10 Questions With Oakmark's Bill Nygren

Bill Nygren knows what he's doing.

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He and his colleagues at Chicago-based Harris Associates are value managers (read: bargain-hunters) who buy shares of a company only when it's trading at 60% or less than what they think it's really worth. Nygren has run the focused and now closed (OAKLX Quote)Oakmark Select fund since its 1996 launch, and its 28% annualized gain over the past five years tops all mid-cap value funds and ranks third in the entire fund universe. Nygren took the reins of the broader (OAKMX Quote)Oakmark fund just as the tech sector peaked last March and has since been trouncing his peers and the S&P 500.

Today, Nygren is finding value in big-cap stocks like Fannie Mae (FNM Quote), American Express (AXP Quote) and Gap (GPS Quote), but he's not finding any bargains in the punch-drunk tech sector. Where are today's bargains and what would he buy today and hold for five years? Read on.

1. What do you make of the tech rally we've seen since the Nasdaq bottom Sept. 21?

I'm surprised at the strength of the tech rally. At the market bottom in late September, we were finding many tech stocks that were close to fairly valued, but nothing priced at less than 60% of what we thought it was worth, so we weren't buying. It's been an awfully powerful rally, but nothing has changed in terms of our estimates of what the businesses are worth. We continue to be underweighted in technology, and our best guess is that some future time will provide us a better opportunity to buy these names than today. ...