David Herro

David Herro

Last Update: 2014-02-19
Related: Oakmark Intl Small Cap

Number of Stocks: 58
Number of New Stocks: 1

Total Value: $26,704 Mil
Q/Q Turnover: 15%

Countries: USA CHE FRA JPN GBR NLD SWE ITA AUS DEU CAN 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 (%)
201329.3431.55-2.2
201229.2215.413.8
2011-14.072.08-16.1
3-Year Cumulative43.6 (12.8%/year)55 (15.7%/year)-11.4 (-2.9%/year)
201016.2215.061.2
200956.326.4629.8
5-Year Cumulative160.9 (21.1%/year)125.5 (17.7%/year)35.4 (3.4%/year)
2008-46.06-37-9.1
2007-0.515.61-6.1
200630.615.7914.8
200514.124.919.2
200419.09127.1
10-Year Cumulative148.5 (9.5%/year)104.1 (7.4%/year)44.4 (2.1%/year)
200338.0428.79.3
2002-8.46-22.113.6
2001-5.13-11.96.8
200012.5-9.121.6
199939.472118.5
15-Year Cumulative367.4 (10.8%/year)98.3 (4.7%/year)269.1 (6.1%/year)
1998-7.0128.6-35.6
19973.3333.4-30.1
199628.02235.0
19958.3237.6-29.3
1994-9.061.3-10.4
20-Year Cumulative466.4 (9.1%/year)483.2 (9.2%/year)-16.8 (-0.1%/year)
199353.5810.143.5
19920.437.6-7.2

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...
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...
David Herro Positive on Global Growth and 3 New Global Stocks
David Herro (Trades, Portfolio) runs both the International and International Small Cap at The Oakmark Funds. He is highly interested in good business at unreasonably low prices, and is optimistic about emerging markets and companies exposed to emerging markets currently. Read more...
» More David Herro Articles

Commentaries and Stories

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Bill Nygren and David Herro Comment on FedEx
FedEx (FDX) was another detractor for the quarter, falling 8%. FedEx reported weak third quarter numbers, which were significantly skewed by unusually severe weather and the company’s widely reported difficulties during the holiday season. Despite the issues with inclement weather, FedEx’s ground segment grew nicely; its volume and price grew 8% and 2%, respectively. However, in spite of this performance, the segment’s margins trailed last year’s, primarily because of hub/network expansion costs. In our view, this expansion will allow for rapid growth and share gains and is, therefore, worth the short-term costs. Finally, we believe FedEx remains focused on its shareholders and on returning capital via stock buybacks. During the most recent quarter, it repurchased approximately $2.7 billion of stock, and since its stock-repurchasing program began in October 2013, the company has repurchased 25 million — or 8% — of its outstanding shares. We expect further buybacks with 15 million shares left under the current authorization. More...

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Bill Nygren and David Herro Comment on Daiwa Securities
Daiwa Securities (TSE:8601), Japan’s second-largest broker, was the largest detractor for the quarter, falling 12%. Daiwa’s stock price was negatively impacted by general Japanese market weakness during the first quarter. More...

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Bill Nygren and David Herro Comment on Bank of America
Bank of America (BAC) was the top contributor for the quarter, returning 11%. The company's most recent quarterly earnings report demonstrated continued progress toward achieving management's expense reduction targets, driven in large part by declines in the cost of servicing its "legacy" mortgages. As management executes on its plan, investors have increasingly recognized the normalized earning power of Bank of America. We believe the combination of further operational improvements and the company's plan to return capital to shareholders – through its recently increased dividend and additional repurchase authorization – will lead to continued gains in the stock. More...

