Bill Nygren

Bill Nygren

Last Update: 11-30-2017

Number of Stocks: 52
Number of New Stocks: 1

Total Value: $17,838 Mil
Q/Q Turnover: 4%

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

Bill Nygren past Portfolios

Bill Nygren 13F Filings

Portfolio DateNumber of StocksTotal Value (Mil)Number of New StocksQ/Q Turnover
2017-09-3052$17,83814%
2017-06-3051$16,93913%
2017-03-3152$16,24935%
2016-12-3152$15,21249%
2016-09-3052$13,99212%
2016-06-3052$14,43412%
2016-03-3156$14,85402%
2015-12-3159$16,22516%
2015-09-3061$15,74538%
2015-06-3060$16,86424%
2015-03-3159$16,80835%
2014-12-3162$16,80928%
2014-09-3065$15,458514%
2014-06-3066$13,956319%
2014-03-3162$12,38249%
2013-12-3156$11,48524%
2013-09-3055$9,86625%
2013-06-3056$9,069311%
2013-03-3155$8,03519%
2012-12-3156$6,90619%
2012-09-3057$6,35639%
2012-06-3059$5,833314%
2012-03-3159$5,65437%
2011-12-3158$4,77425%
2011-09-3059$4,304224%
2011-06-3058$4,06315%
2011-03-3157$3,91305%
2010-12-3157$3,55712%
2010-09-3059$3,25138%
2010-06-3057$3,00725%
2010-03-3156$3,32213%
2009-12-3159$3,141512%
2009-09-3055$2,99625%
2009-06-3056$2,57948%
2009-03-3153$2,03600%

Bill Nygren 13D/G Filings

Filing date :

Bill Nygren Watch

  • Oakmark's Bill Nygren: ‘We Were Seriously Off’ in Forecast for GE

    Bill Nygren (Trades, Portfolio), head of the Oakmark Fund, said on CNBC on Thursday afternoon that while GE was a “swing and a miss” from last time he appeared on the program, he still believes it deserves a fresh look.

    GE (NYSE:GE) was the worst performer in a portfolio of over 50 names in the fourth quarter, Nygren said. He continues to like the stock, however, because of its change in executive leadership and earnings coming from other divisions, specifically health care and aviation.  


  • Bill Nygren Buys American Airlines, CVS, Priceline

    Bill Nygren (Trades, Portfolio) Buys American Airlines, CVS, Priceline


    Bill Nygren (Trades, Portfolio) has not revealed his fourth-quarter portfolio update yet, but he disclosed some of his new positions in an investor letter this week. As new fourth-quarter buys, he chose: American Airlines Group Inc., CVS Health Corp. and Priceline Group Inc.

      


  • Bill Nygren Comments on Corelogic

    Corelogic (NYSE:CLGX) provides unique residential real estate information to the financial services sector. The shares have been weak due to near-term cyclical concerns about declining refinancing activity. We do not believe this has a long-term impact on business value. Unique data businesses tend to have great returns and are difficult to replicate. Corelogic fits this mold. The management team has been good stewards of capital and has reduced the share count 30% since 2010. Management has been improving margins for years, and we believe there is more room for improvement over the next several years. Meanwhile, Corelogic is selling well below public and private market values of other high-quality data providers.

    From David Herro (Trades, Portfolio)s' Oakmark Global Select Fund fourth quarter 2017 commentary.   


  • Bill Nygren Comments on Johnson Controls

    Johnson Controls (NYSE:JCI) shares have underperformed since the $18B Tyco merger, which also brought a new CEO, George Oliver, whom we know and respect from his days at Tyco. We believe JCI had been undermanaged prior to the merger, and Oliver has the opportunity to improve operations in addition to achieving the merger synergies. Roughly three-quarters of revenues and two-thirds of earnings come from the legacy Tyco fire and security business and JCI’s legacy HVAC and building automation businesses. JCI is also the largest producer of lead-acid automotive batteries with nearly 40% market share. While this business is lower growth, the fundamentals tend to be fairly stable as aftermarket accounts for 75% of sales.

    From David Herro (Trades, Portfolio)s' Oakmark Global Select Fund fourth quarter 2017 commentary.   


