Nygren is Partner, Portfolio Manager, and Chief Investment Officer for US Equities at Harris Associates. He began his career in the investment industry in 1981 and has served as a portfolio manager since 1990. Nygren spoke recently about his approach to value investing and shared his thoughts on the effects of the Covid-19 pandemic on markets.
In your four decades in the investment industry, you’ve managed through a number of market crises. How is Harris Associates thinking about the post-pandemic “new normal”?
What are some examples of accelerating trends, as compared to shorter-lived pandemic reactions?
Another example is high-speed internet companies, which benefited during 2020 from the need for better connectivity. There’s no reason to now downgrade to slower service as the pandemic recovery moves forward. E-commerce trends also accelerated – growth could be slower in years ahead, but there’s no reason to think people will go back.
Is there a sector where you think Harris’s views on post-pandemic trends differ from the broader consensus?
Similarly, there’s reason to think there will be some decrease in business travel, but in our view business travel will not end. We think business travel is going to come booming back once it’s safe to be out again. Commercial property maintenance and leasing companies also had a tough year, and there’s concern that people aren’t going back to the office. But we believe many employers will expect their employees back to work the day after they’re vaccinated, and we don’t foresee a crash in commercial real estate.
Are there any companies that investors may be overlooking that could stand to benefit from the business and behavioral changes introduced by the pandemic?
How has Harris Associates’ long-term horizon been affected by the pandemic?
At the beginning of the pandemic, we didn’t believe that the economy recovery was complete. We saw no signs of excess consistent with an economic peak, and were focused on financials, industrials, consumer durables, and energy. When the severe recession hit in March, we forecasted improvement in the second half of 2020 and return to 2019 levels of growth in 2021. We still believe we’re on this path to a second-quarter recovery.
Was there anything that surprised you about the way in which markets reacted to the pandemic?
Value investing carries the risk that a security can continue to be undervalued by the market for long periods of time.
This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions expressed above may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted. Actual results may vary.
The views and opinions expressed are as of March 31, 2021 and may change based on market and other conditions.
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