TIP430: FROM FACEBOOK TO META AND BEYOND

W/ BILL NYGREN

12 March 2022

On today’s show, Trey brings back one of our favorite guests–Bill Nygren. Bill is a partner and portfolio manager at OakMark where they manage over $64B.

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IN THIS EPISODE, YOU’LL LEARN:

  • An update on Facebook, now Meta, since our last discussion in June 2021.
  • Oakmarks process to finding and vetting stock ideas.
  • How they think about diversification once they’re highly allocated in a certain sector.
  • An overview of some of Oakmarks top positions, including their heavy weighting in Alphabet.
  • Buffett’s recent position in Nubank and how it compares to Oakmarks positions in Ally and Fiserv.
  • A forecast of Oil and how EOG and Conoco will follow.
  • And a whole lot more!

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

Trey Lockerbie (00:03):
On today’s show, we welcome back Bill Nygren. Bill is a Partner and Portfolio Manager at OakMark where they manage over $64 billion. In this episode, we discuss an update on Facebook, now Meta since our last discussion in June of 2021, OakMark’s process to finding and vetting stock ideas, how they think about diversification once they’re highly allocated in a certain sector, an overview of some of OakMark’s top positions, including their heavy weighting in Alphabet, Buffett’s recent position in Nubank and how it compares to OakMark’s position in Ally and Fiserv, a forecast of oil and how EOG and Conoco will follow, and a whole lot more. Bill is one of our favorite guests because he always brings such a wealth of knowledge. You can clearly see how researched he and his team are on the topics at hand. So without further ado, please enjoy my discussion with the brilliant Bill Nygren.

Intro (01:00):
You are listening to The Investor’s Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected.

Trey Lockerbie (01:21):
Welcome to The Investor’s Podcast. I’m your host, Trey Lockerbie. And these are my favorite days when we get people like Bill Nygren back on the show because, Bill, you always bring such a wealth of information. Really excited to talk with you about a number of topics today. Welcome back.

Bill Nygren (01:36):
Thanks, Trey. It’s always fun to be on.

Trey Lockerbie (01:39):
Well, Bill. I mean it, you’re one of our favorite guests on the show. And it’s been a few years since you first appeared. It was episode 254, where we discussed OakMark’s philosophy a little bit with Preston and Stig, but a lot has happened since then. And since then, we’ve had you on a few occasions to go deep on some stock picks. Our latest conversation was on Facebook. It was episode 355 back in June of 2021. And in this episode, I wanted to get a brief update on your Facebook position, or should I say Meta position nowadays? And then I’d like to explore your overall strategy a bit further. Let’s start with the Meta Platforms, Inc. update, formally known as Facebook. The stock recently took this huge tumble from a high of around $384 now to today at 210, so about a 44% drop. What is going on here? And has it changed your outlook on Meta since the last time we spoke?

Bill Nygren (02:32):
Yeah. I guess the last time I was on, I should have told you to sell every share you could. That clearly was not our point of view then nor is it how we think about Facebook today. Our view on Facebook has always been that the company is doing a significant amount of investment spending gets run through its income statement so that the basic business of Facebook and Instagram is really more profitable than the total earnings of the company because they’re losing money on WhatsApp, they’re losing money on their artificial or augmented reality. So we’ve thought about this company as kind of a piece by piece valuation. So when you buy a share of Facebook today, you get a little over $20 a sharing cash, you get an interest in WhatsApp, which I don’t know, 10 years ago, however long ago it was, they purchased it. They’ve more than doubled the number of users since then. They paid something in the thirties of billions for it when they bought it. So if the user value is only the same as it was back then, that might be worth $70 billion.

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