  • Bill Nygren Comments on Priceline Group

    Priceline Group, Inc. (PCLN - $1,760)(NASDAQ:PCLN)
    During the quarter, we established a position in Priceline, a pioneer and global leader in the online travel industry. We believe Priceline’s valuation is attractive when viewed against our long-term growth expectations, as we expect online bookings to continue capturing share from offline sources for years to come. The company is investing heavily in business travel, mobile, alternative accommodations and other ancillary businesses, which we believe will further solidify its competitive position and support attractive long-term growth. Priceline’s strong brands, significant investment expenditure and scale advantages should further enhance the company’s powerful network effect. In addition, its geographic exposure, revenue mix and superior online traffic conversion make it one of the best operating models in the industry. On our one-year forward estimate, Priceline trades in line with the S&P 500 P/E ratio (excluding its net cash and investments), despite having a superior growth outlook, an above-average margin profile and extremely high returns on incremental capital, allowing us to buy an above-average business at just an average price.

    From Bill Nygren (Trades, Portfolio)'s Oakmark Fund fourth quarter 2017 commentary.   


  • Bill Nygren Comments on CVS Health Corp

    CVS Health Corporation (CVS - $73)(NYSE:CVS)
    CVS is well positioned in a U.S. health care system that rewards scale, as the company owns the nation’s largest pharmacy benefit manager (PBM), the largest retail pharmacy and the largest retail clinic. Both the PBM and retail pharmacy segments are as concentrated as they have ever been, and we believe these lines of business protect existing players and pose serious challenges for new entrants. After underperforming the S&P 500 by nearly 60% over the past two years, CVS is now valued at less than 12x next year’s consensus earnings after adding back amortization of intangible assets. In our view, the market is underestimating the durability of the company’s competitive advantages across multiple end markets. Additionally, the pending acquisition of Aetna, Inc. would bring together two forward-thinking management teams and give them a broad suite of assets through which to address sector-wide trends, like the shift toward value-based care models and the increasing “consumerization” of health care.

    From Bill Nygren (Trades, Portfolio)'s Oakmark Fund fourth quarter 2017 commentary.   


  • Bill Nygren Comments on American Airlines

    American Airlines Group, Inc. (AAL - $53)(NASDAQ:AAL)
    Although the airlines have always provided a useful consumer service, we feel they have historically been unattractive long-term investment candidates. In the past, the major U.S. airlines lacked pricing power and faced problems related to poor corporate cultures. However, after years of consolidation capped by the merger of US Airways and American Airlines in 2013, the industry has become more mature and disciplined. The three major hub-and-spoke carriers each have strengths in their respective hubs, and their management teams are making wiser decisions about capacity additions and capital allocation. American Airlines’ CEO Doug Parker sees substantial opportunity to grow value as the company completes the US Airways merger integration. He is improving the company’s culture and restoring credibility with employees. Parker believes that American Airlines has around $5 billion of pretax earnings power, which is up 50% from our 2017 estimate, and he has bought back 37% of the company’s shares since the merger closed. With the stock selling for a single-digit multiple of normal earnings power, we believe American Airlines is an attractive investment.

      


  • Bill Nygren's Oakmark Fund: Fourth Quarter 2017 Commentary

    The Oakmark Fund increased 6.0% during the fourth quarter of 2017, which compares to a 6.6% gain for the S&P 500. For all of calendar 2017, the Fund increased 21.1%, which was slightly below the 21.8% return for the S&P 500. The strong fourth-quarter performance capped off a very strong calendar year for the Oakmark Fund and the broader market, and we are pleased that the Fund hit another all-time high adjusted NAV. In fact, this represents the sixth quarter in a row that the Fund has hit an all-time high. With this strong absolute performance comes a brief word of caution: over longer periods of time, we expect S&P 500 returns to moderate to historical single-digit levels. We remain very pleased that the strongest contributions for both the fourth quarter and calendar year have come from our highest-weighted sectors, financials and information technology.


