David Herro

David Herro Premium Guru

Last Update: 05-27-2015
Related: Oakmark Intl Small Cap

Number of Stocks: 55
Number of New Stocks: 2

Total Value: $28,090 Mil
Q/Q Turnover: 6%

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 (%)
2014-5.4113.69-19.1
201329.3432.39-3.0
201229.221613.2
3-Year Cumulative58.1 (16.5%/year)74.6 (20.4%/year)-16.5 (-3.9%/year)
2011-14.072.11-16.2
201016.2215.061.2
5-Year Cumulative57.9 (9.6%/year)105.1 (15.5%/year)-47.2 (-5.9%/year)
200956.326.4629.8
2008-46.06-37-9.1
2007-0.515.49-6.0
200630.615.7914.8
200514.124.919.2
10-Year Cumulative97.4 (7%/year)109.4 (7.7%/year)-12 (-0.7%/year)
200419.0910.888.2
200338.0428.689.4
2002-8.46-22.113.6
2001-5.13-11.896.8
200012.5-9.121.6
15-Year Cumulative217 (8%/year)86.4 (4.2%/year)130.6 (3.8%/year)
199939.4721.0418.4
1998-7.0128.58-35.6
19973.3333.36-30.0
199628.0222.965.1
19958.3237.58-29.3
20-Year Cumulative489.1 (9.3%/year)554.6 (9.8%/year)-65.5 (-0.5%/year)
1994-9.061.32-10.4
199353.5810.0843.5
19920.437.62-7.2

Top Ranked Articles

David Herro On Banco Santander
David Herro of Oakmark commented on the European situation earlier this month. In particular, he has the following assessment for Spain’s Banco Santander (STD):Using this approach allows us to add good quality businesses at attractive price points to our portfolios. An example of this tactic is our investment in the Spanish bank, Banco Santander. This bank has been on our radar for a long time and, in our view, Banco Santander ranks among the highest quality global financial firms that exist today. Some attributes that have led to this assessment are: Read more...
David Herro: Hard to Believe Japan Selloff Is Real Value Lost
David Herro manages Oakmark International and he was named Morningstar’s Fund Manager of the Decade last year. Apparently his fund owns some Japanese names, and the recent market action there does not bore well for his fund. Read more...
David Herro on Where to Invest Now
David Herro, portfolio manager of the Oakmark International Fund, tells CNBC where he's putting his money to work now. Read more...
Oakmark Buys More Shares of Its Worst Performing Stocks
Oakmark, a long-term focused value investment firm, increased its holdings in what it called its “top detractors” -- stocks whose prices dropped -- of its international fund in the second quarter. Oakmark International underperformed the S&P benchmark with a -1% return this year through mid-September. Managers, however, viewed the short-term dip as an opportunity to buy more stocks it considers good values at even better prices. Read more...
The 3 New Buys of New Guru David Herro, International Fund Manager
A new member of GuruFocus’ list of Gurus, David Herro leads the Oakmark International Fund (OAKIX), which just celebrated its 20th anniversary, at the same firm with fellow Guru Bill Nygren, The Oakmark Funds. Herro has an M.A. in economics from the University of Wisconsin-Milwaukee and was named Morningstar’s International Stock Fund Manager of the decade from 2000 to 2009. Read more...
» More David Herro Articles

Commentaries and Stories

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David Herro’s Second Quarter 2015 Market Commentary
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David Herro Comments on Atea ASA
Atea (OSL:ATEA), a Nordic IT infrastructure company, issued a profit warning in June, and this news, combined with a corruption investigation into its Denmark office, caused the stock price to suffer. As a result, Atea was the largest detractor from performance for the quarter. In regards to the investigation, Atea announced that it was determined to assist the police and that the case involved former employees who are now employed by another IT company. Neither Atea as a firm nor any one on Atea’s current management team has been charged with bribery. Management reported that it has known about this issue longer than it has been public, has investigated it internally and is confident that it did not take place in other geographies. This news has not affected any of the company’s business outside of Denmark, which has experienced a postponement of orders pending the outcome. Despite the corruption news, Atea holds leading market positions and competitive advantages as an IT infrastructure and system integration specialist, generates strong cash flow, produces high returns and is well-positioned to capture the long-term growth More...

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David Herro Comments on Julius Baer Gruppe AG
The top performing stock in the Fund this past quarter was Julius Baer Group (XSWX:BAER). Baer released interim results depicting assets under management of CHF289 billion, which outpaced market estimates, even though the company’s assets had declined almost 1% year-to-date due to the negative effects of a strong Swiss franc. Baer’s gross profit margin was better than we expected, and the company’s cost/income ratio was, in our view, solid and slightly lower than Baer’s target range. Additionally, the bank may be on the verge of reaching a settlement with U.S. authorities for charges of an alleged role in helping Americans with tax evasion—a topic that has plagued it and several other Swiss banks since the U.S. Department of Justice started the probe in 2011. The bank recently set aside USD350 million for fines related to such a U.S. tax settlement. This is less than consensus and much less than what we have expected. The settlement has been a long time in coming, and we are happy that the matter may soon be resolved. With the settlement nearing a close and with a strong balance sheet, we think Julius Baer Group remains More...

