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Holly LaFon
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Bill Nygren and Win Murray Taking GuruFocus Reader Questions

Ask your question for a Q&A with renowned investors

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 (NASDAQ:GOOGL), Citigroup (NYSE:C), Netflix (NASDAQ:NFLX) and Apple (NASDAQ:AAPL). In the first quarter, Nygren bought Constellation Brands (NYSE:STZ) and S&P Global Inc. (NYSE:SPGI). He sold Diageo (NYSE:DEO), Unilever (NYSE:UL) and Bristol-Myers Squibb (NYSE:BMY). 

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.

About the author:

Holly LaFon
I'm a financial journalist with a Master of Science in journalism from Medill at Northwestern University.

Visit Holly LaFon's Website

Rating: 0.0/5 (0 votes)


Jibjob - 7 months ago    Report SPAM

In your reading have you come across Terry Smith of Fundsmith? Curious as to what you think about his approach? I ask because he manages a similar amount of assets to yourselves and although we don't have a directly comparable 10 year result (will do at the end of this year), he appears to have outperformed Oakmark by approx 4.8%. Thanks.

Buddy1 premium member - 7 months ago

Thank you for taking questions. I would like to talk about banks, you seem to hold several in your portfolio. What do you think about their current valuation and their future returns and risk from here!

Jeffjultydom premium member - 7 months ago

Thank you for doing this for Gurufocus.

Being your style tilts towards "value", what in your analysis helps you steer clear of potential value "traps"? Then if/when you find youself with a value trap position, do you have some type of a process to limit (or exit) it?

James Li
James Li premium member - 7 months ago

Thank you for taking questions. I have a question regarding your position in Apple:

How does your view on Apple change in light of the ongoing U.S. - China trade war? Do you continue seeing good potential in the stock? Why or why not?

Dimknaf - 7 months ago    Report SPAM

Thank you for taking our questions.

Do you have any views about UK stocks. Whenever I had great returns it was when I saw valuations so low that I could no believe that they exist. That was the case in Greece in 2012 and in some extend in 2015. I think that this is the case now in some UK small caps.

I think the same about some retail companies. Of course a lot of them will dissapear. But don't you think there are some incredible opportunities there (even risky)?

Russell.K - 7 months ago    Report SPAM

Dear Mr Nygren and Mr Murray,

Thank you for taking my questions.

1.) How do you value businesses? (i.e. through the asset-based methologies like Walter Schloss or more earnings-based ones)

2.) Alphabet Inc. is one of your biggest positions but it has a valuation of 32 times free cash flow; how is that justified?

3.) How does one analyse the management of companies?

4.) Netflix is a large position in the Oakmark Select Fund, however it has decreasing FCF but increasing earnings with a rich valuation; is that not a trap?

Madironcapital - 7 months ago    Report SPAM

Dear Mr. Nygren,

We met at the Ben Graham Conference in June.

I caught you walking out the door and asked you a question about News Corp:

'what were the most compelling assets to you at NWSA?'

You answered the real estate but also mentioned you weren't happy with mgt.

Can you please expand on your view of the RE assets at NWSA and the potential intrinsic value for the entire company?

Thank you so much!


Ted Rasa Jr.

Tea - 7 months ago    Report SPAM

3 -5 year out....EEFT, ICLR or FIS??? many thanks.....tom A

Asaint12 - 7 months ago    Report SPAM

What are the long term prospects of TEVA? I am a long term holder of this particular company.

Brbjmich2 - 7 months ago    Report SPAM


Passing on asking about the take on a single company. What's a go-to resource for you for investment ideas and inspiration, beyond typical business publications and websites? Thanks for taking questions and for considering this one.

Schabetc - 7 months ago    Report SPAM

WRT Investing for Retirement:

I can show that a 35 year old , starting in 1980 and simply investing in S&P 500 for 30 years would have more money than any other recommended portfolio. So why all this nonsense about diversification and "risk"?

You all have the wrong concept of risk. Who cares about the intermediate ups and downs (= dollar cost averaging). The real risk is not having enough money when you reach retirement age. So, my question is what is wrong with a policy of S&P 500 only until retirement?

Low Tide Investments
Low Tide Investments premium member - 7 months ago

Hi Bill,

How do you control your emotions when dealing with a position at a loss, where you know that it is still undervalued.

Lappenjr - 7 months ago    Report SPAM

Thanks for taking questions!

I wonder about automakers. In general the industry is priced at very low p/e multiples (except Tesla), and generate very good cash flows. If you look at a strong company like Volkswagen I can’t help but wonder why they are priced so cheaply? They are in the forefront of the EV explosion and they have strong brands such as vw, Audi and Porsche. What are your thoughts on them in particular and of the industry as such for a long term investment? 5-10 years. (I am tempted to load the wagon with VW stocks)


Fergus1 premium member - 7 months ago

Thanks for taking questions!

In your metrics, are you taking account the off balance sheet liabilities ?

Slava Vershkov
Slava Vershkov - 7 months ago    Report SPAM

1) What do you think of British banks and particularly Barclays (which looks like a turnaround story priced far below book)?

2) How do you value financial institutions? Is tangible book value a relevant metric if the management is not so good? Are banks commodity businesses that should be valued as cyclicals?

3) As far as I understand, Netflix has to triple its earnings in the next 5 years just to justify its current valuation. Do you think that mathematical expectation of a long position in Netflix is still positive?

Thank you!

Towens1854 - 7 months ago    Report SPAM

What do you know about investing now, that you wish you knew when you started?

chris lowe
Chris lowe premium member - 7 months ago

Why no Berkshire Hathaway? It would seem to me to be an almost ideal holding for Oakmark.

Thank you


Wlclark premium member - 7 months ago

Can you expand on the process that you follow to understand the Margin of Safety on your investments?

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