There’s a lot to learn from the portfolios of multi-billion-dollar asset managers. Today we’re looking at the top 3 holdings of Bill Nygren, whose Oakmark Funds control more than $62 billion as of October 2021. But first, a bit of background about the man himself: Bill Nygren was born in 1959. In his high school days, Nygren dreamed of becoming a professional baseball player, but didn’t have the talent for it. He has said that failed athletes often make good investors because of their unquenched hunger for success.
And his investment results prove him right in this respect. Over the past 25 years, Nygren has achieved a cumulative return of 1,213% for his investors, or about 10.8% per year. In other words, he has outperformed the S&P 500 index over an impressively long period. Nygren focuses primarily on undervalued stocks identified through classic valuation ratio analysis.
Blindly following a single investor is never a good idea. But if you are looking for promising stocks, Nygren’s top holdings can provide valuable ideas. These are the three largest stock positions currently held by his $62 billion Oakmark Funds:
Nygren’s largest position, accounting for 4% of his total portfolio, is Alphabet stock. Nygren currently holds a block of shares worth $655 million in the company.
In the second quarter, Alphabet’s business grew through the roof: the technology giant was able to increase its revenue by almost 34% to $61.9 billion compared to the expected $56.2 billion. Net income jumped by 166% to $18.52 billion. Analysts had previously forecasted earnings of just under $15 billion. Alphabet has thus clearly exceeded market expectations.
Capital One (NYSE:COF)
Nygren’s second-largest position, with a portfolio weighting of 3.93% is in Capital One. Nygren currently holds a block of shares in the company worth just over $645 million. He bought his first shares in the group back in the first quarter of 2009, and is currently up 155% on his average entry price.
In the second quarter, the group posted net income of $3.5 billion on sales of $8.5 billion.
Ally Financial (NYSE:ALLY)
The fund manager’s third-largest holding is Ally Financial. The position has a value of just over $636 million, accounting for about 3.89% of Bill Nygren’s total assets under management.
Ally Financial, formerly GMAC (General Motors Acceptance Corporation), is a bank based in Detroit. It was founded in 1919 as a wholly owned auto financing subsidiary of automaker General Motors (GM) and in 2006 was the fourth largest non-publicly-traded company in the U.S. by revenue. It was spun off as an independent bank that year.
In the second quarter of 2021, it reported revenues of $2.27 billion and net income of $900 million.