Investors should consider scooping up shares of this pharmaceutical giant trading at a discount, according to longtime value investor Bill Nygren. ” Merck is attractive on a standalone basis, and it’s got really good portfolio characteristics,” said the portfolio manager at Oakmark Funds, who bought shares in the third quarter. “We’re heavy in financials, we’re heavy in the durable names — our portfolio tends to have a little bit of a pro cyclical tilt to it and Merck helps offset some of that risk,” Nygren said in an interview with CNBC. MRK YTD mountain Shares this year Shares of Merck have underperformed the market this year, slumping more than 5%. Some of those issues have stemmed from slowing sales in China of its human papillomavirus vaccine, known as Gardasil. Nygren started looking at the stock earlier this year, meeting with management and Merck CEO Rob Davis, who he credited as being “unusually good” at understanding both the finance and science language. The firm refrained from buying shares until they fell over the summer — Merck slid about 8% in the third quarter — and the valuation improved. Nygren pointed to Merck’s existing drug portfolio as another reason for buying the name. An extension of its Keytruda franchise, a cancer treatment, could also bode well for shares. Beyond the big pharmaceutical name, Nygren is also finding value in some artificial intelligence implementers, in addition to mainstay megacap player Alphabet . This includes Capital One , which is harnessing AI in its underwriting process, and Charter Communications as it implements AI in call centers to reduce costs and improve the customer experience, he said. COF YTD mountain Shares this year Charter shares are up nearly 4% this year, while Capital One has rallied 43%. “We’ll see examples like that of where traditional companies nobody thinks about when you say the word AI, end up being some of the bigger beneficiaries,” Nygren said.
