"Tracking William Nygren’s Harris Associates Portfolio – Q2 2020 Update"
"Harris Associates 13F portfolio value increased from $36.11B to $41.11B this quarter.They increased WorkDay while reducing Regeneron Pharmaceuticals.The top three positions are Alphabet, Bank of America, and Charter Communications and they add up to ~16% of the portfolio.This article part of a series that provides an ongoing analysis of the changes made to Harris Associates 13F stock portfolio on a quarterly basis. It is based on Harris Associates’ regulatory  filed on 08/14/2020. William Nygren’s 13F portfolio value increased ~14% from $36.11B to $41.11B this quarter. The portfolio is diversified with recent 13F reports showing around 200 positions although most of them are very small. There are 66 securities that are significantly large (more than ~0.5% of the portfolio each) and they are the focus of this article. The largest five stakes are Alphabet, Bank of America, Charter Communications, Citigroup, and TE Connectivity. They add up to ~23% of the portfolio. Please visit our  series to get an idea of their investment philosophy and our  for the fund’s moves during Q1 2020.Harris Associates currently has ~$86B under management. Their flag ship mutual funds are the Oakmark Fund (OAKMX) incepted in 1991 and the Oakmark International (OAKIX) incepted in 1992. Both funds have produced substantial alpha during their lifetimes: 11.65% annualized return compared to 9.71% for the S&P 500 index for OAKMX and 8.20% annualized return for OAKIX compared to 5.50% annualized for the MSCI World ex-US Index. The other mutual funds in the group are Oakmark Select (OAKLX), Oakmark Equity and Income (OAKBX), Oakmark Global (OAKGX), Oakmark Global Select (OAKWX), and Oakmark International Small Cap (OAKEX).Note 1: The top holdings in the Oakmark International Fund are not in the 13F report as they are not 13F securities. The positions are Glencore (GLCNF), BNP Paribas (BNPQF), Intesa Sanpaolo (ISNPY), Daimler (DDAIF), Lloyds Banking Group (LYG), Credit Suisse Group (CS), BMW (BMWYY), Continental (CTTAF), CNH Industrial (CNHI), and Allianz (ALIZF).Note2: In a July interview, it was disclosed that they built a stake in T-Mobile US at an attractive valuation due to forced-selling by Softbank (SFTBY).Stake Increases:American International Group (AIG): AIG is a 2.15% of the portfolio position first purchased in 2012 at prices between ~$23 and ~$36. The stake was almost doubled over the next two years at prices between $35 and $56.50. 2016 saw a one-third selling at prices between $50 and $66. 2017-2018 timeframe saw a similar increase at prices between $37.50 and $67. The three quarters thru Q3 2019 had seen a ~20% reduction at prices between $40 and $57.50 while last three quarters saw minor increases. The stock is now at $29.77.HCA Healthcare (HCA): HCA is now a ~1.89% of the portfolio stake. A large position was built over the 2016-2017 timeframe at prices between $64 and $89. Q4 2018 saw that original stake reduced by ~50% at prices between ~$120 and ~$144. Next quarter also saw a ~15% stake reduction. There was a one-third increase this quarter at prices between $82 and $118. The stock currently trades at ~$138.American Express (AXP): The small 0.51% of the portfolio position was purchased last quarter at prices between ~$69 and ~$137 and the stock currently trades at ~$106. This quarter also saw a ~8% stake increase.Note: In an interview in May, Nygren said he thinks AXP will earn between $4 and $5 per share this year and that could double in a couple of years. He also said compared to the financial crisis when the stock crashed to the low-teens, the difference now is that the firm is funded by long-term debt and so there is no risk of a liquidity crunch.Berkshire Hathaway (BRK.B), CBRE Group (CBRE), Charles Schwab (SCHW), Cenovus Energy (CVE), EOG Resources (EOG), Pinterest Inc. (PINS), Reinsurance Group of America (RGA), and WorkDay Inc. (WDAY): These small (less than ~1.5% of the portfolio each) stakes were increased during the quarter. Pinterest, Reinsurance Group of America, and WorkDay stakes were built this year.Stake Decreases:Alphabet Inc. (GOOG) (GOOGL): GOOG is currently the largest 13F position at ~8% of the portfolio. The bulk of the position was purchased in 2014 at prices between ~$515 and ~$595. Next year also saw a ~20% stake increase at prices between ~$495 and ~$750. Last six quarters have seen a ~22% trimming. The stock currently trades at ~$1512.Bank of America (BAC) and Citigroup