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Oakmark Global Select Fund - First Quarter 2014 Commentary
The Oakmark Global Select Fund returned 2% for the quarter ended March 31, 2014, outperforming the MSCI World Index’s 1% return. For the first six months of this fiscal year, the Fund was up 9%, in line with the MSCI World Index. The Fund has returned an average of 9% 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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Oakmark's David Herro - Using Instability in Markets to Buy Stocks
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David Herro Comments on Hakuhodo DY Holdings
We added a new Japanese security to the Fund this quarter, Hakuhodo DY Holdings (TSE:2433), Japan’s second-largest advertising agency. Hakuhodo has offices in more than 15 countries, including approximately 14% of the market share of Japan. It consists of three advertising businesses that offer a wide range of services to client advertisers and media companies. During the quarter, we sold Square Enix Holdings, Takata, and NORMA Group. More...

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David Herro Comments on Hengdeli Holdings
A large detractor from the Fund’s performance for the past quarter was Hengdeli Holdings (HKSE:03389), the large luxury watch retailer in the greater China region. The company recently reported weaker than expected results due to lower demand for luxury watches in China and Hong Kong in 2013. After reporting a number of years of double-digit growth, the luxury watch market was flat year-over-year in 2013. This slowdown is a result of a government crack-down on gifting as well as weakening macro trends in China. While the high end of the market remains under pressure, demand seems to be improving in the mid-end segment, where Hengdeli is more heavily exposed. We believe that Hengdeli’s results will begin to improve when demand in China recovers more broadly, which we expect to occur within the next few years as a result of the significant wealth creation still occurring in China today. More...

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David Herro Comments on Altran Technologies
The top contributing stock for the quarter was French company Altran Technologies (XPAR:ALT). Altran provides a range of outsourced consulting services, categorized into four main areas: information systems, mechanical engineering, systems engineering and managing product lifecycles. Altran’s fiscal 2013 revenues increased a modest 2% year-over-year, which was in line with our expectations; however, revenue trends accelerated during the second half of 2013, positioning the company for better growth in 2014. More importantly, Altran continues to improve how it uses its employees. Its invoicing rates improved in the 4th quarter up from the prior year’s 4th quarter period, and they surpassed 86% in November for the first time. Higher invoicing rates are necessary for Altran to narrow the gap between its margins and the margins of its best-in-class peers. Assuming these positive trends continue in 2014, we expect Altran will report another year of margin improvement. More...

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David Herro Comments on Honda Motor
The largest detractor for the quarter was Honda Motor (HMC), the Japanese automobile manufacturer, which fell 14%. Honda has reported weaker than expected operating margins since the Civic redesign mishap. A mere 18 months after it launched a major redesign, Honda rushed a refresh of the Civic in order to address concerns with materials and quality. To ensure that the Accord’s redesign did not suffer the same fate, Honda ordered changes to the new Accord’s power train and engine late in the development cycle, which negatively affected margins. We expect Honda’s mid-term margins to continue to feel pressure but do not believe this will damage the company’s long-term prospects. More...

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David Herro Comments on AMP
Another top contributor was AMP (ASX:AMP), the leading independent wealth management company in Australia and New Zealand, which returned 20%. AMP’s fiscal year end results revealed that the growth in assets under management exceeded expectations. Although its Wealth Protection division continues to face challenges, the company’s actions on claims management are beginning to show positive results. Additionally, management remains diligent on cost discipline and has brought controllable costs down 2.6% for the group, despite cost inflation of 2.5-3%. Management continues to return capital to shareholders via dividends and has recently committed to a share repurchase program in order to neutralize its dividend reinvestment program. Finally, we believe AMP is well positioned to benefit from expected increases in retirement savings and wage growth in Australia. 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 to performance for the quarter, returning 37%. Since September 2013, Intesa has returned 64%. Though we still believe the stock to be undervalued, we trimmed our holdings as the gap between price and our estimation of value significantly narrowed. During the quarter, management released a new 2017 business plan that we found very positive. Management has committed to return EUR 10 billion to shareholders via dividends over the next four years. This constitutes a cumulative payout ratio in excess of 70%. Even with this return of capital to shareholders, Intesa will be over-capitalized compared to Basel III requirements, leaving the door open for additional capital returns. Additionally, management plans to increase investments in fee-based businesses, including asset management and insurance. We believe management has a solid plan and that this investment will continue to provide value for our shareholders. More...

