David Herro

David Herro Premium Guru

Last Update: 03-01-2017
Related: Oakmark Intl Small Cap

Number of Stocks: 60
Number of New Stocks: 3

Total Value: $24,440 Mil
Q/Q Turnover: 11%

Countries: USA GBR CHE FRA ITA JPN SWE NLD CAN DEU HKG AUS KOR
Details: Top Buys | Top Sales | Top Holdings  Embed:

David Herro' s Profile & Performance

Profile

David Herro has been a manager of the Oakmark International Fund (OAKIX) since 1992, the Oakmark International Small Cap Fund (OAKEX) since 1995 and the Oakmark Global Select Fund (OAKWX) since 2006. He is also the Chief Investment Officer for International Equities at Harris Associates, which he joined in 1992.

His career honors include being named Morningstar's International Stock Fund Manager of the Year in 2006 and International Stock Fund Manager of the Decade for 2000-09.

Mr. Herro has an M.A. in Economics from the University of Wisconsin-Milwaukee (1985) and a B.S. in Business/Economics from the University of Wisconsin-Platteville (1983).

Web Page:https://www.oakmark.com/oakmark/web/me.get?WEB.websections.show&OAKMARK_948

Investing Philosophy

1. Buy businesses that are trading at a significant discount to his estimate of the company's intrinsic value.

2. Invest with companies expected to grow shareholder value over time. Value investors can sometimes fall into the trap of buying a stock that is inexpensive for a reason—because the company just does not grow. He looks for good quality, growing businesses with positive free cash flow and intelligent investment of cash.

3. Invest with management teams that think and act as owners. He seeks out companies with management teams that understand the dynamics of per share value growth and are focused on achieving such growth. Stock ownership and incentives that align managements' interests with those of shareholders are key components of this analysis

Historical Allocation of Stock, Bonds, Cash

Total Holding History

Performance of Oakmark International Fund

YearReturn (%)S&P500 (%)Excess Gain (%)
20167.9111.96-4.1
2015-3.831.38-5.2
2014-5.4113.69-19.1
3-Year Cumulative-1.8 (-0.6%/year)29 (8.9%/year)-30.8 (-9.5%/year)
201329.3432.39-3.0
201229.221613.2
5-Year Cumulative64.1 (10.4%/year)98.2 (14.7%/year)-34.1 (-4.3%/year)
2011-14.072.11-16.2
201016.2215.061.2
200956.326.4629.8
2008-46.06-37-9.1
2007-0.515.49-6.0
10-Year Cumulative37.4 (3.2%/year)95.7 (6.9%/year)-58.3 (-3.7%/year)
200630.615.7914.8
200514.124.919.2
200419.0910.888.2
200338.0428.689.4
2002-8.46-22.113.6
15-Year Cumulative208.2 (7.8%/year)164.2 (6.7%/year)44 (1.1%/year)
2001-5.13-11.896.8
200012.5-9.121.6
199939.4721.0418.4
1998-7.0128.58-35.6
19973.3333.36-30.0
20-Year Cumulative340.9 (7.7%/year)339.2 (7.7%/year)1.7 (0%/year)
199628.0222.965.1
19958.3237.58-29.3
1994-9.061.32-10.4
199353.5810.0843.5
19920.437.62-7.2
25-Year Cumulative757.5 (9%/year)791.8 (9.1%/year)-34.3 (-0.1%/year)