Inc. (C): BAC and C are the second and fourth largest stakes in the portfolio. BAC was a minutely small position in their first 13F filing in 1999. It became a significant part of the portfolio in 2011. The 2012 to 2015 timeframe saw the stake built from 9.8M shares to 138M shares at prices between ~$6 and ~$18. The next 3 years saw a ~40% reduction at prices between ~$12 and ~$33. Since then, the position has stayed steady although adjustments were made every quarter. The stock is now at $25.60 and it is at 4.31% of the portfolio. The 3.82% C position was built in 2014 at prices between ~$46 and ~$56. The stake was almost doubled over the next three years at prices between ~$37.50 and ~$76. Since then, there has been a combined ~23% selling at prices between ~$50 and ~$80. The stock currently trades at $46.02.Charter Communications (CHTR): CHTR is a top three 3.82% of the portfolio stake. It was established in 2015 when around 2M shares were purchased at prices between ~$150 and ~$190. 2017 saw a stake doubling at prices between ~$298 and ~$395. 2018 also saw a ~55% stake increase at prices between ~$260 and ~$390. Last six quarters have seen a ~45% selling at prices between ~$275 and ~$545. The stock currently trades at ~$630.TE Connectivity (TEL): TE is a very long-term stake first purchased in 2011 in the high-20s price range. Recent quarters had seen minor selling. There was a 16% reduction this quarter at prices between ~$59 and ~$92. The stock currently trades at ~$102 and the stake is at 3.24% of the portfolio.Booking Holdings (BKNG): BKNG is now a medium-sized 3.12% of the portfolio position. It was a minutely small stake first purchased in 2016 and was increased substantially next year at prices between $1465 and $2035. H1 2019 saw the stake almost doubled at prices between $1665 and $1880. H2 2019 had seen minor trimming. There was a ~25% stake increase last quarter at prices between ~$1152 and ~$2087. The stock is currently at ~$1807. This quarter saw minor trimming.General Motors (GM): GM is a 2.86% of the portfolio position. It is a very long-term stake. The original position was minutely small in 2007 and it was disposed the following year. In 2013, a huge ~70M share stake was established at prices between $27 and $41. The position size peaked at ~81M shares in 2015. The stake was since sold down by ~25% at prices between $28 and $46. The stock currently trades at $31.79. Last two quarters had seen a minor increase while this quarter there was a ~25% reduction at prices between ~$17 and ~$37.MasterCard Inc. (MA): The 2.53% of the portfolio stake in MA was established in 2011 at prices between $23 and $37. The 2015-2019 timeframe had seen the stake reduced from over 25M shares to 4.23M shares at prices between ~$84 and ~$300. The stock currently trades at ~$342. Last two quarters have seen another ~20% selling at prices between $229 and $313. They are harvesting gains.Hilton Worldwide (HLT): The 2.37% of the portfolio HLT stake was built during the four quarters thru Q1 2019 at prices between $66.50 and $85.75. The stock currently trades at $94.03. Last five quarters have seen only minor adjustments.Netflix Inc. (NFLX): NFLX is a 2.25% of the portfolio stake purchased in 2017 at prices between ~$131 and ~$200. Next year also saw a ~50% stake increase at prices between ~$210 and ~$410. There was a ~38% selling over the last two quarters at prices between ~$300 and ~$470. The stock is now at ~$484.Facebook Inc. (FB): FB is a 2.22% of the portfolio position. The stake saw a ~42% stake increase last quarter at prices between ~$146 and ~$223. The stock currently trades at ~$264. There was marginal trimming this quarter.Liberty Global (LBTYK): LBTYK is a medium sized 2.16% position established in 2017 at prices between $28 and $37. 2018 also saw a ~15% stake increase at prices between ~$20 and ~$37. Q2 & Q3 2019 had seen a ~30% selling at prices between $24 and $27.50 while next quarter saw a similar increase at prices between $20.50 and $25. It is now at $21.92. Last two quarters have seen a ~30% selling at prices between ~$15 and ~$23.Note: Oakmark has a ~14% ownership stake in Liberty Global.Constellation Brands (STZ): STZ is now a ~2% of the portfolio stake. The position saw a ~50% stake increase last quarter at prices between ~$106 and ~$208 and the stock currently trades at ~$193. There was a ~5% trimming this quarter.Ryanair Holdings (RYAAY): RYAAY is a ~2% of the portfolio stake established in 2018 at prices between ~$69 and ~$125. Q2 2019 also saw a ~20% stake increase at prices between ~$62 and ~$83. The stock currently trades at $87.49. Last three quarters have seen a ~42% selling at prices between ~$47 and ~$96.Note: Oakmark has a ~5% ownership stake in Ryanair Holdings.Comcast Corp (CMCSA): CMCSA is a very long-term 1.90% of the portfolio stake that has been in the portfolio for well over 15 years. The first significant buying happened in 2004 when around 10M shares were purchased in the $6 to $8 price-range. The interim period saw some selling but in 2011 there was a 4x stake increase at prices between ~$10 and ~$13. The next five years saw a ~80% reduction at prices between ~$12 and ~$35. 