    Caterpillar and Ally Financial were the best individual contributors for the quarter, both returning in excess of 20%. Our lowest-contributing sectors for the quarter were energy and consumer staples, but our exposure to those sectors was lower than the S&P 500’s weightings. Our worst-contributing securities for the quarter were General Electric and Aon. General Electric has been a very frustrating holding during 2017, as business fundamentals have lagged behind our expectations, but we believe a fresh look reveals an attractive opportunity to own a high-quality, improving business with a strong new management team at just 12.5x our estimate of forward earnings. For the calendar year, our best individual contributors were Caterpillar and Fiat Chrysler, and our biggest detractors were General Electric and Apache. Energy was our only detracting sector for the calendar year.

      


  • 11 Questions With Oakmark's Bill Nygren and Win Murray

    Reflecting on your current holdings, did the Oakmark Select Fund buy from a “shopping list” where you waited for your price/value point, or were you more opportunistic, following and buying from market mispricing?


    Win Murray: Both parts of your question combine for the correct answer: We opportunistically try to take advantage of market mispricing across a “shopping list” of companies that we have already approved to be purchased by our portfolio managers.

      


  • Ask Oakmark's Bill Nygren Your Investing Question Now

    GuruFocus readers have several days to ask their investing questions to two noted value investors, Bill Nygren (Trades, Portfolio) and Win Murray, as part of a GuruFocus Q&A.


    Market-beating Bill Nygren (Trades, Portfolio) is a manager of the Oakmark Select Fund, Oakmark Fund and Oakmark Global Select Fund at Oakmark. He is also chief investment officer for U.S. Equities at Harris Associates. In 2011, Morningstar named him Domestic Stock Manager of the Year.

      


  • Ask Oakmark's Bill Nygren Your Investing Question

    GuruFocus readers have several days to ask their investing questions to two noted value investors, Bill Nygren (TradesPortfolio) and Win Murray as part of a GuruFocus Q&A.


    Market-beating Bill Nygren (TradesPortfolio) is a manager of the Oakmark Select Fund, Oakmark Fund and Oakmark Global Select Fund at Oakmark. He is also chief investment officer for U.S. Equities at Harris Associates. In 2011, Morningstar named him Domestic Stock Manager of the Year.

      


  • Bill Nygren Tells CNBC He Increased His Stake in GE

    Bill Nygren (Trades, Portfolio), Oakmark Fund portfolio manager, appeared on CNBC Tuesday afternoon to discuss his addition to his holding in General Electric (NYSE:GE).

    "This is a very different company looking forward than looking back," Nygren said, highlighting the focus of new CEO John Flannery on return on invested capital and capital allocation.   


  • Bill Nygren's Oakmark Select Fund Third Quarter 2017

    The Oakmark Select Fund returned 5.9% for the quarter, ahead of the S&P 500’s 4.5% return. This brings the Fund’s return for the fiscal year, ended September 30, 2017, to 22.6%, compared to 18.6% for the S&P 500. Please do not expect this level of absolute and relative performance every quarter or year, but we hope you enjoy them like we do as fellow investors in the Fund. We are also gratified to report the Fund ended the quarter at a new all-time high NAV, meaning that as of September 30, all current Select shareholders have unrealized gains in their holdings.


    During the quarter, Fiat Chrysler (NYSE:FCAU) (+69%) was by far the largest contributor to performance due to speculation that the company will be sold. Fiat Chrysler’s share price remains below our estimate of intrinsic value, and we have immense trust in CEO Sergio Marchionne to maximize per share value. So, we maintained our position during the quarter. Chesapeake Energy (NYSE:CHK) (-13%) was the largest detractor perhaps due to management having to shut in some production around Hurricane Harvey, but we view this as a relative non-event for business value.

      


  • Bill Nygren's Oakmark Fund Third Quarter 2017 Commentary

    The Oakmark Fund increased 5.8% during the third quarter, bringing the increase to 23.8% for the fiscal year ended September 30. The Fund’s strong performance outpaced S&P 500 gains of 4.5% for the third quarter and 18.6% for the past 12 months. This was a very good quarter and fiscal year for the Oakmark Fund, and the Fund hit an all-time high adjusted NAV for the fifth quarter in a row. As value investors, we patiently wait for the gap between a company’s stock price and our estimate of intrinsic value to close, and over the past 12 months, the gaps have narrowed. We are pleased that the strongest contribution has come from our highest weighted sectors, financials and information technology.