Top Ranked Articles

Deeply Discounted, Solid European Banks David Herro Is Buying Value guru says they're gaining strength, able to withstand storms and wrongly priced
The threat of a British exit from the European Union has contributed to a drastic decline in prices for European financial stocks, and at least one value guru, Oakmark Funds’ David Herro (Trades, Portfolio), believes the sector is highly attractive, according to his interview Thursday on CNBC. Read more...
David Herro Comments on Countrywide Guru stock highlight
As referenced in the International lead letter this quarter, businesses with exposure to the U.K. real estate market detracted from Fund performance. In line with this, the largest detractor to performance was Countrywide, U.K.’s largest property services group. Following the Brexit vote, Countrywide (LSE:CWD) shares fell by 30% by the close of the quarter. We believe Countrywide is a high-quality business, but U.K. real estate transactions are likely to decline since consumers will probably be reluctant to make large, life-changing decisions in such an uncertain environment. A recovery in the U.K. housing market will benefit Countrywide significantly, but this looks unlikely in the near term. We will continue to monitor the developments in the U.K. and adjust our estimate of intrinsic value if warranted. Read more...
David Herro Comments on Royal Bank of Scotland Guru stock highlight
We initiated a position in Royal Bank of Scotland (NYSE:RBS), a U.K.-based commercial and retail bank, during the quarter after the share price plummeted on news that the U.K. had voted to leave the European Union. We believed the market had overreacted as shares of RBS fell nearly 40% in the two weeks following the announcement. We used the opportunity to purchase shares of the company at a significant discount to our estimate of intrinsic value. We believe RBS has a strong competitive position and a solid management team that has made tremendous strides in de-risking the business. The company’s historical earnings have been hurt by restructuring, litigation and other non-permanent items. While RBS was the quarter’s largest detractor, we expect a significant improvement in profitability and free cash flow in the quarters ahead. Read more...
David Herro Comments on Burberry Group Guru stock highlight
During the quarter, we sold our position in Burberry Group (LSE:BRBY) (U.K.). We believe Burberry has a good brand but is run by an average management team. Given our significant exposure to luxury goods, we decided to sell our position in Burberry and allocate the capital to our other luxury goods names run by stronger management teams. Read more...
David Herro Comments on Olympus Guru stock highlight
We also initiated a position in Olympus (TSE:7733), the Japanese camera and endoscopes company, during the quarter. We owned Olympus in the past and most recently sold our shares in February 2016 as it approached our estimate of intrinsic value. However, by mid-August the share price had fallen over 30%, and since our investment thesis was intact, we repurchased the name into the Fund. Read more...
» More David Herro Articles

Commentaries and Stories

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David Herro Comments on SKY Network Television Guru stock highlight
The Fund’s largest detractor for the quarter was SKY Network Television (ASX:SKT). Based in New Zealand, SKY Network Television provides pay-television services, with content ranging from news and sports to movies and pay-per-view events. SKY Network Television’s fiscal first-half earnings were largely in line with analysts’ expectations. However, news that the New Zealand Commerce Commission would not clear the company’s proposed merger with Vodafone New Zealand weighed on SKY’s share price in February and disappointed investors, including us, who believed the merger would benefit shareholders. Although we have reduced our estimate of SKY’s intrinsic value, we continue to remain shareholders, as we believe its standalone business is still trading at a large discount to the company’s true worth. More...

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David Herro Comments on IWG Guru stock highlight
The top-performing stock for the quarter was IWG (TSXV:IWG) (formerly known as Regus). IWG is a global flexible workplace provider whose network includes almost 3,000 locations across 900 cities in over 100 countries. IWG’s share price reacted favorably after the release of the company’s fiscal year 2016 earnings results in late February. The company reported 5% constant currency revenue growth, which was admittedly a little bit weaker than we had expected, but was more than offset by a 13% constant currency decline in overhead expense. This cost cutting was achieved even as the company expanded its network by 6%—a further illustration of IWG’s excellent progress in restructuring its cost base. The company’s strong operating leverage produced robust free cash flow and a material improvement in return on invested capital. We expect these trends to continue as management further rationalizes its overhead expenses while it increases the mix of capital contributions from third parties. These partnering relationships enable IWG to grow in a capital light manner while further reinforcing its significant scale advantage. (IWG More...

