Oakmark's Bill Nygren: Investors penalize 'shareholder-unfriendly' CEOs too much

Oakmark's Bill Nygren: Investors penalize 'shareholder-unfriendly' CEOs too much
Top portfolio manager takes another perspective on an issue that BlackRock's Fink and other corporate critics have championed.
JUN 26, 2015
Investors may be penalizing corporate management too much for their decision to redirect money from long-term investments to paying dividends and buying back their stock, top portfolio manager Bill Nygren said Thursday. Blue-chip U.S. corporate executives have gotten criticism from a variety of sources over spending their money this way. For instance, BlackRock Inc. Chief Executive Laurence D. Fink, whose company is the largest shareholder of some of the world's largest companies, has written letters to S&P 500 companies asking that they not pay out their earnings if doing so would compromise their longer growth. Yet Mr. Nygren called that criticism “a little misplaced." “I don't think many companies think that they're supply constrained: Building more plants isn't going to grow demand,” he said. “There isn't enough demand to put companies in a short-supply situation.” The Oakmark Select Fund, which Mr. Nygren started managing in 1996, is in the top 2% among funds in its category over the last 15 years, and it beats the S&P 500 return by nearly 5.5% over that period, according to Morningstar Inc. data through June 24. Overall, Mr. Nygren offered a more sanguine view on market valuations than GMO chief investment officer Jeremy Grantham, who spoke, like Mr. Nygren, at the Morningstar Investment Conference in Chicago. Mr. Nygren said investors have been “tougher” on short-term stock-price boosting efforts “because it tends to be easier to measure.” Mr. Nygren also said the market continues to shy away from investing in sectors “where people were scarred from what happened six or seven years” ago, a reference to his far-higher-than-benchmark bet on financial services companies.

Latest News

Ex-Edward Jones advisor gets three-year prison sentence for stealing from widow
Ex-Edward Jones advisor gets three-year prison sentence for stealing from widow

John S. Winslow, 57, was indicted just over a year ago for his scheme to steal from an elderly client.

Vestmark, Hamachi push AI further for advisor portfolio intelligence
Vestmark, Hamachi push AI further for advisor portfolio intelligence

Hamachi's new model portfolio partnership and an industry-first solution from Vestmark join the growing wave of AI tools for wealth managers.

Advisor moves: Cetera's enterprise channel draws experienced Osaic duo in California
Advisor moves: Cetera's enterprise channel draws experienced Osaic duo in California

Meanwhile, LPL attracted a five-advisor team managing $380 million in Kansas, while a veteran with stripes from Morgan Stanley, UBS, and Fidelity has joined Prime Capital Financial.

Dynasty CEO teases 'Virtual Shirl' as RIA execs debate AI's workforce impact
Dynasty CEO teases 'Virtual Shirl' as RIA execs debate AI's workforce impact

At Goldman Sachs’ RIA conference, Dynasty’s Shirl Penney said an AI clone trained on his emails and speeches could be the first of “hundreds of digital employees.”

Captrust adds $1.25B Pennsylvania firm in latest push into private wealth
Captrust adds $1.25B Pennsylvania firm in latest push into private wealth

The top-ranked RIA by total AUM continues to scale its wealth management arm, bringing its Pennsylvania presence to five offices.

SPONSORED Beyond wealth management: Why the future of advice is becoming more human

As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management

SPONSORED Durability over scale: What actually defines a great advisory firm

Growth may get the headlines, but in my experience, longevity is earned through structure, culture, and discipline