    Our highest contributing security for the fiscal year was Bank of America (NYSE:BAC), which produced a total return of 64%. Bank of America has benefited from substantial cost reductions, rising interest rates, strong core loan growth and higher market share. Although the share price has risen considerably over the past 12 months, we believe the business is still attractively valued—at just 10x our estimate of normalized earnings. Our largest individual detractor for the fiscal year was Apache (NYSE:APA), which produced a total return of 27%. Energy companies remain out of favor, but we believe these holdings are among the most attractively valued in the Oakmark portfolio when considering long-term oil supply-and-demand dynamics.

      


  • Harris Associates' Commentary: Patience Is a Virtue

    Daniel Nicholas is a Client Portfolio Manager at Harris Associates across all of the firm’s investment strategies. Prior to serving in this role, he was the Director, Institutional Sales for the firm. Before he joined Harris Associates in 2012, he was an Executive Director at Morgan Stanley as well as UBS. He holds an MS in Finance from the University of Wisconsin-Madison (2001) and a BBA from the University of Wisconsin-Madison (1999).


    One could argue that the active versus passive debate is poorly framed. While there is ample evidence to suggest that the average active manager underperforms net of fees, we believe “closet indexers” are primarily to blame for active manager underperformance. Perhaps a more productive discussion on the value of active management would be to analyze truly “active” managers versus “closet indexers.” We think that if you can find a way to differentiate between the two, the potential reward is significant.

      


  • Bill Nygren Comments on Charter Communications

    Charter Communications (CHTR - $331)

    Charter (NASDAQ:CHTR) gives us the opportunity to invest in what we believe is a strong business with exceptional management at an attractive price. Because of their valuable infrastructure, U.S. cable companies are benefiting from strong demand for high-speed Internet access. In many markets, Charter has the only fiber-rich network capable of providing consumers with the high Internet speeds they demand. We believe that new competitors are unlikely to enter the market as they will have to invest massive amounts of capital for fractional penetration. This should provide a long runway for continued growth at Charter. Chairman and CEO Tom Rutledge earned an excellent reputation for execution at Cablevision, and he has achieved meaningful progress with the legacy Charter business. Corporate governance at Charter is influenced by Dr. John Malone. We’ve had tremendous success investing alongside Dr. Malone over the past 30+ years, and we greatly value his strategic vision and capital allocation skills. After reporting its first quarter earnings, Charter’s stock price lagged behind the market as investors appeared to be frustrated with the pace of operational improvement at Time Warner Cable. Our experience investing in turnarounds reminds us that it takes more than a couple of quarters to make meaningful progress. We take a more positive, longer term view of the business, and Charter is valued at a discount to peer companies.

      


  • Bill Nygren's Oakmark Fund Second Quarter 2017 Commentary

    The Oakmark Fund increased 3.8% in the second quarter of 2017, which was ahead of the 3.1% gain for the S&P 500 Index. This was the fourth quarter in a row in which the Oakmark Fund hit an all-time high adjusted NAV. Broader market strength continued in the second quarter despite lingering concerns about healthcare and tax reform, as well as a drop in energy commodity prices. As was the case in the first quarter, weakening oil prices hurt the performance of our energy holdings during the second quarter, but we remain confident in the long-term outlook for these businesses. With no change in our fundamental outlook for our energy businesses, the lower share prices represented an opportunity to increase the return potential of the portfolio, and accordingly, we added to most of our energy holdings during the quarter.


    Our biggest contributing sectors were financials and information technology, and our lowest contributing sectors were energy and industrials. Our top individual contributors were Citigroup (NYSE:C), Nestlé (OTCPK:NSRGY) and Alphabet (NASDAQ:GOOGL). Citigroup—and many of our other financial holdings—benefited late in the quarter from generally favorable results from the Federal Reserve’s capital analysis review. We are pleased that Citigroup, as well as our other financial holdings, will have greater flexibility to return capital to shareholders through higher dividends and larger share repurchase programs. Alphabet produced a total return of 10%, primarily because of strong first quarter results. The company’s revenue was up over 20% during the quarter, and Alphabet disclosed that YouTube achieved one billion hours watched per day. We have said that YouTube represents a source of unappreciated value within Alphabet, and this disclosure helped to validate our thinking. Our largest detractors were Anadarko, National Oilwell Varco and General Electric. We initiated a new position in Charter Communications during the quarter, and we didn’t eliminate any positions.

