OID: Why 90% and not 80% or 100%?
    Nygren: I would be lying if I said that there was any great science to that 90% figure. What we're trying to reflect is the benefit of leaving a little bit on the table so that there's more likely to be someone who wants to buy the stock from you. If you shoot for 100%, you'll more frequently have trouble finding someone optimistic enough to buy it from you.
    That hasn't been true during the last two years, incidentally, because there's been so much momentum focus in the market recently. But over a longer period, we think that 90% has been a better number.
    Also, we base our value estimate on what we believe to be the private market value of the entire company. And in most cases, you have to acknowledge that the value of a minority share is not as great as that of a control stake. So those are the reasons why we shoot to sell at 90% of private market value instead of 100%.

OID: Sounds reasonable.
    Nygren: But it's interesting that you asked, "Why not 80%?" The only direction that I've heard that question asked the last two years is, "Why don't you wait for 100%?" Frankly, I think there's a stronger argument that we're asking for too much in the public marketplace rather than getting out too cheap.

OID: Speaking of your sell discipline, it looks like the Oakmark Fund was doing a lot of selling during the first quarter…
    Nygren: That's right. For the year ended March 31st, I think that we were, on balance, a seller of every name in the Oakmark Fund portfolio due to significant redemptions, although the Oakmark Select Fund was essentially flat in terms of shareholder redemptions during that same period. However, The Oakmark Fund peaked in assets during early 1998 at about $9-1/2 billion…

OID: And it's down around $2 billion today. Ouch.
    Nygren: It had a difficult second half of 1998, a difficult 1999 and a difficult first two months of 2000. During that period, small investment losses during a strong market reduced assets somewhat. But far and away the majority of the decline in assets in the Oakmark Fund was the result of shareholder redemptions. And when you get redemptions, you have to sell.
    But I believe a lot of the disappointing value stocks have reflected disappointing fundamentals. Some investors who've had disappointing results suggest that the market has penalized their holdings basically for no reason - based on market irrationality. However, the stocks that have been our most disappointing performers have tended to be those where we misjudged the fundamentals.
    Generally, we felt the reaction was too severe in the market. But to me, it's kind of like fingers on a chalkboard when I hear people complain that the market has completely irrationally taken their stocks down.