Bill Nygren's Value Investment Thesis: Six Bargain-Priced Stocks vs. Big Tech Concentration Risk

Bill Nygren, a veteran value investor with over four decades of experience managing Oakmark Funds, has articulated a contrarian investment thesis that challenges the prevailing market enthusiasm for large-cap technology stocks. In his February 5, 2026 MarketWatch interview, Nygren identified six stocks he considers bargain-priced and better investment opportunities than Big Tech companies, drawing attention to what he perceives as a significant mispricing in segments of the market that have been overlooked by mainstream investors [1].

Nygren’s core investment thesis rests on three foundational observations about current market conditions. First, he contends that the S&P 500 has become “more different from the average company than it has in a long time” due to increasing concentration in mega-cap technology stocks [1]. This concentration has created an index that diverges substantially from the broader economy’s underlying fundamentals, effectively transforming traditional passive indexing strategies into concentrated technology bets. Second, Nygren emphasizes that “the opportunity is in the stocks that have been left behind, trading at barely double-digit P/E multiples” [1]. These neglected securities offer attractive valuations relative to their fundamentals, creating potential upside that the market has failed to price in. Third, his fundamental principle—“A cheap enough price can make an average business a good investment”—represents a classic value investing approach that challenges the contemporary preference for growth at any price [1].

The Oakmark U.S. Large Cap ETF (OAKM) serves as the primary vehicle for implementing Nygren’s value philosophy. This actively managed ETF maintains fewer than 40 U.S. large-cap value stocks with assets under management of $951.05 million [0]. The ETF’s portfolio maintains less than 5% exposure to technology stocks, deliberately underweighting the sector that dominates most traditional index funds [2]. According to GuruFocus data, the Oakmark Select Fund maintains positions across diverse sectors including IQVIA Holdings (7.03%), Warner Bros. Discovery (6.10%), Phillips 66 (6.03%), First Citizens BancShares (5.78%), and Lithia Motors (5.75%), reflecting Nygren’s commitment to broad value diversification [3].

represents one of Nygren’s high-conviction value recommendations. His investment thesis for the brokerage firm centers on the disconnect between its expected growth trajectory and its current market valuation. Nygren believes Schwab “will post above-average growth but its stock prices it like a typical business” [1], suggesting that the market has not fully incorporated the company’s growth prospects into its valuation. Current market data supports this contrarian view, with Schwab trading at $103.88 as of February 4, 2026, representing a 58.31% one-year return while still trading near its 200-day moving average of $93.64 [0]. The stock exhibits moderate volatility with a daily standard deviation of 1.58%, suggesting relatively contained price swings despite strong appreciation [0].

constitutes Nygren’s second confirmed recommendation from the six-stock list. Despite trading at a premium to the S&P 500, Nygren contends that “this above-market valuation doesn’t fully capture the company’s earnings potential” and that “the company is worth more than the forward P/E suggests” [1]. This view challenges the market’s short-term pessimism toward the accommodation platform, suggesting that durable competitive advantages and long-term earnings growth potential remain undervalued by current metrics. Current data shows ABNB trading at $124.61 with a -5.24% one-year return and higher volatility at 2.28% daily standard deviation [0]. The 20-day moving average of $132.81 indicates the stock has recently traded below its near-term average, potentially enhancing the value proposition from Nygren’s perspective [0].

The market environment surrounding Nygren’s recommendations provides important context for evaluating his thesis. On February 4, 2026, the technology sector experienced significant weakness with a -2.00% daily decline, while value-oriented sectors demonstrated strength: Basic Materials (+1.35%), Financial Services (+0.93%), and Energy (+0.89%) [0]. This sector rotation aligns with Nygren’s caution about Big Tech valuations and supports his view that value stocks may be entering a favorable period.

The technology-heavy NASDAQ Composite declined -1.35% on February 4, 2026, closing at 22,904.58, following a -1.74% decline the prior session [0]. This two-day decline totaling approximately -3.09% demonstrates the elevated volatility characterizing technology stocks during this period. The Russell 2000 small-cap index also declined -1.24%, closing at 2,624.55, suggesting broader market weakness even as value sectors demonstrated resilience [0]. The S&P 500 declined -0.60% to 6,882.71, reflecting the mixed sector dynamics where technology weakness offset strength in value-oriented sectors [0].

The Oakmark U.S. Large Cap ETF’s performance metrics provide insight into how Nygren’s value strategy has functioned across various time horizons. The ETF has delivered a +1.94% single-day return, +1.83% over five days, and +1.55% year-to-date, demonstrating positive momentum in the immediate term [0]. Over longer periods, the ETF has shown more substantial gains: +9.10% over three months, +12.98% over six months, +16.07% annually, and +16.92% over three years [0]. These returns reflect Nygren’s consistent application of value principles across market cycles, though the strategy may underperform during extended technology-driven rallies.

