David Herro

David Herro Premium Guru

Last Update: 08-24-2016
Related: Oakmark Intl Small Cap

Number of Stocks: 56
Number of New Stocks: 1

Total Value: $22,206 Mil
Q/Q Turnover: 9%

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 (%)
2015-3.831.19-5.0
2014-5.4113.69-19.1
201329.3432.39-3.0
3-Year Cumulative17.7 (5.6%/year)52.3 (15.1%/year)-34.6 (-9.5%/year)
201229.221613.2
2011-14.072.11-16.2
5-Year Cumulative30.6 (5.5%/year)80.4 (12.5%/year)-49.8 (-7%/year)
201016.2215.061.2
200956.326.4629.8
2008-46.06-37-9.1
2007-0.515.49-6.0
200630.615.7914.8
10-Year Cumulative66.3 (5.2%/year)102 (7.3%/year)-35.7 (-2.1%/year)
200514.124.919.2
200419.0910.888.2
200338.0428.689.4
2002-8.46-22.113.6
2001-5.13-11.896.8
15-Year Cumulative171 (6.9%/year)107.5 (5%/year)63.5 (1.9%/year)
200012.5-9.121.6
199939.4721.0418.4
1998-7.0128.58-35.6
19973.3333.36-30.0
199628.0222.965.1
20-Year Cumulative423 (8.6%/year)381.4 (8.2%/year)41.6 (0.4%/year)
19958.3237.58-29.3
1994-9.061.32-10.4
199353.5810.0843.5
19920.437.62-7.2

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...
Bill Nygren and David Herro Comments on CNH Industrial Guru stock highlight
Another large detractor from performance for the quarter was CNH Industrial (NYSE:CNHI) (Netherlands), a manufacturer of agricultural and construction equipment. CNH Industrial’s fiscal first-half revenue decline of 22% (-11% in constant currency) was larger than we estimated, as revenues dropped across segments. Earnings and margins also dropped more substantially than we expected. The core agriculture segment was the driving force behind these poor results as demand for tractors and combines fell across all geographies. In response, management reduced agriculture equipment production by 33% in the second quarter year-over-year. Conversely, the Iveco segment performed better than we anticipated, as revenue declined less than our forecasts (and gained 9% in constant currency) while margins expanded. Management updated full-year guidance with a reduced operating profit margin (to a range of 5.6%-6% owing to production cuts) and unchanged sales projections. Management continues to cut costs across the board, and in light of very challenging market conditions, we believe CNH Industrial’s leadership team is executing relatively well. Read more...
David Herro Comments on Ashtead Group Guru stock highlight
Ashtead Group (LSE:LHT) (U.K.), an international equipment rental company, was the top contributor for the quarter, returning 15%. While Ashtead is based in the U.K., it derives a majority of its revenue (84%) from North America. Ashtead recently released solid fiscal year 2016 results, showing 19% growth in its U.S. equipment rental business. Given that the market only grew 6% over the period, these results imply that Ashtead has continued to significantly gain market share. We have seen a secular shift in the U.S. market toward renting equipment instead of buying it, as it relieves the client of upfront investment and ongoing maintenance responsibilities. The rental market has also expanded significantly into non-construction related categories, which possess both higher returns and lower volatility than the general construction business. These factors should help Ashtead generate greater through-cycle profitability compared to the previous period. Read more...
David Herro Comments on Treasury Wine Estates Guru stock highlight
Treasury Wine Estates (ASX:TWE) (Australia), the world’s largest listed wine company, also significantly contributed to performance for the year (and quarter). As we indicated in our last letter, the company reported what we consider strong fiscal-year results in August, and they successfully resolved inventory issues in North America, allowing management to focus on growing the business. As a result, during the fourth quarter, the company announced they were acquiring wine assets from Diageo in the U.S. and Europe. The U.S. business acquired was the primary motivation for the deal. That acquisition brings a large inventory of wine, more than half of which comes from luxury and masstige grapes that generate 83% of the revenue in the U.S. These cases were sold under a number of brands that will also transfer to Treasury, and the company can now additionally use some of that high quality fruit to blend into its existing brands and expand capacity and margin. Another appeal of the U.S. business is that it is capital-light, as Treasury will own only 2% of the Read more...
Gurus Who Bought LinkedIn Cheap in 2nd Quarter See Big Gains Stock's drop met some estimates of intrinsic value before Microsoft merger
The Microsoft-LinkedIn deal this week conferred some much needed mercy on funds this quarter, if they owned LinkedIn (NYSE:LNKD) stock. Read more...
» More David Herro Articles

Commentaries and Stories

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David Herro Buys Continental German auto parts manufacturer is a new holding David Herro - David Herro Buys Continental
David Herro (Trades, Portfolio) of Oakmark Funds acquired a new holding in the second quarter. It is with Continental AG (XTER:CON). More...

OAKMARK, HERRO, CONTINENTAL, AUTOMOTIVE, EUROPE


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Oakmark Adds to Stake in Taiwan Semiconductor Company has reported strong financial results over the previous 5 years David Herro - Oakmark Adds To Stake In Taiwan Semiconductor
The Oakmark International Fund led by guru David Herro (Trades, Portfolio) boosted its stake in Taiwan Semiconductor Manufacturing Co. (TPE:2330) during the second quarter. More...

