Bill Nygren and Win Murray Taking GuruFocus Reader Questions

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Jul 09, 2019
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Renowned investors Bill Nygren (Trades, Portfolio) and Win Murray of Chicago-based Oakmark Funds are taking questions from GuruFocus readers this week. To ask your question, post it in the comments section below.

Nygren is the manager of the Oakmark Fund and Oakmark Select Fund, as well as chief investment officer for U.S. equities at Harris Associates, a firm with approximately $118 billion in assets, in Chicago. His Oakmark colleague, Win Murray, is co-manager of the Oakmark Select Fund and director of U.S. equity research at Harris Associates.

Both of the investors share a value investing philosophy that prizes stocks trading at discounts to their intrinsic value. They believe that, over time, an undervalued stock’s price will catch up with the value of the underlying business of which it represents a small piece.

“As always, our investment process focuses on long-term business value and is not influenced by short-term volatility in share prices,” the investors wrote this year in a fund commentary.

Oakmark also tends to run focused portfolios with fewer than 75 securities in each fund, which can lead to short-term volatility and outsized returns. When deciding what to buy, they emphasize outstanding management teams that have a significant ownership stake in their companies. Nygren and Murray also like companies that have increasing, predictable earnings and growing free cash flow that is reinvested intelligently.

Dedication to this approach has produced solid returns. The Oakmark Fund, which holds 30 to 60 stocks, has returned 12.36% on average annually since its 1991 inception, versus a 9.71% average annualized return for the S&P 500 index.

As of first quarter-end, the Oakmark Fund had the greatest weighting in financials at 27.2% of the portfolio, followed by information technology at 18.4% and communications services at 16.0%.

Its top holdings were Alphabet (GOOGL, Financial), Citigroup (C, Financial), Netflix (NFLX, Financial) and Apple (AAPL, Financial). In the first quarter, Nygren bought Constellation Brands (STZ, Financial) and S&P Global Inc. (SPGI, Financial). He sold Diageo (DEO, Financial), Unilever (UL, Financial) and Bristol-Myers Squibb (BMY, Financial).Â

Oakmark’s widely read fund and market commentaries came out for the second quarter this week. In Nygren’s general market commentary, he discussed the importance of being a generalist rather than a specialist when investing, especially in difficult markets.

"When analysts come to work at Oakmark, we have already confirmed that they share our long-term value investment philosophy. If they don’t, they don’t survive the interview process. From day one, they can look within any industry for businesses that are undervalued, growing and run for the benefit of shareholders. We believe that level of freedom allows us to attract and retain more talent, speeds development, improves research department flexibility, and most importantly, results in the robust debate our process requires."

You can read Nygren’s full commentary here. Check out his portfolio here.

Nygren and Murray are happy to share their investing expertise with you. Again, to ask them a question about investing, simply post it in the comments section below! GuruFocus will post their answers shortly in an upcoming article.