Oakmark: A Step Ahead of Buffett?

03/26/2004 12:00 am EST

Focus:

Ivan Martchev

Editor, Vital Resource Investor and Global Viewpoints

Ivan Martchev, associate editor of Personal Financenotes that many fund managers tend to follow Buffett's picks. But he singles out value investor Bill Nygren as one who appears to be a step ahead. Here's his review of Nygren's Oakmark fund.

"One of our favorite funds for the future is Oakmark (OAKMX ). It’s managed by Bill Nygren and has a large-cap value strategy, with a little contrarian flavor. Nygren was originally a mid-cap value manager but then the call of duty came for him to take over previously underperforming Oakmark. He sees value where others simply have given up. For example, he’s buying Kohl’s after many shareholders have given up on the stock, just like he was buying Home Depot in the spring of 2003 when no one wanted it. Contrarian investing isn’t for everyone, and few excel at the discipline consistently. Nygren is one of those rare breeds.

"In 2002, there was a period where Nygren’s buys regularly showed up among Berkshire Hathaway’s new holdings reported to the SEC. Only this time, Nygren has bought the shares of specific stocks before Warren Buffett. Most fund managers tend to piggyback Buffett’s picks. The explanation is very simple: since Nygren has a similar value/contrarian style to Buffett, it’s only natural that he likes some of the same stocks as Buffett and his associates at Berkshire Hathaway. Over the past five years, the fund has returned an annualized 5.83%, solidly outperforming the S&P 500 index, which has lost money over the same time period. A long-time favorite fund, Oakmark remains an excellent choice for long-term investors."

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