Bill Nygren with his thirty-year-long career in Harris Associates is an intriguing figure in the investment world. He served in different positions within the firm, but his leadership over the Oakmark Fund is arguably the pinnacle of his career. Bill Nygren's Oakmark Funds Portfolio is valued at $18.30 billion which is a rise from $15.89 billion in the last quarter.
The portfolio is divided over 58 holdings, the largest one being Alphabet Class A holding (NASDAQ: GOOGL). The portfolio weighting is designed so not a single position is dominant among others. Other important holdings include Capital One Financial Corp (NYSE: COF), International Exchange Inc. (NYSE: ICE), and Wells Fargo & Co. (NYSE: WFC).
Nygren started a new position in Q4, namely BlackRock (NYSE: BLK). Significantly increased positions include Corteva Inc. (NYSE: CTVA), and Centene Corp (NYSE: CNC). Also, there were four exits in the last quarter, from Pinterest (NYSE: PINS), PulteGroup Inc. (NYSE: PHM), Parker-Hannifin Corp (NYSE: PH), and Carlisle Companies Inc. (NYSE: CSL).
Key Takeaways
- Bill Nygren is a value investor with a career spanning over three decades.
- He is a CIO at Harris Associates and a vice president of the Oakmark Funds.
- The value investing cornerstone of Nygren's strategy is, based on bottom-up research and long-term investment horizon.
- Nygren's portfolio in Oakmark Funds is valued at $15.89 billion divided amongst 58 holdings.
- The portfolio is sector-oriented towards financial services, complemented by substantial investments in the Telecommunication, Healthcare, and Energy sectors.
Key Holdings
Alphabet Inc Class A (NASDAQ: GOOGL) with 3.47% of the portfolio
The initial trade of GOOGL stocks Nygren was conducted in Q2 2011. During the years he exited and reentered the holding several times, but has kept a steady position since Q4 2019. The current value of the holding is $634 million while the fund owns 4.54 million GOOGL stocks. He was paying for GOOGL stocks $41.70 on average. Based on the current price of $176 and the historical trades he gained 75% from this holding.
Capital One Financial Corp (NYSE: COF) with 2.98% of the portfolio
Capital One is another long-term investment process that Nygren started in Q1 2009. The fund owns 4.16 million shares valued at $545 million. The average buying price of COF stocks was $56 while its current price is $141. Based on the price difference, and trades done in the meantime, Nygren gained 91% from this holding.
International Exchange Inc. (NYSE: ICE) with 2.93% of the portfolio
Oakmark fund owns 4.18 million ICE shares while the initial investment dates back to Q2 2021. The value of the holding is $536 million, and since the initial investment Nygren kept increasing the stake. He bought ICE shares 8 times in total, for an average price of $113. The current price of the stock is $138 generating a gain of 21% so far.
Wells Fargo & Co (NYSE: WFC) with 2.74% of the portfolio
WFC Holding has a fifteen-year history as a part of the Bill Nygren portfolio. During that time, the holding was almost exclusively strengthened, while today it has 10.16 million shares. The value of the holding is $500 million, while the latest activity is the selling of 950 thousand stocks in Q3. Since 2009 Oakmark bought their stocks at $39 on average, while its present value is $61. The rise in value, combined with the sales in the meantime, resulted in a gain of 43% over time.
ConocoPhillips (NYSE: COP) with 2.72% of the portfolio
COP is one of the newer additions to the portfolio dating to Q1 2021. Oakmark funds hold 4.28 million shares valued at $497 million. The average purchasing price of COP stocks was $72 while the sales were timed better at an average of $106. With the current price of the stock reaching $121, the holding generated a solid gain of 58%. The holding saw an increase of 300 thousand stocks during Q4 2023.
KKR & Co Inc. (NYSE: KKR) with 2.69% of the portfolio
As of Q4 2023, Oakmark's Fund owns 5.93 million KKR shares valued at $491 million. Since Q4 2020 Bill Nygren bought their stocks five times and sold them four times. Portfolio managers at Oakmark are known as great market timers, managing to buy stocks for $48 on average while selling for $62. The current value of the stock is $104 showing how they manage to identify substantial discounts when trading. In just three years, from trades and the rise in value, the fund earned a 79% gain.
Iqvia Holdings Inc. (NYSE: IQV) with 2.57% of the portfolio
The initial investment in IQV holding happened in Q2 2023. In both, Q3 and Q4 the fund continued to increase its position in the company, reaching 2.03 million shares valued at $469 million. IQV value has significantly risen since 2023, generating 10% gains. While Oakmark was buying their stock on a $210 average, the current price has already gone up to $231.
Comcast Corp (NASDAQ: CMCSA) with 2.52% of the portfolio
Comcast has been a constant part of Oakmark's portfolio since 2009 except for a short absence during 2013. They now own 10.50 million shares valued at $460 million. The latest activity in this holding was in Q4 when the fund bought an additional 1.45 million shares at $42. Since then the price has fallen and is currently standing at $39. Even with this recent development, the fund made a gain of 53% due to an average buying price of $23.