      


  • Nygren Sticks to Bottom-Up, Long-Term Value

    When Bill Nygren (Trades, Portfolio) was growing up, his mother regularly went bargain hunting to stretch the family’s purchasing power.


    The son carries on the tradition except Nygren searches for bargain stocks rather than bargain groceries. Using disciplined, bottom-up fundamental research, he and his team identify stocks that trade well below their underlying value. After they find and buy those stocks, they wait for the market to come back around to their view of that value, making them long-term investors.

      


  • Maybe US Stocks Aren't Overvalued - Bill Nygren

    Over the past 50 years, the trailing price-to-earnings ratio for the S&P 500 has averaged 16.1x. At the end of 2016 that ratio was 20.6x. Many investors have used that number or other variations to conclude that the current market is expensive and have therefore shifted their asset allocation away from equities.


    We aren’t market timers at Oakmark. We have faith that the long history of the equity asset class outperforming other asset classes is likely to continue. Sure, there will be years here and there when the return on equities is negative, but over the long run, equities have dominated other asset classes and we see no reason for that to change. Other investors, despite professing the same faith in the long-term prospects of corporate America, spend a tremendous amount of time trying to guess when those down years will occur, believing their returns could be enhanced by moving to cash before the anticipated price corrections.

      


  • Bill Nygren Comments on Moody’s

    Moody’s (NYSE:MCO) provides essential information to the world’s capital markets. We have a long history with Moody’s, dating back to the 1990s when it was a part of Dun & Bradstreet. The stock briefly traded for less than 17x 2018 earnings estimates because investors feared that rising interest rates and changing tax policies would depress debt issuance. Although such events would likely result in slower growth in the short term, we believe the company’s long-term prospects remain compelling. Bonds issued with a Moody’s rating pay meaningfully lower interest rates than those without a Moody’s rating, and the price paid to Moody’s is much lower than the interest savings the issuer realizes. We believe this will create consistent demand for bond ratings as debt markets grow. Management is cognizant of the value that the Moody’s rating provides, and they are able to steadily raise prices year after year. In our view, Moody’s is a great business with growing profits, run by a management team we’ve known and respected for years, and the shares trade at a price that is well below our estimate of intrinsic value.


    From the Oakmark Select Fund first-quarter 2017 shareholder letter.

      


  • Bill Nygren Comments on Delphi Automotive PLC

    Delphi (NYSE:DLPH) is an automobile parts supplier that is well positioned for the secular trends that will continue to drive the auto industry. We believe Delphi will benefit from increasing governmental regulations for safety, fuel efficiency and emissions control, as well as rapidly growing consumer demand for vehicle connectivity. Since Delphi’s initial public offering in 2010, we find the company has generated robust sales and earnings growth along with ample free cash flow. Despite strong fundamental performance, the stock trades at a discount to the market P/E as well as our estimate of intrinsic value due to concerns about the U.S. auto cycle, short term uncertainty in China and an uncharacteristic downward revision to earnings guidance in 2016. We believe these headwinds will prove temporary and that the company’s performance will improve.


    From the Oakmark Select Fund first-quarter 2017 shareholder letter.

      


  • Bill Nygren Comments on Chesapeake Energy Corp

    The downturn in oil and gas prices since late 2014 has created an opportunity to buy well-managed exploration and production companies at discounted values. We believe Chesapeake Energy (NYSE:CHK) is among the best managed oil and gas companies and is trading well below the value of its assets. The company has sizeable acreage holdings across the U.S., and its management is focused on developing these assets in a cost-effective and high-return manner. The team has successfully navigated the commodity price downturn while prioritizing the interests of equity holders, and we expect this shareholder-friendly team will continue to create value in an improving commodity price environment. With the enterprise trading at a substantial discount to our estimate of asset value, we believe Chesapeake is an attractive holding.


    From the Oakmark Select Fund first-quarter 2017 shareholder letter.

