Bill Nygren, Oakmark Fund portfolio manager, explains why his long-term stock plays focus on the financial sector.
Trident Fund LP February 2021 Performance Update
Trident Fund LP performance update for the month ended February 2021. Q4 2020 hedge fund letters, conferences and more Trident Fund LP Performance The Trident Fund LP returned 6.1 percent in February, and the fund is -0.5 percent net for 2021. In February, Trident profited from rising interest rates and commodity prices to regain losses sustained Read More
our next guest has made his living investing for the long term. joining us, bill niagara, he manages a four star oak mark fund. you say, don’t even ask me about stuff that we talked about all the time. we have to. your focus is on companies and what they will be worth in five years, that you can buy at significantly less today than what they will be worth in five years and as far as stocks go, you figure in general, they’re attractive compared to everything else. we should get to what you think is worth more in five years. one of the things is the financials? right. the financial, even though they were depressed, they were at historical lows. most of these companies sell at a significant discount to the their book value, low pd on earnings we expect after legacy costs from the housing busts are for the longer going through the physical statement. we expect most companies to return all their earnings to shareholders. even if they don’t have much loan growth, they can get good eps growth. i guess if you thought that the whole fed exit strategy was going to be a disaster, you wouldn’t even be positive on these stocks then, so youmouthen, implicit in this, you don’t think the end of the world is going to happen again in the near term. well, the end of the world didn’t happen five years ago when people thought it would. wasn’t it sort of in this book i read? every time i say it, we get a little royalty, no, if that were going to repeat what we saw five years ago, all this printing, if that comes back to haunt us, you do not think we are setting ourselves up for something that could be worse than the last time around? no, i don’t think so, joe the way we think at oakmark, we are projecting business fundamental also out five years. we’re really trying to identify how business trends change over a long period of time and the most of the economic news, that we focus on day-to-day just becomes noise when you look at that. do you have five, you got 50, do you have five financials that you like? well, financials are some of our top holdings. we have large positions in jp morgan, capital one and aig. if we step out from there, do you do any technology, do you do any sick lick also? sure, we do both of those. i think our view on the market today is that the bond market is overvalued, stocks are modestly under valued. the more a stock looks like a bond the more likely it is to be underpriced. when you see that cyclical risk or ob less sent — ob scalescent, they left that behind. do you have five? in the technology space, we own lot of the technology companies buying back stock and paying out dividends. texas instruments, oracle. in the industrial space companies like parker hannefin. cummins engine, delphi, if the market priced them as average companies, they’d have to go up in price. we think they are better than average today. i see you did an interview, omnicom, who do you like with them? bbdo, which asset? what we at omnicom, we like the advertising generates capital, they are paying that back through share repurchase. eps are growing faster than earnings are. you must have a couple that you think are really good really float your boat? you never know your home runs in advance. the names we have the most confidence in, by definition, are the names we sized largest. bank of america. i would expect our financial names to be a strong health ove the upcoming years.