CHICAGO William Nygren, a top manager at Oakmark Funds, said on Wednesday he remains bullish on Apple Inc and Bank of America Corp, but is still avoiding Dell Inc in light of the company's plans to take the computer maker private.
Nygren, a noted value investor who runs the $9.6 billion Oakmark Fund, said at the Morningstar Investment Conference in Chicago that Apple is undervalued while Bank of America has one of the top management teams in the banking industry.
Nygren said that there is "an awful lot that could go wrong at Apple" before it would appear overvalued, and that its high growth rate and recent move to return more cash to shareholders through dividends and buybacks was "comforting."
Apple announced in April its plan to return $100 billion to shareholders by the end of 2015 by increasing its dividend and share buybacks. The technology giant's stock had tumbled more than 45 percent from September 21 to April 19, falling by roughly $320 per share, but has since risen more than 10 percent.
Nygren's Oakmark Fund earned a return of 21 percent last year, besting 97 percent of peers, according to Lipper. The fund is up 16.7 percent so far this year, above 86 percent of peers.
Nygren also said that Bank of America stock is undervalued, and that Chief Executive Brian Moynihan is unfairly blamed for mistakes made by prior management. Moynihan was elected head of the bank in late 2009, following the 2008 financial crisis.
"Most of what has gone wrong at Bank of America was put in place by the prior management, and we think unfairly that Brian Moynihan has been tarred by that brush," Nygren said. Nygren's Oakmark Fund had over 3 percent of its assets invested in Bank of America at the end of March, according to Lipper.
Nygren, who said in April that he sold his $250 million stake in Dell after private equity firm Blackstone Group LP ended its pursuit of the company, told Reuters that an alternative proposal to founder Michael Dell and private equity firm Silver Lake Partners' $24.4 billion buyout of the company has not lured him back into the stock.
"We're not really current on the situation. We had been intrigued with Blackstone's involvement, and after Blackstone walked away, we decided to do the same thing," Nygren said.
Dell shareholders will vote on July 18 on the $13.65-per-share buyout offer by Michael Dell and Silver Lake.
Competing against that proposal is activist investor Carl Icahn and Southeastern Asset Management, who together own about 13 percent of Dell stock. They proposed an alternative to the buyout that lets shareholders get $12 of cash for every share they own as well as keep their stock.
(Reporting by Sam Forgione; Editing by Lisa Shumaker)