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David Herro Comments on Swatch Group AG
We purchased several new names during the quarter, including Glencore as well as some previous holdings of the Fund, such as Bureau Veritas (France), Nomura (Japan), Omron (Japan) and Swatch Group (XSWX:UHRN) (Switzerland), that we were able to repurchase due to fundamental changes or price volatility. Swatch (XSWX:UHRN) is the dominant player in the Swiss watch market, making up approximately 30% of the industry’s revenues and over 60% of its volume. Furthermore, Swatch’s manufacturing arm produces approximately 75% of all finished movements and has a market share above 90% in some key components. Yet challenging fundamentals and concerning headlines created a recent buying opportunity for us to become shareholders of Swatch Group again. Over the past year shares declined by 30% as demand from China weakened and concerns about Apple’s smart watch dented sentiment. We believe these are short-term issues that Swatch will overcome. Swiss watches are niche and, in our opinion, are unlikely to be materially impacted if smart watches gain mass market status. The majority More...

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David Herro Comments on Samsung Electronics Co Ltd
Samsung Electronics (XKRX:005930), South Korea’s top electronics company and world leader in semiconductor manufacturing, was the quarter’s top detractor, declining 12%. Investors reacted negatively to news that initial sales of the new Galaxy S6 smartphone failed to meet consensus expectations. Although we believe it is still too early to judge that product’s success, management’s targets for the Galaxy S6 are in line with our expectations. It’s important to point out that while Samsung’s consumer electronics division (TVs and smart phones) is most visible to consumers, we don’t see it as the company’s main value driver. In our view, that driver is its semiconductors business in which Samsung is a principal leader and holds significant competitive advantages. All three of the company’s semiconductor businesses (DRAM, NAND and System LSI) are going from strength to strength. With its dominant position in semiconductors, strong balance sheet and low valuation, Samsung Electronics offers compelling long-term potential in our view. More...

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David Herro Comments on Lloyds Banking Group PLC
Lloyds Banking Group (LSE:LLOY, LYG), the dominant retail bank in the U.K., was the top contributor for the quarter, returning 16%. The company’s underlying core asset profitability remained strong while better than expected trends in its non-core operations resulted in robust free capital generation. We believe Lloyds’ highly profitable bank operations’ cash flow generation will continue to increase as non-core operations moderate. Lloyds’ balance sheet health has also improved significantly in our view, especially in terms of asset quality and capital ratios. More...

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David Herro's Oakmark International Small Cap Fund Second Quarter 2015 Commentary
For the period ending June 30, 2015 the Oakmark International Small Cap Fund returned 2% for the quarter and 11% year-to-date. This is compared to the MSCI World ex U.S. Small Cap Index, which returned 4% and 8% for the same periods, respectively. Since the Fund’s inception in November 1995, the Fund has returned an average of 10% per year. More...

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David Herro's Oakmark International Fund Second Quarter 2015 Commentary
The Oakmark International Fund declined 1% for the quarter ended June 30, 2015, underperforming the MSCI World ex U.S. Index, which returned 0.48%. 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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International Investing Guru David Herro Gives 2 Stock Picks David Herro - International Investing Guru David Herro Gives 2 Stock Picks
David Herro (Trades, Portfolio) of Oakmark may be the best international fund manager of the past 10 years. More...

David Herro, Oakmark Fund, Video


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David Herro Discusses Large Cap Investing on Bloomberg
David Herro (Trades, Portfolio), manager of the Oakmark International Fund (OAKLX) and several other Oakmark funds, discussed large cap investing on Bloomberg in May. Watch the video here. More...

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Oakmark Intl Small Cap Fund Adds Two New Positions During 1QFY15 David Herro, Bill Nygren - Oakmark Intl Small Cap Fund Adds Two New Positions During 1QFY15
Oakmark Intl Small Cap (Trades, Portfolio) Fund recently added two new positions to its portfolio of 59 stocks, valued around $2.95 billion with a 10% quarter over quarter turnover. More...

INTERNATIONAL, AUTOMOTIVE, TECHNOLOGY, Oakmark International Fund, David Herro, Bill Nygren


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David Herro Trades International Holdings in First Quarter David Herro - David Herro Trades International Holdings In First Quarter
David Herro (Trades, Portfolio) has been a manager of the Oakmark International Fund since 1992. During his tenure, Morningstar has named him International Fund Manager of the Year (2006) and International Stock Fund Manager of the Decade (2000-2009). In recent years, the Oakmark International Fund has provided evidence to support those honors with returns exceeding 29% in 2012 and 2013. More...

