Bill Nygren, vice president of Oakmark Funds, says his firm holds shares in CBRE, an office leasing company that he expects to appreciate in an economic recovery. Office work, he says, will recover. “Any company with a differentiated culture that believes they can remotely keep it alive is wrong,” said Nygren.
At the same time, like some other value investors, Mr. Nygren has bought stocks that, by most definitions, are on the growth side rather than the value side of the stock spectrum. The three largest holdings in the Oakmark mutual fund are Alphabet, Facebook, and Netflix, which make up just over 11 percent of its portfolio.
“People say a growing company can’t be a value stock,” said Nygren. “But to us, a value stock means that the stock sells for less than the deal is worth.” Netflix’s rapidly growing subscriber base is more valuable than conventional metrics such as price-to-book values would suggest.
Comcast is one of the largest holdings in the Dodge and Cox Stock Fund, which highlights high capital value stocks, said Charles Pohl, chairman and chief investment officer of Dodge and Cox. While Comcast’s traditional television business faces stiff competition from online competitors such as Netflix, the company is successful in providing high-speed Internet services to customers and should benefit from a broad economic recovery.
He is also confident that financial stocks will recover with the economy. As of September 30, the fund held shares in Capital One, Charles Schwab, Bank of America and Wells Fargo, and financial stocks should lose value as the economy recovers.
Steve Watson, Portfolio Manager at Capital Group, who works for the American Funds Capital Income Builder, among others, said: “If we look at the world again, the market will look across the valley to the other side. “” He pointed to Total, the French oil company, as one of the stocks that would return when the world returned. And he noted that chemical company Dow’s shares rose sharply late in the year “because it is a company with a broad portfolio of chemical products that will help the global economy recover.”
In his view, value stocks were wrongly “knocked down”. “The market has been overwhelmed by growth,” he said.