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Bill Nygren Of Oakmark Funds On His Biggest Mistake
"But Nygren's largest blunder by far was his heavy investment in Washington Mutual (WM), the country's largest thrift. At one point, WaMu represented a towering 15% position in Select's portfolio. The Seattle-based bank has written off $20 billion of losses on home mortgages and dramatically diluted shareholder value by raising new capital. The stock price has plunged nearly 90% in a year."
In 2007 the average person on the street in Seattle knew more about WaMu's house of cards than Nygren did.
"But Nygren's largest blunder by far was his heavy investment in Washington Mutual (WM), the country's largest thrift. At one point, WaMu represented a towering 15% position in Select's portfolio. The Seattle-based bank has written off $20 billion of losses on home mortgages and dramatically diluted shareholder value by raising new capital. The stock price has plunged nearly 90% in a year."
In 2007 the average person on the street in Seattle knew more about WaMu's house of cards than Nygren did.
Thanks.
Great managers make sizable mistakes at times. That's fine. I would actually respect a manager more if they admitted it, told me what they learned from it and how it may change the way they approach an investment going forward. It kind of reminds me of the whole story of Bill Miller giving a speech promoting Bear Stearns in the midst of its falling apart:
"In The Big Short, author Michael Lewis recounts a similar episode. On a Friday morning in March 2008, Miller was invited to present the bullish case for investment bank Bear Stearns, which had traded at $53 the previous day. During a Q&A session after his presentation, an audience member asked Miller a question: "Mr. Miller, from the time you started talking, Bear Stearns stock has fallen more than 20 points. Would you buy more now?" Miller's answer: "Yeah, sure, I'd buy more."
By the following Monday, Bear Stearns had been sold to J.P. Morgan for $2 a share."
You have a manger who manages well over $10B in AUM and when asked about your biggest investing mistake you're going to give some story about some silver coins when you were in college? Additionally, in terms of Nygren, the Wamu incident is what comes to mind - when I saw the title of the thread, that's the only thing I thought it could be.
I've said this before about people like Gartman, whose issues (like the lousy performance of his etf) has never been questioned.
Great managers make sizable mistakes at times. That's fine. I would actually respect a manager more if they admitted it, told me what they learned from it and how it may change the way they approach an investment going forward.
Concur with your assessment. It is actually refreshing if not humbling that he acknowleged his past mistakes. Rather than just moving on as it is Oakmark has implemented processes to prevent this type of costly mistakes. Since then Oakmark Select fund, OAKLX, has been a stellar performer.
Comments
Yeah, it wasn't his bad bet on Washington Mutual.
"But Nygren's largest blunder by far was his heavy investment in Washington Mutual (WM), the country's largest thrift. At one point, WaMu represented a towering 15% position in Select's portfolio. The Seattle-based bank has written off $20 billion of losses on home mortgages and dramatically diluted shareholder value by raising new capital. The stock price has plunged nearly 90% in a year."
In 2007 the average person on the street in Seattle knew more about WaMu's house of cards than Nygren did.
Great managers make sizable mistakes at times. That's fine. I would actually respect a manager more if they admitted it, told me what they learned from it and how it may change the way they approach an investment going forward. It kind of reminds me of the whole story of Bill Miller giving a speech promoting Bear Stearns in the midst of its falling apart:
"In The Big Short, author Michael Lewis recounts a similar episode. On a Friday morning in March 2008, Miller was invited to present the bullish case for investment bank Bear Stearns, which had traded at $53 the previous day. During a Q&A session after his presentation, an audience member asked Miller a question: "Mr. Miller, from the time you started talking, Bear Stearns stock has fallen more than 20 points. Would you buy more now?" Miller's answer: "Yeah, sure, I'd buy more."
By the following Monday, Bear Stearns had been sold to J.P. Morgan for $2 a share."
http://www.cbsnews.com/news/bill-miller-large-cap-stocks-represent-a-once-in-a-lifetime-opportunity/
You have a manger who manages well over $10B in AUM and when asked about your biggest investing mistake you're going to give some story about some silver coins when you were in college? Additionally, in terms of Nygren, the Wamu incident is what comes to mind - when I saw the title of the thread, that's the only thing I thought it could be.
I've said this before about people like Gartman, whose issues (like the lousy performance of his etf) has never been questioned.
Meh.
Same here - I went to the link to see what he had to say about it, and it's about some coins umpteen years ago? Really, Bill?