A manager known for smoking out solid undervalued stocks set fire to his

Philip Morris

(MO) - Get Report

stake in the third quarter.

Bill Nygren disclosed that he sold the mid-cap value

(OAKMX) - Get Report

Oakmark fund's long-standing stake in tobacco concern Philip Morris in a letter to shareholders posted on the fund's

Web site Friday morning. Nygren, who has made his name at the helm of

(OAKLX) - Get Report

Oakmark Select fund since 1996, inherited the large and high-profile stake in the embattled shop when he

replaced Robert Sanborn on the Oakmark fund in March.

His reason for selling his Philip Morris shares: He and co-manager Kevin Grant felt Philip Morris'


business made the stock worth more than $30, despite the government's popular and well-known antitobacco


. When the stock hit their price target, they sold -- the stock's highest closing price during the third quarter was $33.88 on Aug. 15, according to



The stock, a former outsize position and top holding in the fund under Sanborn, had weighed the fund down in recent years. The fund and the stock averaged a 2% annual loss over the past three years. Like

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many other Sanborn picks, though, the stock has seen better days since the manager stepped down. It's up more than 43% through Thursday's close.

The Oakmark fund rose 6.1% in the third quarter, compared with a 1.2% loss for the

S&P 500. Over the past three years the Oakmark Select fund boasts a 16.9% annualized return that tops 95% of its mid-cap value peers and beats the S&P 500 by more than 1.6 percentage points annually. Henry Berghoef became a co-manager in March.

Nygren, who historically chose different stocks from the firm's buy list than Sanborn, also added the following stocks to the Oakmark fund's portfolio: retailer

JC Penney

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, telecommunications behemoth


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, machinery shop

Rockwell International

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, drugstore chain


(CVS) - Get Report

and auto titan


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