Bill Nygren, Chief Investment Officer at Harris Associates, discusses his career, the research process at Harris, stock pitching process, qualities of a good portfolio manager, his personal life, and lessons from his career.

In this engaging discussion, Bill Nygren, a veteran value investor with over 40 years at Harris Associates, opens up about his unique approach to investing. He shares insights on position sizing and the emotional challenges of analyst changes within teams. Bill dives into the complexities of modern accounting, particularly how traditional methods struggle with intangible assets, using Netflix as a prime example. He emphasizes the need for investors to look deeper than surface metrics, advocating for a diversified and informed investment philosophy.

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!

This is Matt Reustle and today we are breaking down First Citizens Bank. I'm joined by investors with plenty of experience investing in banks - Bill Nygren and Alex Fitch of Oakmark. First Citizens is a bank with 125 years of history but they don't operate like the bulge bracket Wall Street Banks. They don't even host quarterly conference calls. They have a playbook and they execute it, and their recent acquisition of Silicon Valley Bank fell into that playbook. In this conversation, Bill and Alex offer a really unique macro and micro view on bank investing and what stands out about First Citizens. Please enjoy this breakdown of First Citizens Bank. For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.-----This episode is brought to you by Tegus, the modern research platform for leading investors. Stretch your research budget with flexible expert calls you can trust. At a fraction of the cost of traditional expert networks, Tegus customers pay only what an expert charges – with zero markups and no confusing call credits – netting an average 70% savings. Don’t want to conduct a full hour call? Tegus offers the ability to schedule 30-minutes, an offer you won’t find anywhere else. And they don’t stop there. With white-glove custom sourcing for every project and robust compliance measures, including a dedicated 50+ analyst team that vets every call transcript, Tegus ensures your privacy and protection. As the industry innovator for qualitative insights, Tegus helps you find the right experts you need at a quality and speed that can’t be matched. For a limited time, as a listener, you can trial Tegus for free by visiting tegus.co/patrick.-----Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt | @domcookeShow Notes(00:02:47) - (First question) - A primer on investing in banks(00:09:27) - The appeal of First Citizens Bank(00:15:18) - How they leverage acquisitions, including FDIC auctions, for a competitive edge(00:21:42) - How their risk management and protective measures foster resilience and growth(00:26:22) - The significant impact of prioritizing relationship-based and specialized lending(00:28:51) - Why they adjust risk parameters during the integration with other banks(00:30:38) - How they leverage loyal customers and low costs to achieve strong profitability (00:33:21) - Rapid fund movement during the SVB event raises market change concerns(00:36:58) - Overview of bank investment opportunities(00:42:48) - The key drivers of their business model(00:47:43) - Rebuilding relationships with former depositors to retain SVB deposits(00:51:23) - Their emphasis on relationships and strategic acquisitions(00:53:30) - How the regulatory framework plays a key role in de-risking the banking system(00:57:00) - The key risks for First Citizens moving forward(00:58:39) - Why volatile interest rate changes impacted banks(01:00:08) - Lessons learned from studying First Citizens

"The Investor’s Podcast Network" welcomes Bill Nygren and Robert Bierig. They discuss Harris Associates' value-based investing strategy, their unique consensus-building process, an exciting underpriced business they've added, undervalued industries, and the importance of regular stock reevaluation. Listen in for timeless strategies and new insights!