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David Herro's Oakmark International Small Cap Fund: First Quarter 2014 Commentary
The Oakmark International Small Cap Fund returned 2.3% for the quarter ended March 31, 2014, underperforming the MSCI World ex U.S. Small Cap Index, which returned 3.5% for the same period. Holdings in Japan contributed most to the Fund’s quarterly return, while Swiss and Australian names were the largest detractors. More...

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David Herro's Oakmark International Fund: First Quarter 2014 Commentary
The Oakmark International Fund returned 1% for the quarter ended March 31, 2014, slightly outperforming the MSCI World ex U.S. Index. For the first six months of the Fund’s fiscal year, the Fund returned 5%, which underperformed the MSCI World ex U.S. Index’s 6% return. 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 7% per year over the same period. More...

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International Favorite David Herro's Top Five Holdings at Year End David Herro - International Favorite David Herro's Top Five Holdings At Year End
David Herro is a favorite among an exclusive group of international gurus. As the chief investment officer of International Equities for Harris Associates, you would think he had his hands full enough already, but Herro is also the portfolio manager of the Oakmark International Fund, the Oakmark International Small Cap Fund and the Oakmark Global Select Fund. The international guru has 28 years of investing experience under his belt and has been with Harris Associates since 1992. More...

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David Herro Positive on Global Growth and 3 New Global Stocks David Herro,Oakmark International Small Cap Fund - David Herro Positive On Global Growth And 3 New Global Stocks
David Herro (Trades, Portfolio) runs both the International and International Small Cap at The Oakmark Funds. He is highly interested in good business at unreasonably low prices, and is optimistic about emerging markets and companies exposed to emerging markets currently. More...

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Oakmark Funds - Finding Quality in Europe
Many investors continue to believe that European stocks are too risky. But in our view, Europe offers a wide variety of investing opportunities. Other investors’ hesitation to invest in the region has provided us with the chance to purchase high quality stocks that are undervalued simply due to geography. More...

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Oakmark's David Herro - International Stock Picks
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David Herro and Bill Nygren Comment on Canon
Falling 15%, the largest detractor for the year was Canon (CAJ), a Japan-based consumer imaging company.  This performance was largely the result of the downgrade of the ILC business (digital SLRs and lenses).  This business has lagged enough that management has lowered fiscal-year volume estimates from 9m to 8m.  Quarterly data confirms that imaging inventory has decreased year-over-year.  Despite falling prices due to uncertain consumer markets in developed markets and from trading down in emerging markets, management indicates pricing is normalizing.  The office products division has remained mostly unchanged, generating only slightly lower volumes.  In addition, print volumes are growing again, and Canon is taking market share.  We continue to believe that Canon is a compelling investment opportunity that will reward shareholders in the long term. More...

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David Herro and Bill Nygren Comment on CNH Industrial
The largest detractor for the quarter was CNH Industrial (CNHI), a global agricultural and construction equipment manufacturer, which fell 11%.  CNH released its nine-month results, which showed revenue growth of 0.6%, but the company’s margins were adversely affected by Iveco, its trucks and commercial vehicles segment.  Iveco’s margins fell short of expectations due to tough pricing, high launch costs, negative mix and increases in bad debt provisions.  Management maintains full-year guidance of 3-4% revenue growth.  We believe improvements in the Iveco division will help CNH Industrial achieve its long-term margin targets.  More...

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David Herro and Bill Nygren Comment on Daiwa Securities Group
The largest contributor for the year was Daiwa Securities Group (TSE:8601), Japan’s second largest broker, which returned 88%.  During the quarter Daiwa released its fiscal first-half results, showing its highest pre-tax profits since the company started reporting such figures in 1995.  Revenues rose across the board in retail, wholesale and asset management and are on track to meet the company’s full-year estimates.  Of special note, the wholesale banking division became profitable for the first time since 2009.  We expected wholesale banking revenues to be strong due to equity trading and commission activity, but were surprised by the advance in fixed income revenues which surpassed peers.  More...

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