


  • Bill Nygren Comments on TRW Automotive Holdings Corp

    On the morning of September 15, TRW Automotive Holdings (TRW) announced it was going to be acquired by ZF Friedrichshafen for $105.60 per share. This was of more than a passing interest to us because at the time TRW was the largest holding in Oakmark Select. It was also the culmination of a process we applauded because TRW stock began 2012 at $33 per share, and was only up to $74 at the end of 2013. Over the years, takeovers have contributed significantly to Oakmark and Oakmark Select’s returns. In 2014 both Funds benefited when AT&T offered to buy DirecTV and when Actavis purchased Forest Laboratories. Additionally, Oakmark Fund owned Covidien, which increased from $72 to $92 after announcing its merger with Medtronic. Obviously, we welcome takeover activity in any of our holdings.


    But when TRW announced news of the acquisition at 8:16 a.m. Chicago time, it took less than an hour – 9:04 to be exact – for the first law firm to announce its threat to sue TRW for accepting too low a price. Within 10 days I had counted at least 27 similar press releases from various law firms purporting to represent shareholders, threatening legal action to block the takeover. How do you square the law firms all jumping in to protect the shareholders while as a large shareholder ourselves, we were cheering the news?

      


  • Bill Nygren Comments on Whirlpool Corp

    Whirlpool Corp. (WHR - $152)

    Whirlpool (WHR) is the leading player in a fragmented global appliance market. The company has a dominant position in the North American market, and the strengthening U.S. housing recovery should increase demand for North American household appliances. Replacement demand is the largest component of Whirlpool’s sales, so an aging base of appliances in the U.S. should lead to further revenue growth as products purchased during the housing boom reach the end of their useful lives. In addition to these revenue tailwinds, Whirlpool’s profitability is also improving as a result of considerable cost cutting and a shift in their sales mix toward more attractive categories. While it is often overlooked, Whirlpool’s KitchenAid small appliance business grows faster and contributes higher margins than the rest of the business. When we consider strong revenue growth, improving profitability and the growing contribution from better categories, we see an attractive business that is selling at a considerable discount to the S&P 500 P/E multiple.

      


  • Bill Nygren Comments on T. Rowe Price Group

    T. Rowe Price Group (TROW - $79)

    With more than $730 billion of assets under management, T. Rowe Price (TROW) is a leading global investment manager that offers a broad array of mutual funds, sub-advisory services and separate account management for individual and institutional investors. T. Rowe has an impressive track record of superior performance; 80% of the T. Rowe Price funds have outperformed their respective Lipper averages for the past 10 years. A variety of issues – including fear of equity market peaks, the growth of index/ETF products and minor asset outflows in the institutional side of the business – have caused investors to become cautious. We believe T. Rowe’s success will continue because of its excellent distribution and an enduring investment culture that is the source of superior investment results. Investor skepticism has given us a chance to buy a well-managed company in a lucrative industry for a historically low valuation.

      


  • Bill Nygren Comments on Las Vegas Sands Corp

    Las Vegas Sands Corp (LVS - $62)

    While best known in the U.S. for its Venetian and Palazzo casino hotels in Las Vegas, the vast majority of the earnings of Las Vegas Sands (LVS) are generated in Macau (60% of EBITDA) and Singapore (30% of EBITDA). A weaker economy and the recent crackdown on corruption in China have pressured gambling volumes in Macau, especially in the portion of the business catering to VIP customers. The Macau gaming market is rather bifurcated between a large and more mature VIP business and a smaller, higher growth and higher margin mass-market business. Roughly 85% of LVS’s profits in Macau come from the more attractive mass-market segment. Furthermore, LVS is well positioned within that segment because it controls 56% of the casino-operated hotel rooms in the market, which gives it an edge in attracting high value customers. We view the recent slowdown in Macau as a temporary phenomenon that has given us the opportunity to own one of the best-positioned global gaming companies at a significant discount to our estimate of intrinsic value. Meanwhile, shareholders currently are benefiting from a dividend yield that is over 3% and an owner-operator management team that is buying back stock.

      


  • Bill Nygren Comments on Glencore PLC

    Glencore PLC (GLEN-LON - $5)

    Glencore (LSE:GLEN) was formed 40 years ago as a physical commodities trader, and over the years Glencore’s value-focused management team has grown the company into one of the largest miners in the world. After decades of being run as a private company, Glencore went public in May 2011 at a price of $8.57. Like many companies in the mining sector, Glencore’s share price has fallen over the past few years as commodity prices have weakened due to a glut of new supply. We believe the market has overly discounted the effects of lower commodity prices and has provided us with an opportunity to buy Glencore at a compelling discount to value. After giving the company credit for the expected ramp-up in production from large current investments, the company is trading at less than 9 times earnings – too low considering that approximately a quarter of those earnings come from the very high-return trading segment and the rest come from long-lived and well-run mining assets. Couple this low valuation with Glencore’s smart and highly incentivized management team (the senior leaders own billions of dollars of stock and many only receive nominal salaries), and we find Glencore to be an attractive addition to the Fund.

      


  • Bill Nygren Comments on Accenture PLC

    Accenture PLC (ACN - $80)

    Accenture (ACN) is one of the largest consulting and outsourcing companies in the world with over $30 billion of net revenues. Accenture is one of very few companies that can serve customers in both capacities globally, with scale, and across most industry verticals. As a result, roughly 60% of revenue is from projects where Accenture is the sole service provider from conception through completion, and more than 90 of Accenture’s top 100 customers have been clients for more than 10 years. Management has a long track record of disciplined capital allocation, having reduced the share count by nearly one-third over the past decade, and it recently initiated a fairly generous dividend. Accenture sells for less than 15x EPS, net of more than $7 per share of cash on the balance sheet. We believe this is an attractive price for such a high-quality and well-managed franchise.

      


  • Bill Nygren’s Third Quarter 2014 Market Commentary

    September 30, 2014


    On the morning of September 15, TRW Automotive Holdings (TRW) announced it was going to be acquired by ZF Friedrichshafen for $105.60 per share. This was of more than a passing interest to us because at the time TRW was the largest holding in Oakmark Select. It was also the culmination of a process we applauded because TRW stock began 2012 at $33 per share, and was only up to $74 at the end of 2013. Over the years, takeovers have contributed significantly to Oakmark and Oakmark Select’s returns. In 2014 both Funds benefited when AT&T offered to buy DirecTV and when Actavis purchased Forest Laboratories. Additionally, Oakmark Fund owned Covidien, which increased from $72 to $92 after announcing its merger with Medtronic. Obviously, we welcome takeover activity in any of our holdings.

      


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

    September 30, 2014


    The Oakmark Fund increased fractionally during the past quarter, bringing the gain to 20% for the fiscal year ended September 30. The S&P 500 advanced 1% for the quarter and gained 20% for the fiscal year. The Oakmark Fund hit another all-time high price during the third calendar quarter. We are pleased with strong fiscal year gains, but we continue to believe that unusually strong equity performance over the past several years will lead to more moderate near-term returns.

      


  • 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.  


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