American International Group (NYSE: AIG) with 2.52% of the portfolio
AIG is another long-term investment with a history of twelve years of activities. Oakmark 2023 increased its position presently owning 6.79 million shares valued at $460 million. While the fund has been paying $45 on average, and selling for $49 they didn't manage to generate noteworthy returns. This is further amplified by the sheer length of the investment process. The current AIG stock price is $80 and this holding generated a 35% gain so far.
Fiserv Inc. (NYSE: FI) with 2.47% of the portfolio
In three years of FI stocks investing Nygren bought seven and sold on three occasions, leading to a holding with 3.4 million shares. In Q4 2023 he expanded this position for an additional 250 thousand stocks bought at $122. The value of the holding is $451 million and it generated a gain of 25%.
Sector Allocation
Bill Nygren's portfolio holdings are heavily concentrated in the Finance sector, with reasonable allocation also seen in the Telecommunication, Energy, and Healthcare sectors. The current sector allocation is:
- Finance with 38.60% of the portfolio valued at $7.06 billion
- Telecommunication with 12.40% of the portfolio valued at $2.26 billion
- Energy with 9.07% of the portfolio valued at $1.64 billion
- Healthcare with 8.78% of the portfolio valued at $1.60 billion
- Consumer Cyclical with 8.51% of the portfolio valued at $1.55 billion
- Technology with 7.43% of the portfolio valued at $1.35 billion
- Industrials with 5.94% of the portfolio valued at $1.08 billion
- Consumer Defensive with 4.01% of the portfolio valued at $732 million
- Materials with 2.85% of the portfolio valued at $521 million
- Real Estate with 2.43% of the portfolio valued at $444 million
Bill Nygren's Biography
Nygren educational background pointed out his high potential which he later fulfilled. He earned his bachelor's degree in accounting from the University of Minnesota, while he obtained his MBA from the University of Wisconsin-Madison.
Before joining Harris Associates in 1983, he worked at Northwestern Mutual Life Insurance Company as an investment analyst.
Currently, he is the CIO at Harris Associates and vice president of the Oakmark Funds. Also, he has been the portfolio manager of the Oakmark Select Fund since 1996. In 2001 he was awarded with the Moriningstar's Domestic Stock Manager for the year 2001 accolade.
Bill Nygren's Investment Strategy
Bill Nygren is known as a value investor, with the cornerstones of his strategy being contrarianism, a long-term investing horizon, and the search for intrinsic value in the company. Before investing he is waiting out for a significant discount, usually up to 60% to the intrinsic value of the company.
The first step in evaluating potential investments is identifying true business value. This is done through a bottom-up approach where the company is analyzed in detail. Nygren is analyzing their financial statements, including cash flow, leverage, liquidity, and growth potential.
Nygren throughout his career was known as a contrarian, often betting on out-of-favor companies. From his Oakmark portfolio we can see that besides Alphabet holding, there are no major investments in the most popular companies that are the drivers of the AI revolution.
When investing he is assessing a three to five-year period, which often prolongs to over a decade. He believes in long-term investing, and waiting out for the company to show its true potential. He bases his belief on the fundamental analysis and the real quality of the business.
Oakmark Fund under his leadership is focused on patience and consistency as being integral parts of the investment process. Their portfolio is concentrated in between 20 and 70 stocks with an active management approach.
Oakmark Funds Performance Analysis
Historical Performance
Since 1999 Oakmark Fund generated a cumulative 25-year gain of 763% or 9% annually. At the same time frame, the S&P 500 delivered a cumulative gain of 285% or 5.55% yearly gain. In the last fifteen years, the fund outperformed the index on ten occasions.
Some of the best-performing years are 2000, 2001, 2009, and 2016. In the last three years the fund created a gain of 34.2%, -13.36%, 30.89% beating the index every time. The last three years resulted in a cumulative gain of 52.19% while the index delivered 27%.
Notable Success
Bank Of America Holding
During the Global Financial Crisis in 2008, Nygren invested in Bank Of America when it was an out-of-favor investment. Nygren had a strong conviction that the stock would experience a comeback after the crisis which did happen. This investment move handsomely paid off when the bank's price value soared after the crisis.
Bet On Netflix
Although Netflix was not been a pick for most value investors at the time, Nygren identified its intrinsic value. Based on its business model, market position, and growth potential he made a bet which later proved to be highly lucrative.
Notable Failures
General Electric Investment
Nygren and his partners from Oakmark Fund believed that the GE stock was undervalued and that it would in due course make a turnaround. However, due to long-term insurance liabilities, and operational issues, the stock price experienced a prolonged downturn. This resulted in significant losses for the fund.
Investments In The Energy Sector
In a period around 2014, several energy sector-based investments like Apache Corporation went downhill. The price of oil plummeted and later high volatility led to substantial losses.