2017-2018 timeframe saw the stake rebuilt at prices between $31 and $43. Last six quarters have seen only minor adjustments. The stock is now at $46.81.Regeneron Pharmaceuticals (REGN): REGN is a 1.86% of the portfolio position. The bulk of the stake was built in H1 2018 at prices between $320 and $385. Q2 2019 saw a ~45% increase at prices between $300 and $415. Last quarter saw a ~50% selling at prices between ~$335 and ~$495. That was followed with a similar reduction this quarter at prices between ~$493 and ~$644. The stock is now at ~$569.Moody’s Corp (MCO): MCO is a 1.65% of the portfolio stake established in 2017 at prices between $94 and $152. The stock currently trades at ~$287. Last quarter saw a ~20% reduction at prices between ~$165 and ~$285. That was followed with a ~11% trimming this quarter.Ally Financial (ALLY): ALLY is a 1.60% of the portfolio position first purchased in 2015 at prices between $18.50 and $24. Next year saw the position more than doubled at prices between $15.50 and $20.50. Since then, the stake had been kept relatively steady although adjustments were made every quarter. Last six quarters have seen a ~12% selling at prices between ~$12 and ~$35. It is now at $25.70.Baidu Inc. (BIDU): BIDU is a 1.12% of the portfolio position first purchased in 2015 at prices between ~$134 and ~$233. Next year saw a substantial stake increase at prices between ~$125 and ~$194. 2017-2018 timeframe saw that original stake sold down by ~50% at prices between ~$165 and ~$280. It was built back up last year at prices between ~$97 and ~$182. Last quarter saw a ~40% selling at prices between ~$84 and ~$145. The stock currently trades at ~$126. There was marginal trimming this quarter.Agilent Technologies (A), Apache Corp (APA), Apple Inc. (AAPL), Bank of New York Mellon (BK), Borg Warner (BWA), Capital One Financial (COF), CVS Health Group (CVS), Caterpillar Inc. (CAT), CoreLogic Inc. (CLGX), Cummins (CMI), eBay Inc. (EBAY), Fiat Chrysler (FCAU), Gartner Inc. (IT), Goldman Sachs (GS), Grupo Televisa (TV), General Electric (GE), Howmet Aerospace (HWM), Humana Inc. (HUM), Intel Corp (INTC), Interpublic Group (IPG), Lear Corp (LEA), Liberty Broadband (LBRDK), MGM Resorts (MGM), Open Text Corp (OTEX), Oracle Corp (ORCL), Parker Hannifin (PH), Philip Morris (PM), Qurate Retail (QRTEA), S&P Global (SPGI), Southwest Airlines (LUV), State Street Corp (STT), Texas Instruments (TXN), Trip.com (TRIP), Visa Inc. (V), and Wells Fargo (WFC): These small (less than ~1% of the portfolio each) positions were reduced this quarter.Kept Steady:None.Note: Although the stakes as percentage of the 13F portfolio are very small, Oakmark has significant ownership stakes in the following businesses: CoreLogic (CLGX), Tenet Healthcare (THC), and Volaris - Controladora Vuela Compañía de Aviación (VLRS).Below is a spreadsheet that shows the changes to William Nygren’s Harris Associates 13F portfolio holdings as of Q2 2020:Bill Nygren – 4/30/20 – Value Investor’s  & 4/15/2020  – added STZ, PINS (thinks could earn $1.50 to $2 per share in 2022, at $16 selling at 1/10th Facebooks per-user-revenue multiple but they expect them to monetize at half Facebook’s ratio) & WDAY during selloff while dropping American Airlines. AXP – thinks it is cheap at $96 as they expect $4 to $5 earnings this year and double that in a couple of years – commercial paper funded during financial crisis, now deposit & long-term debt, used to charge merchants more but now the same, etc. So, now very advantaged. Two-thirds is like capital one, and one-third is like MasterCard. AXP is selling at 10x times earnings, comparable should be 14x – so, gap to close there. AAL – sold as it is leveraged and it fell only like others who have strong balance sheets – so, EV did not go down as much, so sold… MTCH – tinder is not monetized 90% of users.Regulatory filings thru 5/31/2020: None."