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Bill Nygren manages the $8 Billion Oakmark Select Fund (MUTF:OAKLX). Morningstar named Nygren one of the 5 best managers for 2011. Oakmark Select is a fairly concentrated fund with 21 positions. He adheres to the Warren Buffett diversification principle, "Put all your eggs in one basket and watch that basket closely." In selecting his investments, Nygren examines the private market purchase value of a security, which is the price at which an informed buyer would purchase the company in its entirety. Hence, you can evaluate his portfolio as one might evaluate a conglomerate with separate business units.

Value investors, like Nygren, say that "the best businesses are like toll bridges, which their customers have to pay to cross if they want to reach their destination. This enables them to piggyback on the growth of other, less fortunately placed businesses." Below are four "toll bridge businesses" that comprise 25% of Nygren's portfolio.

TICKER

COMPANY NAME

% ASSETS

P/E

LTG

Dividend Yield (%)

CMCSA

Comcast Corp

5.4%

16.3

13%

1.9

MA

MasterCard Incorporated A

4.9%

21.0

20%

0.2

EBAY

eBay Inc

4.5%

21.6

13%

FDX

FedEx Corporation

3.7%

17.2

16%

0.6

Comcast is a national content distributor, providing cable, voice, and internet services to the home and business. 22.5+ Million customers leverage this toll bridge business to surf the web, watch cable programming, and communicate with friends. While newspapers and magazines search for ways to monetize their content online, Comcast collects a monthly fee to facilitate internet, voice, and cable connections. Quarterly earnings grew 4.7% year over year. With a P/E of 16 and long-term growth rate of 13%, this distribution business is a good value.

Mastercard is another strong toll bridge business, providing the backbone infrastructure that enables debit and credit card processing globally. Mastercard serves 22,000 financial institutions. While it receives a fee for every transaction that it facilitates over its network, Mastercard does not bear any credit risk. The financial institutions bear the responsibility to authorize and to collect customer payments. Quarterly earnings grew 40% quarter over quarter as transaction volumes increased. Mastercard is a fast-grower, with long-term growth rate of 20% and P/E of 21. There is meaningful upside in its growth as the economy improves.

E-bay is an online marketplace for the sales of goods and services. It also provides online payment solutions through PayPal and BillMeLater, secondary ticket sales through StubHub, and apartment listing services through Rent.com. E-bay provides an online clearinghouse for secondary market buyers and sellers. It collects a fee for each transaction in exchange for the intermediation. And transaction volumes have grown over the years. Quarterly earnings grew 14% year-over-year. At a P/E of 22 and growth rate of 13%, this toll bridge business is an good way to play the growth of online transactions.

Federal Express facilitates many of these internet transactions, providing transportation and business services in the United States and internationally. They provide efficient delivery of packages for individuals, online businesses and large corporations. Quarterly earnings grew 78% year-over-year, largely a reflection of an easy comp in the prior year. As the economy improves and internet transactions grow, FedEx will benefit. With a P/E of 17 and long-term growth of 16%, Federal Express is an attractive toll bridge.

These stock ideas should be used to identify potential candidates for your portfolio. Remember to perform your own due diligence before purchasing or selling any security for your portfolio.

Accounting data sourced from Yahoo!Finance



Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 4 Top Value Investments Of The Oakmark Select Fund