David Herro

David Herro Premium Guru

Last Update: 12-06-2016
Related: Oakmark Intl Small Cap

Number of Stocks: 57
Number of New Stocks: 2

Total Value: $23,086 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 (%)
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...
Bill Nygren and David Herro Comment on Apache Guru stock highlight
The largest contributor to performance for the fiscal year was Apache (NYSE:APA), a global oil and gas exploration company, which returned 66%. Oil prices have been volatile over the past year, but have rebounded in 2016 thus far. Apache has specifically benefitted from solid quarterly results that have demonstrated improved capital efficiency, including a 45% decline in North American well costs compared to 2014 levels. The company also announced the discovery of a new resource play in the Permian Basin called “Alpine High.” Initial results indicate that Apache has discovered a high quality resource at a low cost. This increased our estimate of intrinsic value and also increased our confidence in management. In our view, Apache has the balance sheet and asset quality to survive continued volatility in oil and gas prices, and we like how the management team is preserving and growing per share value during the commodity price downturn. 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...
» More David Herro Articles

Commentaries and Stories

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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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David Herro's Oakmark International Small Cap Fund: Fourth Quarter 2016 Commentary Review of market and holdings David Herro - David Herro's Oakmark International Small Cap Fund: Fourth Quarter 2016 Commentary
The Oakmark International Small Cap Fund returned 2% for the quarter ended December 31, 2016, solidly outperforming the MSCI World ex U.S. Small Cap Index, which declined 3% for the same period. For the year ended December 31, the Fund was up 6% while the MSCI World ex U.S. Small Cap Index returned 4%. Since the Fund’s inception in November 1995, it has returned an average of 9% per year. More...

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David Herro Comments on Travis Perkins Guru stock highlight
Our “new” purchase is actually a return engagement: Travis Perkins (LSE:TPK). Travis is the largest supplier of building materials in the U.K., serving both the trade market via its Travis Perkins brand as well as the do-it-yourself market via its Wickes brand. The share price came under considerable pressure following the U.K.’s vote to leave the European Union, which we believe provides us with an attractive entry point. Brexit will likely result in a period of slower near-term demand for Travis Perkins, but over the medium term we believe that demand for building materials in the U.K. will grow due to structural shortages of housing stock and infrastructure. We expect Travis will continue to gain market share, given its leading brands and best in class management team. More...

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David Herro Comments on Smiths Group Guru stock highlight
We initiated one new position in the quarter and eliminated one holding. Both issues are U.K.-domiciled entities. We sold our holding in Smiths Group (LSE:SMIN), a conglomerate active in seals (primarily for the oil and gas sector), healthcare, detection and connectors. Smiths’ new management team had a strong first year at the helm, highlighted by margin improvement at the detection division, the announced acquisition of Safran’s Morpho detection business and a significant de-risking of its U.K. pension plan. We view these developments favorably, as do other investors, and the share price has risen nearly 50% in local currency. However, this increased price more closely reflects our view of the business’ intrinsic value and thus we’ve found more attractive investment alternatives. More...

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David Herro's Oakmark Global Fund: Fourth Quarter 2016 Commentary Review of market and holdings David Herro - David Herro's Oakmark Global Fund: Fourth Quarter 2016 Commentary
A Populism-Inspired Market? More...

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David Herro Gains 2 New Holdings, Divests Another Guru invested in Scottish bank and Japanese manufacturer in 3rd quarter David Herro,T Rowe Price Equity Income Fund,Vangua - David Herro Gains 2 New Holdings, Divests Another
David Herro (Trades, Portfolio), manager of the Oakmark International Fund, acquired two new holdings and sold another in the third quarter. More...

JAPAN, OAKMARK, HERRO, SCOTLAND


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David Herro Comments on Hays Guru stock highlight
There was one new security purchased in the Fund this quarter. Hays (LSE:HAS), which is headquartered in the U.K., is a worldwide provider of permanent and temporary recruitment and human resource services, employing over 9,000 staff across 33 countries. Hays conducts its business across a wide range of industries, including accountancy and finance, construction, information technology, financial services, education and energy, and oil and gas, among others. More...

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David Herro Comments on Regus Guru stock highlight
One of the largest detractors for the quarter was another U.K.-based company, Regus (LSE:RGU), a global flexible workplace provider that serves more than two million customers in 2,800 locations across 900 cities in 106 countries. During the past quarter, the company released its results for the first half of 2016, which were ahead of estimates mainly due to better-than-expected benefits from reorganization. However, the company may be facing a couple of risk factors, including a recession in the U.K. that could reduce demand for office space, a correction in the U.K. real estate market and a weakening economic environment in Europe. On the positive side, the uncertainty in the marketplace could be a tailwind to flexible space providers and could help in rent negotiations, as well as in forming additional capital-light partnerships. The main reason for the decline in share price during the quarter was that Mark Dixon, the CEO and the largest shareholder of Regus, sold shares representing 4% of the company’s total issued ordinary shares. Our discussions with More...

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David Herro Comments on Countrywide Guru stock highlight
The largest detractor for the fiscal year was Countrywide (LSE:CWD), the U.K.’s largest real estate agency group. As we discussed in our last letter, businesses that were exposed to the U.K. real estate market were the prominent detractors to Fund performance in the second quarter. Following the Brexit vote in June 2016, Countrywide shares fell 30% by the close of the month. Since then, there has been a modest decline in real estate transactions outside of London and a larger decrease in London as consumers remain reluctant to make large, life-changing decisions in such an environment. The trading atmosphere has weakened over the past three to four months and has resulted in downward revisions to Countrywide’s near-term earnings estimates. However, in our view business value is not determined by what Countrywide will earn over the next 24 months, but rather the cash flow the business will generate over the next 50 years. We continue to believe the U.K.’s decision to exit the European Union has little long-term impact on the normalized levels of transactional More...

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David Herro Comments on Konecranes Guru stock highlight
The top contributor for both the quarter and fiscal year was Konecranes (OHEL:KCR1V), a Finnish company that specializes in the manufacturing and servicing of cranes, such as workstation cranes, industrial cranes, and cranes for shipyards and ports, as well as other lifting equipment. The company produces one out of every ten of the world’s cranes, and it sells primarily to industrial companies and to harbors and shipyards around the world. In addition, Konecranes is a global leader in maintenance, inspection and repair services. More...

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David Herro's Oakmark International Small Cap Fund 3rd Quarter Commentary Review of holdings and markets David Herro - David Herro's Oakmark International Small Cap Fund 3rd Quarter Commentary
The Oakmark International Small Cap Fund returned 7% for the fiscal year ended September 30, 2016, underperforming the MSCI World ex U.S. Small Cap Index, which appreciated 14% for the same period. For the recent quarter, the Fund returned 8%, slightly outperforming the MSCI World ex U.S. Small Cap Index, which returned 8% for the period. Since the Fund’s inception in November 1995, it has returned an average of 9% per year. More...

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