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Holly LaFon
Holly LaFon
Articles (8090) 

Ask Oakmark's Bill Nygren Your Investing Question

Market-beating investor joins GuruFocus for Q&A

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.

Win Murray co-manages the Oakmark Select Fund and serves as the Director of U.S. Equity Research at Harris Associates, which he joined in 2003.

The $89.8 billion Oakmark Funds specialize in value investing and low-priced stock selection. They take a patient, long-term perspective, selecting equities priced below estimated intrinsic value that the they believe will eventually rise to their true value. 

In addition to discounts and low ratios, the investors also seek businesses with growing free cash flow, intelligent reinvestment and management teams that have an ownership mindset.

Bill Nygren (TradesPortfolio) has appeared on numerous media outlets. In October, he said he did not see markets as expensive, despite being a bargain hunter. “I don’t see the excitement typical at market peaks. We’re still finding stocks to buy," he told CNBC.

Bill’s portfolio has the largest weighting in financial services at 34.5%, with top positions in Citigroup (NYSE:C), Alphabet (NASDAQ:GOOG), Bank of America (NYSE:BAC), Oracle (NYSE:ORCL) and AIG (NYSE:AIG).

The Oakmark Select Fund, which Win and Bill co-manage, has Alphabet, Fiat Chrysler (NYSE:FCAM), CBRE Group (NYSE:CBG), Citigroup and TE Connectivity (NYSE:TEL) as its biggest holdings. It has also invested almost a third of its stocks in financials.

Both funds have produced outstanding results. Since inception, the Oakmark Fund returned 12.98% on average annually, and the Oakmark Select Fund posted 12.87% average annual returns.

To ask Bill and Win your questions, simply post them in the comments section below. You’ll get an answer in an upcoming article shortly!


Rating: 5.0/5 (3 votes)

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Comments

Old_Street
Old_Street - 3 weeks ago    Report SPAM

In past interviews, you've talked about how you get excited about an opportunity when you're able to build a proprietary data set. Without giving away any of your secrets, can you give us some past, but somewhat recent, examples where you've been able to do that and how the data were collected or built? How have you employed technology to gain an edge in investing?

Also, every company seems fixated with improving margins. How do you determine whether a company is temporarily boosting margins by forgoing valuable investment? How do you figure out whether a company is investing enough in its business?

Gangstarr
Gangstarr - 3 weeks ago    Report SPAM

Bill: Appreciate you taking the time to answer questions for the members of Gurufocus! What is your take on Chesapeake Energy? What do you estimate its range of intrinsic value at? What are potential catalysts to achieve that range?

csucag2
Csucag2 - 2 weeks ago    Report SPAM

Can he comment on GE? Any thoughts on upside? Time frame? Mistakes they have made in the past? What he would like to see them do? Any thoughts on the spinoff?

lennyst
Lennyst - 2 weeks ago    Report SPAM

Reflecting on your current holdings, did Oakmark Select Fund buy from a 'shopping list' that you waited for your price/value point, or were you more opportunistic - following and buying from market miss-pricings?

cknazze
Cknazze - 2 weeks ago    Report SPAM
What resources or advice can you give to somebody starting their own investment partnership? Could you touch on LLC setup, RIA advisor, brokers, etc. I want to model it after Warren Buffett (Trades, Portfolio)'s in the 50s and 60s. Thanks.

maurodejesus
Maurodejesus premium member - 2 weeks ago

Do you think the market prices for Facebook, Amazon and Google are expensive? Or do you see them fairly valued for their quality and growth?

bobsantoro
Bobsantoro - 2 weeks ago    Report SPAM

Bill, What signals should we look for to warn us of an imminent market correction? What stocks do you recommend to take a defensive position against a large correction.

csucag2
Csucag2 - 2 weeks ago    Report SPAM

What is your most compelling investment right now?

arurao7
Arurao7 - 2 weeks ago    Report SPAM

Bill:

a) Why are you still bullish on Chesapeake and Apache? I remember in one of the earlier quarterly letters, the team at Oakmark believes Oil prices will rise to 70 -80 dollars per barrell over the next few years. What are the assumptions to this number, because "shale" , and "oil producing-nations-undercutting-each-other" seem to be increasing the supply, and 'electric vehicles' seem to be dampening the demand side of the equation.

b) Surprised to see Netflix in oakmark's portfolio. I understand your explaination in the quarterly letter about how the P/E will drop if they bump up the monthly rate by a few dollars (to $15 per month). Why do you think Amazon, or Apple cannot capture this market. Is this a case where amazon and apple can have a market, but Netflix can still widen its moat?

emh.larsson
Emh.larsson - 2 weeks ago    Report SPAM

What is your advice when it comes to differentiating between temporary weaknesses in a high quality company and the first leg of a secular reversal to a future mediocre mean, causing both return on capital and valuation multiples to head south?

khurrum
Khurrum premium member - 2 weeks ago
Thank you for taking the time to answer our questions. For a generalist, how would you suggest going about the research process - Warren Buffett (Trades, Portfolio) talks about having a very high bar and rejecting the vast majority of ideas that come your way and that when you comes across a good idea it should be so obvious that it hits you on the head. How quickly and what types of deal breakers do you reject ideas on? And what makes you decide to continue researching an idea? Once you decide to look at an idea in more detail, how long do you spend on it before you decide to invest? Keeping in mind mental biases such as getting more attached to ideas the longer you spend researching it? Thanks again

Had1rian
Had1rian premium member - 2 weeks ago

Thanks for taking investor questions? I have a question about what characteristics one should look for in a stock that might be predictive of its becoming valued at a higher mulitple? I track stocks whose prices are going up nicely for a couple years due to increasing EBITDA and earnings, but in such a manner that the valuation multiple barely budges. Thank You!

khurrum
Khurrum premium member - 2 weeks ago

Hi, thank you for taking the time to answer our questions. I would appreciate if you could tell us a bit about how you go about building a position in a name which you like? As value investors, we cannot time the market and as such there is always a risk that we can take a big position in a name very early and have to wait for a long time for that position to recover or you can keep buying in to lower your average cost while that position ends up becoming much larger than you would like. Is there a standard size of position you take which may be for example a small proportion of the eventual size position you would like to end up with and maintain that position if it goes up right away and only buy in more if the price falls or initiate a large position right away? Thanks again

Carol Nadon
Carol Nadon premium member - 2 weeks ago

Hi, assuming your a risk manager in a bottom up perspective, how are you taking care of risk management globaly. For instance, China’s debt as a percentage of GDP now stands at about 280% beside other major problems like unrecovarables bad loans, shadow banking, etc. Are you concern about theses facts or do you invest as a pure bottom up player ?

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