Billionaire legend Bill Nygren over at the Oakmark Select Fund has arguably been one of the biggest names to watch as of the fourth quarter. With market turbulence picking up and numerous hedge funds taking a bit of profit off the table before the year began, questions linger as to what is still worth buying as the S&P 500 looks to dip on the back of concerning headlines coming from the Middle East.
Either way, those with a long-term view might wish to have a closer look at the moves of Nygren’s impressive fund. They’ve made quite a few sales across the board, but what’s more interesting, at least in my view, were the buys. There were a lot of value gems picked up by Oakmark in the last quarter, and many of them, I think, are worth adding to a watchlist or buying up, even as the market looks to feel stuck for a while longer.
Let’s look at two names that I think stood out the most:
Keurig Dr. Pepper
Keurig Dr. Pepper (NASDAQ:KDP | KDP Price Prediction) is a fantastic staple to hold if you’re looking to prepare for increased turbulence. While the stock may not have had an all too eventful start to the year, with flat gains, I do think that the price of admission has become incredibly modest, now going for 11.9 times forward price-to-earnings (P/E), which is especially low, not just for Keurig Dr. Pepper standards, but for the broad beverage scene as a whole.
When it comes to playing defense with fizzy sodas and morning brews, it doesn’t get a whole lot cheaper than Keurig Dr. Pepper these days. And while the five-year chart is quite nasty, I do think there’s a big shareholder-value-creative catalyst in store that might move the mark sooner rather than later.
After its JDE Peet’s deal, Keurig Dr. Pepper will spin off its coffee and beverage business, which, I think, is for the better. As the two entities go their separate ways, there are undoubtedly execution risks to be aware of. In any case, I think such risks are already priced into the multiple and then some.
Salesforce
Salesforce (NYSE:CRM) has been really hurting since the AI-driven SaaS-pocalypse struck. While shares have since ricocheted off lows of around $178 per share, I’m really not sure what can help improve the narrative. Undoubtedly, Salesforce is betting big on agents, and while CEO Marc Benioff claimed on CNBC that this isn’t his first SaaS-pocalypse, things certainly do seem far scarier this time around, especially when you consider the potential for new tools to restart the whole selling spree all over again.
While I’m sure the Salesforce experience is better with AI, it takes a brave investor to buy right here. At 24.6 times trailing P/E, I don’t remember the last time shares were this cheap. As big-name investors like Bill Nygren buy while Salesforce kicks off its share repurchase program, though, the case for buying the dip feels a bit stronger, even if it means being on the wrong side of the trade for a while longer.
Until Salesforce serves up the guidance that causes investors to back up the truck, I do think the AI-driven cannibalization fears could remain the main overhang that keeps the new value play in software weighed down. Unless you’re a patient deep-value investor who’s willing to deal with more pain, I’d wait to see how things pan out, as Salesforce might be able to get agentic AI right and still not have much to show as far as the stock is concerned.
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