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David Herro Comments on H&M Guru stock highlight
H&M (OSTO:HM B), a global fashion designer and retailer, was the largest detractor for the quarter, declining 8%. As we anticipated, higher-than-normal inventory levels in the first quarter led to increased markdowns and lower margins. While H&M has started to see an improvement in a number of markets, including China, its performance in the U.S. and Central/Southern Europe remains weak. However, the company is taking definitive steps to improve results and increase its profitability. Last year, a new management team revised the company’s growth targets to focus more on comparable and profitable growth. Also it recently announced the launch of the Arket brand, a higher priced concept that will offer classic garments for women, men and children, as well as home furnishings. We support this move as the company has been successful with its other lines, including & Other Stories and COS. We believe that H&M’s substantial investments over the past few years will soon bear fruit and that the gross margin headwinds facing the company will also abate. For these reasons, we continue to believe that H&M provides good investment value and that More...

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David Herro Comments on Glencore Guru stock highlight
Glencore (LSE:GLEN), one of the world’s largest mining companies and commodities traders, was the top contributor to performance again this quarter, returning 14%. Glencore reported full-year 2016 operating profit of $10.3 billion, which exceeded our estimates by approximately 5%. Improved profitability was driven by solid performance in both the Industrial and Marketing segments. In January, we met with CEO Ivan Glasenberg, who remains optimistic about copper prices given steady demand and deteriorating supply. In addition, Glencore officially completed its debt reduction plan in 2016, and its net debt declined by $14.1 billion over the last 18 months—a remarkable achievement that reflects management’s decisive action. As the company’s balance sheet health has improved, so has its generation of free cash flow, which will largely be returned to shareholders. Management plans to return at least $1 billion to shareholders in 2017 via dividends. We believe management is working to enhance shareholder value, and our investment thesis remains intact. More...

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David Herro Comments on Arconic Guru stock highlight
We purchased shares of Arconic (NYSE:ARNC) after it separated from Alcoa and became an independent public company. We believe Arconic represents an attractive investment opportunity given our favorable long-term outlook for many of its end markets, the durability of its underlying business segments, and its discount relative to precedent acquisition activity. Arconic designs and manufactures lightweight metal parts and components that are used within the aerospace, building and construction, transportation, and other industries. Its largest division, Engineered Products and Solutions, accounts for approximately half of the firm’s profits and is considered the “crown jewel” of the company. This segment has a similar product portfolio to Precision Castparts, which was acquired by Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway in 2016. We believe Arconic’s long-term revenue outlook is bright. More...

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David Herro Comments on Wirecard Guru stock highlight
Wirecard (XTER:WDI) is a vertically integrated online payment services provider, primarily operating in Europe and South Asia. The majority of the activities are online, which allows for attractive growth opportunities as credit card penetration increases and as e-commerce displaces in-store purchases. As one of the leading players in the industry, Wirecard benefits from significant scale and network effects that allow it to provide an increasingly superior value proposition to its clients (i.e., a virtuous cycle effect). We find Wirecard’s management team has added tremendous value for shareholders via its strategic and operational prowess, and the large insider ownership (CEO owns 7%) creates significant alignment with minority shareholders. Wirecard trades at a meaningful discount to both our fundamentally driven intrinsic value as well as recent private market transactions, and we took advantage of the short-term price weakness to initiate a position. More...

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Oakmark International Small Cap Fund First Quarter 2017 David Herro talks about the holdings of his fund David Herro - Oakmark International Small Cap Fund First Quarter 2017
The Oakmark International Small Cap Fund returned 10% for the quarter ended March 31, 2017, outperforming the MSCI World ex U.S. Small Cap Index, which returned 8% for the same period. Since the Fund’s inception in November 1995, it has returned an average of 10%, annualized. More...

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Oakmark International Fund First Quarter 2017 Shareholder Letter David Herro talks about the holdings of his fund David Herro - Oakmark International Fund First Quarter 2017 Shareholder Letter
The Oakmark International Fund returned 9% for the quarter ended March 31, 2017, outperforming the MSCI World ex U.S. Index, which returned 7% over the same period. Most importantly, the Fund has returned an average of 10% per year since its inception in September 1992, outperforming the MSCI World ex U.S. Index, which has averaged 6% per year over the same period. More...