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Oakmark International Fund Adds to Melco International Company has reported strong revenue growth over the past 3 years Oakmark International Fund, David Herro - Oakmark International Fund Adds To Melco International
During the second quarter, the Oakmark International Fund, led by guru David Herro (Trades, Portfolio), continued to add to its stake in Melco International Development (HKSE:00200). The fund added an additional 5,565,000 shares of Melco International Development during the second quarter at an average price of 8.84 Hong Kong dollars ($1.14). The trade had a 0.23% impact on The Oakmark International Fund’s portfolio. It now owns 58,032,000 shares of the company.  More...

OAKMARK FUND, DAVID HERRO, ADD


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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. More...

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David Herro Comments on ALS Ltd. Guru stock highlight
Bid activity was not limited to Saft Groupe, as Premier Farnell (U.K.) and Gategroup (Switzerland) also received cash tender offers at valuations near our estimate of intrinsic value. In addition, ALS Ltd. (ASX:ALQ) (Australia) received a potential private equity bid at an indicative price of AUD$5.30 per share, which was rejected by ALS’ board as they deemed the offer too low. We agree with the board’s assessment; our estimate of intrinsic value is well ahead of the indicative offer price as well. Finally, New Zealand based pay-TV operator Sky Network Television announced its plans to merge with Vodafone NZ, the New Zealand unit of telecommunications operator Vodafone Group (U.K.). We find this merger compelling because it will enable the group to offer a bundled solution of pay-TV, broadband and phone, which has proven successful in many other markets. The financial considerations are also compelling since the deal values Sky’s equity at more than a 20% premium to its trading price prior to the announcement of the merger. More...

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David Herro Comments on Saft Groupe Guru stock highlight
The top-performing stock for the quarter was Saft Groupe (XPAR:SAFT). Headquartered in France, Saft Groupe is a leading designer, developer and manufacturer of batteries for industrial use by companies in areas such as telecommunication, transport and defense. Shares of Saft Groupe rose in early May after news that it received a friendly tender offer from French energy operator Total. The offer price came in at an approximately 38% premium to its prior day’s closing price and remained at that level as we ended the second quarter. Total has indicated that the acquisition is part of its plan to accelerate development in the fields of renewable energy and electricity. We believe the offer should face few regulatory hurdles. However, in order to pass, the transaction needs more than 50% shareholder approval. We will evaluate how to proceed, but in the interim we have welcomed the closing of the gap between Saft’s share price and our estimate of its intrinsic value. More...

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David Herro's Oakmark International Small Cap Fund 2nd Quarter Commentary Review of quarter and holdings David Herro - David Herro's Oakmark International Small Cap Fund 2nd Quarter Commentary
The Oakmark International Small Cap Fund declined 2% for the quarter ended June 30, 2016, underperforming the MSCI World ex U.S. Small Cap Index, which declined 1% for the same period. Since the Fund’s inception in November 1995, it has returned an average of 9% per year. More...

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David Herro and Bill Nygren Comments on Credit Suisse Guru stock highlight
Credit Suisse (NYSE:CS), one of Switzerland’s top financial services groups, was the largest detractor from performance for the quarter, declining 22%. Although the U.K.’s decision to leave the EU has negatively impacted Credit Suisse Group’s share price, it is important to remember that the bank derives only 2% of its revenues from the U.K., while 13% of its costs are denominated in pound sterling currency, the net result of which may be somewhat positive for profitability. While the decision to leave the EU has caused notable market upheaval, global market declines were actually more extreme in the first few months of 2016 due to significant commodity price weakness, concerns regarding slowed economic growth in the U.S. and China, and monetary decisions by major central banks. Even so, Credit Suisse was able to grow net new money by 6.1% in the first quarter, which was meaningfully better than the 3.8% we estimated for the full fiscal year and higher than our expected normal run-rate of 5%. Additionally, we believe its overall first quarter results were good. Performance in its investment bank division lagged behind the industry, More...

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David Herro and Bill Nygren Comments on Apache Guru stock highlight
The largest contributor to performance for the quarter was Apache (NYSE:APA) (U.S.), a global oil and gas exploration company, which returned 14%. In addition to higher oil prices, Apache benefitted from solid first quarter results that demonstrated better production at lower costs. The results also showed that Apache continues to reduce its capital intensity with North American well costs down 45% since 2014 due to service prices and efficiencies. 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. One of the reasons we purchased Apache last year was our confidence in the newly appointed CEO, John Christmann. He acted quickly, replacing the operating heads of each region and changing compensation metrics to focus on return, better aligning management with the shareholders. We continue to believe that Apache is inexpensive relative to the value of its properties. More...

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David Herro Comments on BMW Guru stock highlight
We also sold our position in BMW (XTER:BMW) (Germany). We strive to invest in owner-oriented management teams that build shareholder value over time. We have been disappointed in BMW’s capital allocation and significant cash position. We had hoped to discuss our concerns with management, but management refused to hear our thoughts on the topic. Given our concerns about capital allocation, management’s unwillingness to meet with us and our significant exposure to the automotive sector, we decided to sell our shares. More...