David Herro, Oakmark Fund


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International Investing Guru David Herro Sees Value In Europe and Japan David Herro - International Investing Guru David Herro Sees Value In Europe And Japan
Do you want a shortcut to finding global undervalued securities? More...

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David Herro Comments on Melco Crown Entertainment
An additional detractor for the quarter was Melco Crown Entertainment (MPEL) (Hong Kong), which is a developer and owner of casino gaming and entertainment resort facilities in Asia. Casino revenues in Macau were weak due to China’s anti-corruption campaign, difficult year-over-year comparisons and a weaker macro environment. Although we continue to monitor the market, we remain optimistic about Macau’s long-term prospects, given low penetration of Chinese visitors, continued wealth creation of Chinese citizens and large infrastructure projects, which should help facilitate the growth of Macau. More...

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David Herro Comments on CIE FINANCIERE RICHEMONT SA
Richemont (XSWX:CFR) (Switzerland), the world’s second-largest luxury goods company, was the quarter’s biggest detractor, falling 10%. Richemont’s stock price fell after its fiscal nine-month sales update, which indicated a slow third quarter. Thus, even though the company’s organic sales grew 2% for the full period, they still fell short of our forecast. Sales declined most in Hong Kong/Macau and in the company’s specialty watch unit, both of which generate margins greater than the group’s average. Even so, sales in Europe and the Americas increased 9% and 7%, respectively, which we see as encouraging. We expect Richemont’s near-term results will be negatively impacted by the stronger Swiss franc, as most of its watch manufacturing costs are denominated in francs while much of its revenues are not. However, the company’s brands have pricing power, and management has already announced mid-single-digit price increases in Europe. Moves like these should offset some of the currency exchange rate volatility. While Richemont is facing some short-term headwinds, we believe the long-term growth prospects remain intact. From More...

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David Herro Comments on Daimler AG
Another top contributor for the quarter was Daimler (XTER:DAI) (Germany), the global auto manufacturer of the Mercedes brand, which returned 15%. Daimler reported full-year 2014 unit sales of 2.5 million vehicles (its best unit-sales year ever), which resulted in a 10% revenue increase and a 38% increase in underlying Industrial earnings. The company’s largest division, Mercedes-Benz, continued its strong performance (14% revenue growth and 10% unit growth year-over-year along with improved margins), driven by strong performance in China, robust S-Class model sales and the launch of the new C-Class model. Overall, the results were as we expected, and management predicts these positive trends will continue in 2015. More...

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David Herro Comments on Intesa Sanpaolo
Intesa Sanpaolo (MIL:ISP), an Italian retail and commercial bank, was the top contributor for the quarter, returning 16%. Intesa’s fiscal-year results showed core revenue growth of 7%. We found these results impressive for an Italian bank, given that Italian GDP hasn’t been growing, there is low banking penetration and the household savings rate is high. We believe Intesa’s performance reflects management’s focus on growing fee-based businesses. Asset quality continues to improve with non-performing loan formation at its lowest level since 2011, down 22% year-over-year, and management expects it to fall even further in 2015. Intesa’s balance sheet remains very strong with a leverage ratio around 7%, one of the best in Europe, and its liquidity far exceeds requirements. Management has also announced a dividend increase, which will return additional capital to shareholders in 2015. We believe Intesa has a strong position and will continue to provide value for our shareholders. More...

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David Herro Comments on Melco International Development
The Fund’s largest detractor for the quarter was Melco International Development (HKSE:00200) (Hong Kong), which is a developer and owner of casino gaming and entertainment resort facilities in Asia. Casino revenues in Macau were weak due to China’s anti-corruption campaign, difficult year-over-year comparisons and a weaker macro environment. Although we continue to monitor the market, we remain optimistic about Macau’s long-term prospects, given low penetration of Chinese visitors, continued wealth creation of Chinese citizens and large infrastructure projects, which should help facilitate the growth of Macau. More...

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David Herro Comments on Michael Page International PLC
Even with high unemployment rates, staffing companies have maintained acceptable earnings due to strong demand and pricing despite market fears. Michael Page (LSE:MPI) particularly benefited from improved sentiment in Europe and a growing sense that hiring activity will increase. Because of the company’s high exposure to the more volatile permanent placement market, its earnings are especially sensitive to increased hiring trends. During 2014 Michael Page reported a respectable 15% year-over-year increase in EBIT. We expect the rate of EBIT growth to accelerate further in the coming years due to continued growth in hiring activity as well as Michael Page’s productivity improvements, driven by a new IT system. More...

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David Herro's Oakmark International Fund 1Q 2015 Letter
The Oakmark International Fund returned 7% for the quarter ended March 31, 2015, outperforming the MSCI World ex U.S. Index, which returned 4% over the same period. Most importantly, the Fund has returned an average of 11% 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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