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Oakmark Global Fund First Quarter 2017 Shareholder Letter David Herro comments on the holdings of his fund David Herro - Oakmark Global Fund First Quarter 2017 Shareholder Letter
Although the Oakmark Global Fund’s 8% absolute return this quarter was nearly identical to last quarter’s, the drivers of performance broadened to include more relative contribution from the Fund’s large international weighting and was less driven by the financials sector, though it still contributed nicely. While we are pleased with the back-to-back 8% quarterly returns, please understand that high-single-digit quarterly returns are more the exception than the rule. In the meantime, we trust that you appreciate the performance as much as we do, as fellow shareholders in the Fund. More...

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Award-Winning International Fund Manager David Herro Picks 3 Stocks Morningstar's 2016 international manager of the year reports fourth-quarter portfolio David Herro - Award-Winning International Fund Manager David Herro Picks 3 Stocks
Oakmark Funds Manager David Herro (Trades, Portfolio) won Morningstar’s 2016 International-Stock Fund Manager of the Year in January, and disclosed his stock picks from the first quarter in February. More...

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T. Rowe Price Japan Fund Gains 4 New Holdings Fund releases quarterly portfolio T. Rowe Price Japan Fund,David Herro,Causeway Inte - T. Rowe Price Japan Fund Gains 4 New Holdings
The T. Rowe Price Japan Fund (Trades, Portfolio) acquired four new holdings in the final quarter of 2016. The new holdings are Sumitomo Electric Industries Ltd. (TSE:5802), Komatsu Ltd. (TSE:6301), Nidec Corp. (TSE:6594) and istyle Inc. (TSE:3660). More...

T ROWE PRICE. JAPAN, BUYS, Q4


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Herro and Nygren Comment on Ingenico Group Guru stock highlight
During the quarter, we initiated one new position in France-based Ingenico Group (XPAR:ING), a global leader in secure electronic payment solutions. The company provides products and services that include point-of-sale payment terminals, payment software and mobile e-payment solutions. We eliminated our positions in China ZhengTong Auto Services (China) and Ichiyoshi Securities (Japan) during the quarter. Also in December, the acquisition of gategroup (Switzerland) by Chinese conglomerate HNA Group was completed. More...

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Herro and Nygren Comment on Incitec Pivot Guru stock highlight
A top-performing stock for the quarter was Incitec Pivot (ASX:ISL), an Australian manufacturer of mining explosives, fertilizers and industrial chemicals. Incitec Pivot’s share price reacted favorably following the company’s fiscal year earnings report that was released in early November. Overall, these results were in line with our estimates and represent what we believe is solid performance in the face of significant macro headwinds across Incitec's businesses. We met with management in December, and found that their efforts to reduce costs during 2016 were substantive and helped counter tough market conditions that significantly affected their earnings, such as steep price declines for fertilizers. Overall, the company expects its markets to remain challenging in 2017. However, management is on track to deliver additional cost savings to help combat this, and certain markets seem to be improving, including the mining explosives and urea markets. In addition, the company is now in position to harvest the benefits of a period of significant capital investment. Even with the recent share price advance, we believe Incitec Pivot More...

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Herro and Nygren Comment on Citigroup Guru stock highlight
Citigroup (NYSE:C)’s global franchise gives it a unique advantage because it has more than twice as many country banking licenses as its closest competitor. This unique global reach is an attractive asset and difficult to replicate in today’s regulatory environment. We believe Citigroup has substantial excess capital, which—combined with its significant deferred tax assets—should give the management team many opportunities to increase shareholder value. More...

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Herro and Nygren Comment on Lloyds Guru stock highlight
We have been following Lloyds (NYSE:LYG) for some time, and the U.K.’s recent decision to withdraw from the European Union translated to a decline in Lloyds’ share price. In our estimation, this price drop greatly exceeded any actual loss of intrinsic value of the company, and we believe Lloyds is undervalued relative to its normalized earnings power. More...

