David Herro

David Herro

Last Update: 2014-08-08
Related: Oakmark Intl Small Cap

Number of Stocks: 58
Number of New Stocks: 3

Total Value: $31,298 Mil
Q/Q Turnover: 12%

Countries: USA CHE FRA GBR DEU JPN ITA NLD AUS KOR SWE HKG CAN
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

  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

Oakmark Funds Commentary - 'Balance & Flexibility'
The Oakmark Equity & Income Fund has a simple but important objective: to preserve and grow its shareholders’ capital over time. In order to both preserve and grow capital, the Fund seeks to mitigate risk by finding the right balance between its equity and fixed income allocations. But finding this balance isn’t based on inflexible guidelines. Rather, the Fund’s managers strive to achieve balance by employing Harris Associates’ firm-wide value philosophy and active, bottom-up approach to investing. More...

  • Currently 5.00/5

Rating: 5.0/5 (1 vote)

David Herro's Q2 2014 International Small Cap Fund Investor Letter
The Oakmark International Small Cap Fund returned 2% for the quarter ended June 30, 2014, underperforming the MSCI World ex U.S. Small Cap Index, which returned 3% for the same period. Since the Fund’s inception in November 1995, it has returned an average of 11% per year. More...

  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

David Herro Comments on BNP
As we look at the last quarter, two of our larger holdings, Credit Suisse and BNP (XPAR:BNP), fell under intense regulatory pressure from U.S.-based regulatory bodies. Both pleaded guilty to various charges and will pay large fines (see the Oakmark International letter for further discussion of Credit Suisse). Though this is unfortunate and points to lapses by some of their employees, we believe that the fundamental business value of each company, based on the present value of all future cash flow streams, does not align with the declines in these two companies’ share prices. Additionally, we believe that both companies are structurally intact, have strong business models, are well-capitalized and should be able to recover, post legal settlements. More...

  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

David Herro's Second Quarter 2014 Shareholder Letter
Fellow Shareholders, More...

  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

David Herro Comments on Credit Suisse Group
Credit Suisse Group (XSWX:CSGN), the Swiss-based financial services company, was the largest detractor for the quarter, declining 9%. First-quarter results released in April were mixed. Overall revenues and net profit were less than market expectations, while net new money inflows in the wealth management/private banking and asset management divisions were strong. Margins in wealth management and asset management also expanded. In May, Credit Suisse announced that it settled its U.S. tax evasion case that resulted in a total fine of CHF 2.5 billion (USD 2.8 billion). Credit Suisse was not required to relinquish any of its licenses, and its internal due diligence suggests that no clients have terminated their relationship due to the issue. We are pleased that this situation is finally resolved. Although Credit Suisse’s Tier 1 capital ratio declined to 9.3% based on its first-quarter results, management expects to exceed a level of 10% by current year-end. Management also stated that the company plans to return approximately half of its earnings to shareholders, which is better than the 35% previously announced. Lastly, More...

  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

David Herro Comments on Richemont
Richemont (XSWX:CFR), the world’s second-largest luxury goods firm, was the top contributor for the quarter, returning 10%. Shares reacted positively to fiscal year 2013 earnings, in addition to an increase in the fiscal year 2014 dividend of 40%. Additionally, Richemont saw 6% organic growth in April, or 8% excluding the slowdown in Japan, following the increase in consumption tax. Globally, the jewelry division continues to perform well, as jewelry sales have increased by double digits over last year. Management continues to invest in its jewelry manufacturing capacity due to its very bullish view of the business’s long-term growth prospects from global wealth creation. We believe Richemont has a high-quality inventory of brands and is led by one of the best management teams with which we invest. More...

  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

David Herro's Oakmark International Fund Second Quarter 2014 Letter
The Oakmark International Fund returned 1% for the quarter ended June 30, 2014, underperforming the MSCI World ex U.S. Index, which returned 5%. 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...

  • Currently 5.00/5

Rating: 5.0/5 (2 votes)

Why Oakmark Finds Value in Some Banks
If you’ve been reading the financial press over the last six years or so, you’ve likely noticed a steady drumbeat of negative articles on banks and, in particular, large U.S. banks. As a result, we often get questions about our relatively large positions in institutions such as JPMorgan (JPM), Citigroup (C), and Bank of America (BAC). The short answer is we find their risk profiles are much improved, along with management (where needed), and the valuations are quite attractive. More...

  • Currently 5.00/5

Rating: 5.0/5 (1 vote)

International Favorite David Herro's Top Five Holdings David Herro - International Favorite David Herro's Top Five Holdings
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...

  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

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...

  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

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...

  • Currently 1.00/5

Rating: 1.0/5 (1 vote)

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...

  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

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...

  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

Oakmark's David Herro - Using Instability in Markets to Buy Stocks
  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

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...

  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

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...

  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

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...

  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

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...

  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

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...

  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

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...

Add Notes, Comments

If you want to ask a question, or report a bug, please create a support ticket.

User Comments

No comment yet

Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK