I just ran across an interesting speech by value investor, Bill Nygren of the Oakmark Funds. In Nygren’s speech, The Hunt for Intrinsic Value, he points out several interesting companies, including Wal-Mart, Viacom, Citigroup, Limited Brands, Coca-Cola Enterprises, Raytheon, JPMorgan Chase, and Pulte Homes. I especially found his discussion of the 80/20 rule that states that you should focus 80 percent of your effort on the top 20 percent of the company.
The flip side of this rule can be used to spot opportunities when looking at the financial media. When 80 percent of the media’s negative commentary covers the portion of a company that only generates 20 percent of a company’s value, it might be time to take a closer look at this company.