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Herro and Nygren Comment on Danone Guru stock highlight
Danone (XPAR:DN), one of the largest dairy food producers and bottled water suppliers in the world, was the largest detractor for the quarter, declining 14%. Danone’s third-quarter results were weaker than expected given continued destocking in both its Waters and Early Life Nutrition segments. The Waters division is suffering from oversupply as growth normalizes in China. Early Life Nutrition has been hurt by regulatory changes in China since distribution is shifting from indirect to direct. We believe both divisions will continue to be weak in the short term. Additionally, Danone is in the process of acquiring WhiteWave, a U.S.-based dairy food producer, and investors reacted negatively to WhiteWave’s third-quarter results, which fell short of expectations. We continue to believe the strategic rationale behind the WhiteWave acquisition is sound. It will enable Danone to integrate fast-growing brands and gain leverage with retailers, which should lead to improved competitive positioning. In December, Danone amended fiscal-year guidance by lowering organic growth but increasing operating margins. The organic growth shortfall More...

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Herro and Nygren Comment on Bank of America Guru stock highlight
Bank of America (NYSE:BAC), one of the biggest U.S. banks, was the largest contributor to performance for the quarter, returning 42%. Bank of America’s share price reacted positively to third-quarter results that showed strong capital market performance and healthy loan and deposit growth. The election of Donald Trump further boosted Bank of America’s stock price amid investors’ expectations that a Trump administration would lead to less regulation. Additionally, the president-elect has promised to boost economic growth, which should allow for interest rates to return to more normalized levels and benefit companies in the financials sector. We believe an improving interest rate environment, along with additional expense reductions and continued share repurchases, will drive strong EPS growth over the next several years. At its current price, we believe Bank of America remains undervalued. More...

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David Herro Comments on Grupo Televisa Guru stock highlight
Grupo Televisa (NYSE:TV), a media company and the world’s largest producer of Spanish-language content, was the largest detractor from performance for the quarter, declining 19%. The U.S. presidential election results prompted an immediate drop in the value of the peso and hurt Televisa’s share price. We expect advertising budgets will be under pressure in 2017 given the uncertain environment caused by the U.S. election while advertisers take a wait-and-see approach. Although we expect near-term volatility to continue, we believe Televisa’s fundamentals remain strong. Third-quarter results were in line with our expectations and company guidance. Specifically, the company’s cable segment and Sky satellite service performed well, growing 12% and 13%, respectively. We believe the company possesses a collection of great assets that the market continues to undervalue, and our investment thesis remains intact. More...

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David Herro's Oakmark International Fund Fourth Quarter Letter Review of market and holdings David Herro - David Herro's Oakmark International Fund Fourth Quarter Letter
The Oakmark International Fund returned 6% for the quarter ended December 31, 2016, outperforming the MSCI World ex U.S. Index, which remained flat over the same period. The Fund’s calendar-year performance was strong in absolute and relative terms, returning 8% versus the MSCI World ex U.S. Index’s return of 3%. Most importantly, the Fund has returned an average of 10% per year since its inception in September 1992, outperforming the MSCI World ex U.S. Index, which has averaged 6% per year over the same period. More...

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Herro and Nygren's Oakmark Global Select Fund Fourth Quarter Commentary Review of market and holdings David Herro,Bill Nygren - Herro And Nygren's Oakmark Global Select Fund Fourth Quarter Commentary
The Oakmark Global Select Fund returned 7% for the quarter ended December 31, 2016, outperforming the MSCI World Index’s 2% return. For the calendar year, the Fund returned 10%, outperforming the MSCI World Index’s return of 8%. The Fund has returned an average of 8% per year since its inception in October 2006, outperforming the MSCI World Index’s annualized gain of 5% over the same period. More...

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