With Vaccines Arriving, Value Investors Try for a Comeback

Bill Nygren, vice president of Oakmark Funds, says his firm holds shares of CBRE, an office leasing company, which he expects will gain value in an economic recovery. Office work, he says, will rebound. “Any company with a differentiated corporate culture who thinks they can keep it alive remotely is wrong,“ Mr. Nygren said.

At the same time, Mr. Nygren, like some other value investors, has bought stocks that, by most definitions, fall on the growth, not the value, side of the stock spectrum. The three largest holdings in the Oakmark mutual fund are Alphabet, Facebook and Netflix, which make up just over 11 percent of its portfolio.

“People say a company that is growing cannot be a value stock,” Mr. Nygren said. “But to us a value stock means the stock is selling for less than the business is worth.” Netflix’s rapidly growing subscriber base is more valuable than traditional metrics, like price to book value, would indicate, he said.

Comcast is the largest holding of the Dodge and Cox Stock fund, which emphasizes large-capitalization value stocks, Charles Pohl, chairman and chief investment officer of Dodge and Cox, said. While Comcast’s traditional television business faces steep competition from online rivals like Netflix, he said, the company has been thriving by providing high-speed internet services to customers, and it should benefit from a broad economic rebound.

He said he is also hopeful that financial stocks will recover with the economy. As of Sept. 30, the fund held stakes in Capital One, Charles Schwab, Bank of America and Wells Fargo and, he said, financial stocks should recover lost value as the economy rebounds.

Steve Watson, a portfolio manager at the Capital Group who works on the American Funds Capital Income Builder fund, among others, said: “As we get a glimpse of the world coming back to normal, the market will look across the valley to the other side.’’ He pointed to Total, the French oil company, as one of the stocks that would come back if the world comes back. And he noted that shares of Dow, the chemical company, surged late in the year “because it is a company with a broad-based portfolio of chemical products that feed global economic recovery.”

In his view, value stocks “have been beaten down” unfairly. “The market got overexcited by growth,” he said.

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