Bill Nygren Quotes
102 Bill Nygren Quotes (Oakmark Fund)
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[In December 2008] Any company that earns an above-average return on assets either has a competitive advantage or is earning above its sustainable rate. It is our job to decide which one it is.
Bill Nygren
[In December 2008] Our basic strategy is to buy a company only when it is trading at 60 percent of its value and to sell them when they achieve 90 percent.
Bill Nygren
[In December 2008] Short-term price speculation is really gambling.
Bill Nygren
[In March 2005] Taking advantage of the values created by emotional investors is the cornerstone of the Oakmark Fund’s approach to investing. We try to buy from fearful or bored investors and sell to greedy investors who want excitement.
Bill Nygren
[In December 2008] Like most value investors, we don’t like to project supernormal growth for very long and that makes it harder for us to justify paying above-average multiples. Value investors usually have suspicions about the ability of companies to perform dramatically better than their competitors.
Bill Nygren
[In December 2008] Every time we look at a business, we try to ascertain how sustainable their results are…
Bill Nygren
[In December 2008] We do study historical track records… it is a very good way of judging the management team.
Bill Nygren
A brand is a very valuable asset, but is usually not on the balance sheet.
Bill Nygren
The longer it takes for the market to realize the potential of one of our companies, the greater my return is.
Bill Nygren
A big part of any investor’s success or failure in this business is how they manage mistakes. Generally, the sooner you can admit them, the more likely you minimize their impact on your performance.
Bill Nygren
[In September 2013] We define risk as losing money.
Bill Nygren
[In September 2013] The stocks selling at the biggest discounts to value have to come from areas other investors aren’t looking, or where investors are so focused on short term negatives that they ignore long term opportunity…
Bill Nygren
[In September 2013] The idea that the best opportunities are in places others are worried about or ignoring is almost fact rather than opinion.
Bill Nygren
[On risk when his father was teaching him at the age of 10 about the risks of gambling, but embarrassingly keeping on initially winning coins out of a slot machine.] My dad was a smart, successful businessman. His job was all about assessing risk. He was telling me gambling was stupid, but I saw all that money coming out of the machine. I needed to square that, so later on I started researching what kinds of returns you get when you take risk.
Bill Nygren
[To his father at the age of 10 when his father was initially winning coins in a slot machine when he wanted to be losing them to teach his son a lesson. But it taking him a whole 30 minutes to get rid of the coins he kept on winning initially.] Dad, why don’t you stop? You’re so far ahead!
Bill Nygren
[On state lotteries and risk.] If you put a dollar in a state lottery, the state typically keeps fifty cents. Almost everybody comes away empty-handed, and someone hits a huge home run. If you bought all the tickets, you would get back only half your money. Not good odds. In horse racing, the track keeps between 15 and 20 percent of your money – better than the lottery, but still a net loss. At the very positive end of the gambling spectrum, casinos keep about 1 percent of what you bet at the craps table. Further up the return/risk scale, you move into the field of investing, where expected returns are positive.
Bill Nygren
[As a young man seeing a page of stock quotes located conveniently just behind the sports section and seeing changes in share prices when he was earning just 5% on his pocket money. Then asked his father:] Is there a way to predict which ones will go up? [His father advised he should go to the library.]
Bill Nygren
The price you should be willing to pay for a stock depends not only on the company’s growth rate, but also on the interest rates available on competing investments…
Bill Nygren
A lot of my companies achieve my growth estimates through relatively modest top-line growth. A business can use excess cash to improve its balance sheet, buy back shares and shrink its share base, or acquire firms. Any of those can incrementally boost the firm’s growth rate. On a per share basis, this can make a relatively mundane business look pretty good.
Bill Nygren
[On management being given Company stock options.] Options are good but imperfect motivator. Good because leaders benefit more the higher the stock price goes. Imperfect because a stock’s price can rise for lots of reasons unrelated to the company’s performance, thereby rewarding executives for circumstances beyond their control.
Bill Nygren
I start with an undervalued company that’s growing at least as fast as the market. Management is taking incremental steps that benefit shareholders. I don’t have to worry about things like catalysts or how the stock is likely to perform in the next quarter. The longer it takes for the market to realize the potential of one of our companies, the greater my return is.
Bill Nygren
It’s one thing if it earns 95 percent of what I thought it would. That’s within a reasonable range of error. However, if a couple of years go by and it has not grown, that is a serious error in my forecasting.
Bill Nygren
[On most investors usually first asking on an investment ‘If everything works wonderfully, how great will it be?’ Bill instead asks:] If I am wrong, how bad can it be?
Bill Nygren
I think of both Robert [Sanborn] and myself as pure value investors.
Bill Nygren
[On selling stocks once they get to within 90 percent of their intrinsic value if it all goes to plan.] We are very disciplined quantitatively on the sell side.
Bill Nygren
Some people look… and say, ‘Wow, you’re changing.’ I say, no, we’re not changing at all. The opportunities that the market is creating have changed.
Bill Nygren
[In August 1997] Over long periods of time we tend to get more than our share of takeovers.
Bill Nygren
[In May 2001 on looking for large beaten down stocks. Typically wanting to pay no more than 60% of what comparative companies have sold for.] We base our estimates on what similar companies have sold for.
Bill Nygren
[In May 2001] It’s not rocket science.
Bill Nygren
[In May 2001] The mistake a lot of value investors make is searching for the statistically cheapest stocks. They end up with structurally disadvantaged companies.
Bill Nygren
[In May 2001 on wanting to own stocks where the managers own a lot of it.] We want their interests aligned with ours.
Bill Nygren
[In May 2001 on not just focusing on a company’s next quarterly earnings report.] We’re trying to understand where management is trying to take the company over the next five years, and whether we think they can succeed.
Bill Nygren
[In September 2003 on having 18% of Oakmark Select’s assets and 4% of Oakmark’s funds invested in Washington Mutual (Wamu) shares and predicting that their profits will rise at least 10% a year indefinitely.] Who can process mortgages as efficiently as they can? Who can maintain a checking account as efficiently?
Bill Nygren
[In March 2005] We invest some $30 billion in six different funds which utilize a long-term value approach. It requires patience.
Bill Nygren
[In March 2005] We believe that thinking about an investment time frame of at least five years creates our biggest competitive advantage. In a world where many base their investment decisions on a steady diet of financial news, we focus on what a business might be worth five years from now.
Bill Nygren
[In April 2006 on what he is focusing on.] Above average businesses selling at average prices.
Bill Nygren
[In April 2006] Eventually, either the fundamentals will get worse or the stocks start doing better. We think the latter is much more likely.
Bill Nygren
[In August 2006 on ‘Margin of Safety’ by
Seth Klarman] The book belongs in the category of Buffett and Graham.
Bill Nygren
[In April 2007] Investors are overreacting to the upturn in mortgage delinquencies. As an investor who’s committing money for five years or longer, I’m getting higher-quality companies than usual for less of a premium.
Bill Nygren
[In April 2007] Financial stocks look very attractive. If you believe the negative story on the mortgage market, you have to be negative on most forms of consumer lending, but we feel very strongly about the retail banking growth story.
Bill Nygren
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