"Of Mutual Interest"-Bill Nygren, Portfolio Manager, Oakmark Select Fund
Tuesday, August 04, 2009PAUL KANGAS: Mutual funds that focus on undervalued large and mid-cap stocks took it on the chin when the market sold off last year, but they've finally started to take off. And in tonight's "Of Mutual Interest" segment, we focus on one value fund that's made a big comeback, the Oakmark Select Fund. It's up 31 percent year to date placing it near the top of its category. And Bill Nygren's been at Oakmark since its inception 13 years ago. He joins us from Chicago. Bill, welcome to NBR.
BILL NYGREN, PORTFOLIO MANAGER, OAKMARK SELECT FUND: Thanks for having me, Paul.
KANGAS: As a value manager, you look for under valued stocks. Are there any left after July's big rally?
NYGREN: I think there are a lot of under valued stocks left. A lot of investors look back on the end of March and say market is up 50 percent. And which is true. But we don't think there is much fundamental reasons for the market to be that cheap back then. You have to remember, the market is still down a third from where it was a decade ago.
KANGAS: Good point. You only have about 20 stocks in the fund's portfolio. The biggest holdings are media companies like Discovery Communications and Viacom. Why do you like that group?
NYGREN: I think investors have turned too negative on the media group. There is concern about new media, specifically the Internet and all the different devices to view media on. We think content companies that deliver demanded content are still going to be among the better names in the stock market. A name like Discovery has got good global growth and improving balance sheet. We think their best days are still ahead.
KANGAS: Interesting. You also have pharmaceutical and tech stocks on the portfolio. Are you still seeing value there?
NYGREN: Absolutely. I think sometimes people think because we're a value manager, we can only buy the lousiest companies, the very cheapest, but when names like pharmaceuticals or other health care names and certainly the technology names get just thrown out by other investors and become as cheap as traditional businesses, we're happy to buy those, too.
KANGAS: OK. Now, you were burned by the financial stocks a few years ago. Do you think they're good buys now?
NYGREN: Well, it's true, Paul, we didn't see the collapse in home prices coming. I wish we had. But we still think the retail banking business is a great business and we believe that once loss ratios get back to normalized levels, their earnings will come through and those stocks can go substantially higher.
KANGAS: Which stocks do you like the best in that group?
NYGREN: We own Capital One Financial, JPMorgan and Bank America. We think all three are still very attractive.
KANGAS: OK. Now do you personally own or have any other disclosures to make about those issues that we've mentioned tonight?
NYGREN: I don't directly own any of the stocks in the fund or any other stocks for that matter. But the majority of my personal assets are in the funds that I manage. So indirectly I've got a big interest there.
KANGAS: You have a global select fund also, very briefly, you like some of the foreign markets and which so?
NYGREN: We like basically all of the foreign markets. We think the valuations there are as attractive as they are in the U.S. And we've got that fund about evenly split now between U.S. names and non-U.S. names.
KANGAS: Very, very good. Now Bill, it's great to see your patience is finally paying off and I want to thank you for your insights.
NYGREN: Thanks for having me.
KANGAS: My guest, Bill Nygren of the Oakmark Select Fund.