      


  • Oakmark Select Fund First Quarter 2017

    For the quarter, the Oakmark Select Fund increased 3%, compared to a 6% gain for the S&P 500 Index. While good on an absolute basis, we aren’t satisfied by the relative return this quarter, but understand that our investment process of buying companies that have a clear path to per-share value growth, that are run by strong management teams, and that trade at significant discounts to intrinsic value works well on average and over time, but not necessarily every quarter.


    Nearly half of the underperformance relative to the S&P 500 came from our two energy holdings as oil and gas prices pulled back somewhat during the quarter. The three largest detractors—Apache (-19%), Chesapeake Energy (-15%) and General Electric (-5%)—all have direct or indirect exposure to oil and gas prices. Energy price volatility notwithstanding, the fundamentals of all three companies are largely tracking with our expectations. Furthermore, recent oil and gas property transactions confirm our belief that Apache and Chesapeake Energy are trading at substantial discounts to fair value, and in the case of Chesapeake, insiders have been buying stock. We added to the Fund’s holdings in both Chesapeake and Apache during the quarter.

      


  • Oakmark Fund First Quarter 2017 Shareholder Letter

    The Oakmark Fund increased 4% in the first quarter of 2017, hitting an all-time high adjusted NAV for the third quarter in a row. The Oakmark Fund lagged behind the S&P 500’s strong 6% gain. Although the S&P 500 also hit new highs during the first quarter, the momentum from January and February faded in March as concerns grew over the Trump administration’s plans for healthcare reform, new infrastructure spending and tax reform. Oil commodity prices also weakened in March, which hurt the performance of our energy holdings during the quarter, but we believe supply-and-demand dynamics will lead to higher commodity price trends over the long term. The information technology sector was especially strong during the first quarter, with the NASDAQ Index gaining 10%. In addition, the information technology sector has provided the highest contribution to return of the Oakmark Fund over the past three years, with several holdings returning more than 20% annually (Apple, Microsoft and Texas Instruments).


    Our best contributing sectors for the first quarter were information technology and consumer staples. Apple and Unilever were the best individual performers, up 25% and 22%, respectively, and the information technology sector as a whole returned 8%. Our lowest contributing sectors for the quarter were energy and consumer discretionary. Our worst individual securities for the quarter were Apache and Anadarko. During the quarter, we added new positions in Chesapeake Energy, Delphi Automotive and Moody’s (see below). We eliminated positions in Halliburton and Sanofi. Halliburton was sold when it reached our estimate of intrinsic value, and Sanofi was sold because we believed we had higher-conviction, higher-return options within the healthcare sector.

      


  • Oakmark: Sacrificing the Short Term for the Long Term

    Eric Liu is a Portfolio Manager and Senior International Investment Analyst at Harris Associates. Prior to joining Harris Associates in 2009, Eric was a Research Associate at Dodge & Cox and an Investment Banking Analyst at Jefferies & Company. He received an MBA from the University of Chicago and a BA from the University of California Los Angeles.


    2016 was an unusually volatile year for global equity markets and our strategies. The beginning of the year was marked by a sharp sell-off in global equities due to growth concerns in China, the devaluation of the yuan and falling commodity prices. At one point during the first quarter, the Oakmark International Fund was down over 16%. Markets then recovered from their February lows, but this was short lived as Britain voted to exit the European Union in late June, which led to uncertainty across global markets and another sell off of equities. At the end of the year's first fiscal half, the Oakmark International Fund was down over 10%. Through this downward volatility, we did not waiver and instead used it as an opportunity to initiate new positions in companies that we viewed as undervalued and further build up stakes in our most underappreciated holdings.

      


  • Bill Nygren Comments on Ally Financial

    We continue to believe that financial stocks are quite undervalued as well. During the quarter we made a new investment in Ally Financial (NYSE:ALLY). Ally was founded nearly a century ago as General Motors Acceptance Corporation. Its purpose then was to provide financing to GM dealers and retail customers. Today, Ally is no longer owned by GM. It serves a wide variety of dealers (including Ford, Chrysler and Toyota), and it is carefully building a consumer franchise. In our view, investors are myopically concerned that the auto business is at a cyclical peak. U.S. auto sales are near record levels, and credit losses are below long-term averages. Some believe Ally’s earnings have nowhere to go but down. We believe cyclical pressures will be more than offset by continued internal improvements, such as funding cost reductions (low-cost online deposits grew 19% in the third quarter of 2016) and improving the capital structure. With Ally’s stock trading at roughly 68% of tangible book value, we believe Ally is a compelling addition to the Oakmark Select Fund. We didn’t eliminate any positions during the quarter and exit 2016 with 20 investments in the portfolio.

