There are too many investors in the so-called Magnificent Seven and it's time to move away from them, according to value investor Bill Nygren. While there has been some rotation out of high-flying tech names into smaller stocks, the small-cap Russell 2000 still lags the S & P 500 for the year. The former is up 11% in 2024, while the other has soared 22% — led by sharp gains in Nvidia , Meta Platforms and Amazon , among others.
"We think it's a really good time for an investor to diversify away from the concentration in the S & P 500," Nygren, Oakmark funds CIO and portfolio manager, said Monday on CNBC's " Money Movers ." "The new names we're purchasing have kind of been left behind in this market that is so concentrated on mega-cap growth." He said these stocks are "generally selling at half to two-thirds the market multiple, which means we don't think nearly as much has to go right for them for those stocks to perform well.
" Nygren highlighted automotive parts supplier Genuine Parts as a name he likes. He thinks the company is "quite misunderstood by investors," with most believing it's structurally disadvantaged and missing the fact that Genuine Parts is actually growing at a double-digit rate. Genuine Parts is currently at around 16 times trailing earnings, well below the S & P 500's multiple of 27.
7, per FactSet. Nygren believes the stock's closest peer is Applied Industrial Technologies , which is currently trading over 23 times its earnings. Nygren is also a fan of G.
