How Bill Nygren is positioning himself in the current market environment.

Investors should consider buying shares of the pharmaceutical giant, which are trading at a discount, according to longtime value investor Bill Nygren.

“Merck is attractive on its own and has really good portfolio characteristics,” said the portfolio manager at Oakmark Funds, which bought shares in the third quarter.

“We have a strong presence in the financial sector, we also invest in sustainable companies — our portfolio has a slightly procyclical focus, and Merck helps offset some of that risk,” Nygren said in an interview with CNBC.

Merck shares have lagged the market this year, down more than 5%. Some of those problems stem from declining sales in China of the human papillomavirus vaccine known as Gardasil.

Nygren began looking at the stock earlier this year, meeting with the company’s management and Merck CEO Rob Davis, whom he praised as “unusually good” at understanding both the language of finance and science. The firm held off on buying shares until prices fell over the summer — Merck fell about 8% in the third quarter — which boosted the stock’s valuation.

Nygren cited Merck’s existing drug portfolio as another reason for the investment. Expanding the franchise for Keytruda, a cancer treatment, could also have a positive effect on the stock.

In addition to big pharma, Nygren also sees value in some companies that are applying artificial intelligence, as well as in major players like Alphabet. This includes Capital One, which is using AI in its credit-scoring process, and Charter Communications, which is implementing AI in its call centers to reduce costs and improve customer service, he added.

Charter shares are up nearly 4% this year, while Capital One shares are up 43%.

“We’re going to see examples like these where traditional companies that no one thinks of when they hear the word ‘artificial intelligence’ end up being some of the biggest beneficiaries,” Nygren said.