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Oakmark’s Bill Nygren Finds Value in Financials

The financial sector has long-term growth potential stronger than the pressure on its net interest margins, Oakmark Fund’s Bill Nygren told CNBC on Monday.

“I think, clearly, as long as interest rates stay as low as they are now, that’s going to put pressure on NIMs for the whole banking industry,” he said on “Fast Money.”

“But the other side of that is, since the financial crisis four years ago, a lot of the competition that banks had have gone away, and that’s allowing them to earn higher margins on a lot of their products,” he added.

Nygren’s fund listed Capital One and JPMorgan among its largest financial holdings.

“We’re not trying to argue that these are fantastic businesses, but what we’re saying is the best banks sell at maybe three-quarters of book value. A lot of the others sell at about half of book value, and you don’t need tremendously good results from these banks to make them go up from these levels.”

Nygren also identified TE Connectivity as a stock that had upside potential, due to its healthy dividend yield, its share base declining 2 to 5 percent per year and top-line growth.

“We think you combine those three, you get a pretty nice rate of return, even if the PE-multiple doesn’t change,” he said.

Trader disclosure: On Sept. 17, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Stephanie Link is long AAPL; Stephanie Link is long JPM; Stephanie Link is long WFC; Stephanie Link is long EBAY; Stephanie Link is long AIG; Joe Terranova is long VRTS; Joe Terranova is long WFM; Joe Terranova is long SWN; Joe Terranova is long AAPL; Joe Terranova is long TRV; Joe Terranova is long VZ; Joe Terranova is long VLO; Joe Terranova is long CSTR; Joe Terranova is long CHKP; Joe Terranova is long EMC; Joe Terranova is long NXPI; Joe Terranova is long AAPL SEPT. 655 PUTS; Joe Terranova is long AAPL SEPT. 640 PUTS; Mike Murphy is long WFC; Mike Murphy is long TGT; Mike Murphy is long FB; Mike Murphy is long EBAY; Josh Brown is long MRK; Josh Brown is long AAPL; Josh Brown is long RAX; Josh Brown is long LULU;

For Faisal Kahn
Within the past 12 months, Citigroup Global Markets Inc. or its affiliates has acted as manager or co-manager of an offering of securities of CVX

Within the past 12 months, Citigroup Global Markets Inc. or its affiliates has acted as manager or co-manager of an offering of securities of VLO

Within the past 12 months, Citigroup Global Markets Inc. or its affiliates has acted as manager or co-manager of an offering of securities of PSX.

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