    From Bill Nygren (Trades, Portfolio)'s Oakmark Select Fund fourth quarter 2016 commentary.   


  • Bill Nygren Comments on HCA

    HCA (NYSE:HCA) is the largest operator of for-profit hospitals and related health care services in the U.S. The company benefits from scale and size advantages, an attractive geographic footprint in higher growth markets, best-in-class management and governance, and an equity-friendly approach to capital allocation. We expect HCA to grow operating income in the mid-single digits and grow EPS in the low-double digits over time. Hospital stocks sold off following the presidential election due to concerns that the benefits from health care reform will be lost. We believe that HCA’s share price discounts the effects of repealing the Affordable Care Act. Accordingly, the shares are selling below our estimate of intrinsic value.

    From Bill Nygren (Trades, Portfolio)'s Oakmark Fund fourth quarter 2016 commentary.   


  • Bill Nygren Comments on Baxter

    Baxter (NYSE:BAX) is a collection of disparate health care businesses, which include dialysis consumables, intravenous solutions and surgical sealants. These businesses represent what was left at Baxter following the spinoff of Baxalta in mid-2015. The businesses hadn’t been run optimally, and at the time of the spin were only producing 9% margins, which represents less than half of the levels we believe to be achievable. Baxter hired outsider Jose Almeida as CEO in late 2015. Oakmark Fund shareholders might fondly remember Almeida from his successful tenure as CEO of our long-time holding Covidien, where he fixed (and eventually sold) a collection of health care assets that had been spun out from Tyco International. We believe Almeida has the right skill set to improve Baxter’s margins and portfolio of assets, and that the company is selling at a large discount to intrinsic value.

      


  • Bill Nygren Comments on AutoNation

    AutoNation (NYSE:AN) is the largest automotive retailer in the U.S. The company owns and operates 371 new vehicle franchises through 261 stores, located predominantly in major metropolitan markets. The stock was down 18% in 2016 because investors were disappointed by the company’s earnings and were fearful that the auto cycle had reached its peak. The soft earnings were caused by brand-building investments, disruptions from a Takata airbag recall and poor performance in Texas. We are confident that these are short-term setbacks and that AutoNation will be able to rebound. In our view, the brand and franchise remain strong, and the company’s CEO, Mike Jackson, is a proven operator and superb capital allocator. Since Jackson became CEO in 1999, he has opportunistically used share repurchases to reduce the share base by 75%, contributing to a total return to shareholders of 346% (versus 144% for the S&P 500). We believe that paying 11x depressed earnings for an industry leader with such a strong track record is a compelling investment.

      


  • Bill Nygren's Oakmark Select Fund: Fourth Quarter 2016 Commentary

    The Oakmark Select Fund increased 10% for the quarter, compared to 4% for the S&P 500 Index. For all of calendar 2016, the Fund increased 15%, compared to a 12% gain for the S&P 500 Index. We’re happy to highlight that the Fund hit a new all-time high adjusted NAV this quarter.


    As you can see from those numbers, more than all of our 2016 outperformance came from the strong fourth calendar quarter. As always, we invest the Fund’s assets where we believe the market is presenting the most compellingly valued opportunities, and thus were 32% weighted in financials and 0% weighted in health care and consumer staples at the start of the fourth quarter. Although those weightings were responsible for some of the Fund’s relative underperformance throughout most of 2016, these sector weights proved hugely beneficial in the most recent quarter, producing over 450 basis points of relative performance versus the S&P 500 Index. Our top individual performers for the quarter, each up by at least 20%, were Fiat Chrysler (up 40%) and four financial companies (led by Bank of America, up 42%). Our biggest detractors, FNF Group and Intel (NASDAQ:INTC), were each only down single-digit percentages.

      


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