Bill Nygren - Fundamental Investing From A Generalist's Perspective

With the constant evolution of the asset management industry, investors need to stay a step ahead to justify earning an active management fee. With over 40 years of experience in the industry, this is a lesson that today's guest, Bill Nygren of Harris Associates, instills in the younger analysts he mentors.

Bill is a true legend of value investing and an investor you can turn to whenever the market is uncertain. He radiates fundamental ideas and has an expansive perspective on the comings and goings of the market and the economy at large.

Bill is the Chief Investment Officer for US equities at Harris Associates, which he joined in 1983, and a vice president of the Oakmark Funds. He has been a manager of the Oakmark Select Fund since 1996, Oakmark Fund since 2000, and the Oakmark Global Select Fund since 2006. Bill served as the firm's director of research from 1990 to 1998. He has received many accolades during his investment career, including being named Morningstar's Domestic Stock Manager of the Year for 2001, and he holds an M.S. in Finance from the University of Wisconsin's Applied Security Analysis Program (1981) and a B.S. in accounting from the University of Minnesota (1980).

In this episode, Bill, Michael, and I discuss why Bill was drawn to value investing, why generalist analysts transition more easily to portfolio manager than specialists, his approach to idea generation and portfolio construction, pivoting in times of crisis and great distress, recession insights from over 40 years of experience, and so much more!

Key Topics:

• Welcome Bill to the show (1:09)
• Bill's lifelong fascination with the line between gambling and investing (2:17)
• Why Bill was drawn to value investing (4:51)
• The importance of working at a firm that shares your investment philosophy (6:26)
• Why generalist analysts transition more easily to portfolio manager than industry specialists (9:36)
• Dealing with industry intricacies as a generalist analyst (14:05)
• Harris Associates' approach to idea generation (15:55)
• What it's like to be an analyst at Harris Associates (18:31)
• Why Harris uses multiple techniques to define value (24:25)
• Looking at management's attitude towards capital redeployment (26:33)
• Harris' maintenance process and error recognition methods (30:08)
• Bill's thoughts on the news of Microsoft's massive investment into OpenAI(32:53)
• Pivoting in times of crisis and great distress (36:38)
• Capital One as a case study of a stock that represents a good investment opportunity today (41:25)
• Recession insights from over 40 years of industry experience (44:02)
• Thinking about the effect of the current interest rate environment (48:35)
• Criteria for portfolio construction and position sizing (49:52)
• The evolving opportunity set (53:21)
• Identifying anomalies in GAAP accounting (55:44)
• The things that keep Bill up at night and excited about the future (59:31)
• Bill's book recommendations (1:02:04)
• And much more!

Mentioned in this Episode:

• Harris Associates
• Oakmark Funds
• Michael Dell's Book | Play Nice But Win: A CEO's Journey from Founder to Leader
• John Mack's Book | Up Close and All In: Life Lessons from a Wall Street Warrior
• Joe Maddon & Tom Verducci's Book | The Book of Joe: Trying Not to Suck at Baseball and Life

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!