Nygren on the Value in Financials

Top fund manager Bill Nygren says he’s continuing to find the best value in the market in the financial sector.

While the much-maligned sector isn’t the sexiest right now, Nygren says that doesn’t matter to him. What does matter is value. “We own the financials because they are the cheapest stocks with the highest quality management,” he told CNBC. “We don’t wake up in the morning thinking we want to put money to work in boring industries. But when you see valuations that are less than book value, less than 10 times earnings, to us that looks really, really attractive compared to a market at about 16 times earnings.”

Nygren also likes the tech sector, but not the hot, trendy upstarts. Instead he’s high on the likes of Oracle, Microsoft, and Intel. As for financials, he’s particularly keen on Bank of America.

The Validea Hot List is up 250% since its 2003 inception, more than tripling the S&P 500. Check out its current holdings here.

Nygren Talks Value, Opportunity, And The End Of QE

Worried about the end of quantitative easing? Top fund manager Bill Nygren isn’t.

In an interview with MoneyLife’s Chuck Jaffe, Nygren says that his firm’s five-year-holding-period, value-focused, bottom-up approach means that the exact timing of the tapering of the Federal Reserve’s bond-buying program “ends up not really being an important factor,” adding, “We certainly think the markets can handle it.”

Nygren says his firm tends to go into areas where there is controversy today, but where five years down the line normalcy should return. Today he sees opportunity in financials and some cheaper tech stocks. “Our expectation is that, over time, ‘normal’ returns to the market,” he says.

As for what to expect in 2014 for the broader market, Nygren says that such short-term forecasting is nearly impossible. But he does say that he thinks many people are still underinvested in stocks and that valuations are not unreasonable. “I think it’s a tough burden on the person who wants to argue that they shouldn’t own stocks,” he said, adding that bonds rates are so low that he doesn’t think they are worth the principal risk.

Validea’s Benjamin Graham-based portfolio is up 15.9% annualized since its 2003 inception, nearly tripling the S&P 500.

Nygren Talks Value

Bill Nygren, whose Oakmark Select fund is in the top 2% of its peers over the past 5 and 15 years, recently talked with CNBC about his approach and some of his favorite current stocks. “When you’re a long-term value investor like we are at Oakmark, we end up buying things that had been disappointing for others,” he said, discussing why his fund owns beaten-down Qualcomm shares. He also talks about some of his fund’s big financial holdings, including Bank of America and CapitalOne.

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