Bill Nygren of Oakmark says “I don’t see any signs of froth in this market,” a lot of tech names are returning cash to shareholders. Bill Nygren notes in an interview with CNBC. Additionally, Nygren believes that technology, financials and industrials are most attractive stock sectors in the current climate. He says in five years no one will remember Cyprus.
Videos and computer transcript below:
Top value fund managers are ready for the small cap bear market to be done
During the bull market, small caps haven't been performing well, but some believe that could be about to change. Breach Inlet Founder and Portfolio Manager Chris Colvin and Gradient Investments President Michael Binger both expect small caps to take off. Q1 2020 hedge fund letters, conferences and more However, not everyone is convinced. BTIG strategist Read More
your view of the market here, as i said, this cyprus thing has sort of paralyzed us, to try to figure out or we’ve been unable to move much since then. what should we do? well, at oakmark we try to think about where the market might be headed five years from now. not next week or next month. and i really doubt that in that time frame we’ll even remember this period was paralyzed by cyprus. i think what investors ought to look at is that the u.s. stock market is not expensive relative to its own history. it’s not expensive relative to other asset classes. it’s providing great income opportunities today relative to other asset classes. we think the stock market despite being at a record high is pretty cheap. what do you make of this health care lead, though? that surprised a lot of people that a traditionally defensive sector would be leading at a time when the market for all intents and purposes has been risk on. i think a lot of frustrated fixed income investors have migrated over to the equity markets and they’re looking for yields that are safer, looking for prices that are more attractive, yields that are higher than what they can get in the fixed income market in businesses that are pretty safe such as health care and consumer nondurables. we think the better opportunities tend to be today in the companies that aren’t paying out high dividends and instead are using that capital to repurchase their own shares. where are the best places to invest right now in your estimation? well, i think looking at sectors, technology, financials and industrials are probably the most attractive places. and in a sector like financials, a name like capital one is a big holding for us. the stock sells in the mid-50s. by next year she’ll be making about $7 a share. and in a slow growth economy, most of that $7 a share could come back to shareholders either through dividends or share repurchase. why haven’t a lot of the large technology stocks participated? is there an underlying issue that we’re taking for granted? well, i think the technology stocks aren’t as safe as health care or consumer nondurables. there’s a lot of change going on, especially around the pc business. but with prices where they’re at today, i really think investors are getting paid to take that risk on. we like stocks like intel, texas instruments, microsoft, apple, all of them are repurchasing their own shares, all are paying dividends that are reasonable levels and p/es are basically single digit after you adjust for access cash positions. we like dell, still a large holder of dell.