The ETF’s actively managed structure distinguishes it from passive index funds, with performance entirely dependent on Nygren’s stock selection and portfolio management decisions. This active approach enables the fund to capitalize on value opportunities as they emerge while maintaining the flexibility to adjust exposures based on changing market conditions. The concentrated nature of the portfolio—with fewer than 40 holdings—means individual stock selection has a significant impact on overall performance [2].

Nygren’s observation about S&P 500 concentration represents perhaps his most significant strategic insight for contemporary investors. The increasing dominance of a handful of mega-cap technology companies has fundamentally altered the risk-reward profile of traditional passive indexing strategies. Nygren warns that investors “buying a concentrated technology fund with tech holdings significantly higher than we think is prudent” [1] may be taking on more technology exposure than they recognize or intend. This concentration creates both underexposure to undervalued market segments and overexposure to technology-specific risks including regulatory changes, competitive dynamics, and valuation corrections.

Nygren’s emphasis on “barely double-digit P/E multiples” for opportunity identification highlights the enduring importance of valuation discipline in investment decision-making [1]. In an era where growth stocks frequently trade at premium valuations justified by future potential, the value approach maintains that price matters enormously for long-term returns. This perspective suggests that even companies with above-average growth prospects may offer superior risk-reward when purchased at reasonable valuations, as the margin of safety provided by lower multiples can buffer against disappointments while providing participation in successful outcomes.

The current market environment presents an interesting test case for Nygren’s value thesis. The weakness in technology stocks alongside strength in value sectors on February 4, 2026, could represent either a temporary rotation or the early stages of a more sustained regime shift [0]. Historical patterns suggest that value strategies can experience extended periods of underperformance relative to growth, making patience and conviction essential for investors pursuing this approach. The durability of any value rotation will depend on factors including Federal Reserve policy, economic growth trajectories, and the sustainability of AI-related technology investments.

Value investing strategies face several inherent risks that investors should consider when evaluating Nygren’s recommendations. Extended periods of underperformance represent the most significant challenge, as value strategies have historically experienced prolonged stretches where growth approaches dominate [1]. During such periods, patient capital may test investor resolve despite ultimately correct positioning. Sector concentration in financial services creates vulnerability to interest rate changes, regulatory developments, and economic conditions affecting banking and brokerage operations. The interest rate environment particularly impacts Charles Schwab’s net interest margin, as the firm’s profitability correlates with rate spreads [1].

Charles Schwab faces several risk factors including sensitivity to the interest rate environment, potential regulatory changes affecting brokerage operations, and competitive pressures from both traditional and fintech competitors [1]. Airbnb confronts regulatory risks related to short-term rental restrictions across various jurisdictions, travel demand sensitivity to economic conditions, and competitive pressures from hotel chains and alternative accommodation platforms [1]. The elevated volatility in ABNB shares—2.28% daily standard deviation compared to 1.58% for SCHW—suggests higher short-term price fluctuation that may test investor confidence during downturns [0].

Despite these risks, Nygren’s recommendations present compelling opportunity windows for investors sharing his value orientation. The valuation disparity between technology stocks and value alternatives has reached levels that historically have preceded value outperformance periods. The Oakmark U.S. Large Cap ETF’s demonstrated ability to deliver positive returns across multiple time horizons—including during the recent technology weakness—suggests the strategy possesses resilience that may benefit investors during regime transitions [0]. The actively managed structure provides flexibility to adjust exposures as opportunities evolve, potentially capturing value rebounds while limiting downside during extended growth-dominant periods.

The analysis presented in this report is based primarily on the MarketWatch article published February 5, 2026, featuring Bill Nygren’s value investment philosophy and stock recommendations [1]. Bill Nygren manages the Oakmark Fund and Oakmark U.S. Large Cap ETF (OAKM), with the latter demonstrating a +16.07% one-year return and +1.55% year-to-date performance as of February 4, 2026 [0]. The confirmed stock recommendations are Charles Schwab (SCHW) and Airbnb (ABNB), though Nygren’s full six-stock list was not fully disclosed in the available sources [1].

Nygren’s investment thesis centers on three propositions: excessive S&P 500 concentration in technology has created index strategies that differ significantly from the broader economy; meaningful opportunities exist in “left behind” stocks trading at double-digit P/E multiples; and sufficiently low valuations can render average businesses into good investments [1]. This contrarian approach has produced consistent value-oriented performance, though investors should note the potential for extended underperformance during growth-dominant market regimes.

The market context on February 4, 2026, showed technology weakness (-2.00%) alongside value sector strength (Financial Services +0.93%, Energy +0.89%), providing near-term validation for Nygren’s cautious technology view while highlighting the ongoing sector rotation dynamics [0]. Investors considering exposure to Nygren’s value approach through the Oakmark U.S. Large Cap ETF or individual stock positions should evaluate their risk tolerance, investment time horizon, and conviction in the value thesis relative to alternative strategies.