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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. More...

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David Herro Comments on Credit Suisse Guru stock highlight
Credit Suisse (NYSE:CS), one of Switzerland’s top financial services groups, was the largest detractor from performance for the quarter, declining 22%. Although the U.K.’s decision to leave the EU has negatively impacted Credit Suisse Group’s share price, it is important to remember that the bank derives only 2% of its revenues from the U.K., while 13% of its costs are denominated in pound sterling currency—the net result of which may be somewhat positive for profitability. While the decision to leave the EU has caused notable market upheaval, global market declines were actually more extreme in the first few months of 2016 due to significant commodity price weakness, concerns regarding slowed economic growth in the U.S. and China, and monetary decisions by major central banks. Even so, Credit Suisse was able to grow net new money by 6.1% in the first quarter, which was meaningfully better than the 3.8% we estimated for the full fiscal year and higher than our expected normal run-rate of 5%. Additionally, we believe its overall first quarter results were good. Performance in its investment bank division lagged behind the industry, More...

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Rating: 5.0/5 (1 vote)

David Herro Comments on Ashtead Group Guru stock highlight
Ashtead Group (LSE:LHT) (U.K.), an international equipment rental company, was the top contributor for the quarter, returning 15%. While Ashtead is based in the U.K., it derives a majority of its revenue (84%) from North America. Ashtead recently released solid fiscal year 2016 results, showing 19% growth in its U.S. equipment rental business. Given that the market only grew 6% over the period, these results imply that Ashtead has continued to significantly gain market share. We have seen a secular shift in the U.S. market toward renting equipment instead of buying it, as it relieves the client of upfront investment and ongoing maintenance responsibilities. The rental market has also expanded significantly into non-construction related categories, which possess both higher returns and lower volatility than the general construction business. These factors should help Ashtead generate greater through-cycle profitability compared to the previous period. More...

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Rating: 0.0/5 (0 votes)

David Herro's Oakmark International Fund: Second Quarter 2016 Commentary on holdings and quarter David Herro - David Herro's Oakmark International Fund: Second Quarter 2016
The Oakmark International Fund declined 8% for quarter ended June 30, 2016, underperforming the MSCI World ex U.S. Index, which declined 1%. Most importantly, the Fund has returned an average of 9% 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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Nygren and Herro's Oakmark Global Select Fund 2nd Quarter Commentary Discussion of holdings and outlook Bill Nygren,David Herro - Nygren And Herro's Oakmark Global Select Fund 2nd Quarter Commentary
The Oakmark Global Select Fund declined 4% for the quarter ended June 30, 2016, underperforming the MSCI World Index, which returned 1% for the quarter. The Fund has returned an average of 7% per year since its inception in October 2006, outperforming the MSCI World Index’s annualized gain of 4% over the same period. More...

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David Herro's 2nd Quarter Market Commentary Oakmark investor discusses second quarter investing David Herro - David Herro's 2nd Quarter Market Commentary
Fellow shareholders, More...

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David Herro: Brexit Reaction Manager of 3 global Oakmark funds addresses uncertainty caused by Brexit David Herro - David Herro: Brexit Reaction
David Herro (Trades, Portfolio) is a Partner, Deputy Chairman, Portfolio Manager and the Chief Investment Officer of International Equity at Harris Associates. With 30 years of investment experience, David co-manages three Oakmark Funds: the Oakmark International Fund (OAKIX), the Oakmark International Small Cap Fund (OAKEX), and the Oakmark Global Select Fund (OAKWX). Prior to joining Harris Associates in 1992, he was a Portfolio Manager with both The State of Wisconsin Investment Board and The Principal Financial Group. David earned a BS from the University of Wisconsin-Platteville (1983) and an MA from the University of Wisconsin-Milwaukee (1985). More...

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Deeply Discounted, Solid European Banks David Herro Is Buying Value guru says they're gaining strength, able to withstand storms and wrongly priced David Herro - Deeply Discounted, Solid European Banks David Herro Is Buying
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. More...

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Rating: 5.0/5 (1 vote)

David Herro Likes European Financials in Spite of Brexit Herro on Credit Suisse, BNP Paribas, Daimler and valuation David Herro - David Herro Likes European Financials In Spite Of Brexit
David Herro (Trades, Portfolio) of Harris Associates and Oakmark Funds discusses the impact of Brexit on European financials. He holds some financials in Europe such as Credit Suisse (NYSE:CS) and BNP Paribas (LSE:TRYS). He also discussed holdings Daimler (XTER:DAI) and BMW (XTER:BMW). More...

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Gurus Who Bought LinkedIn Cheap in 2nd Quarter See Big Gains Stock's drop met some estimates of intrinsic value before Microsoft merger Bill Nygren,David Herro - Gurus Who Bought LinkedIn Cheap In 2nd Quarter See Big Gains
The Microsoft-LinkedIn deal this week conferred some much needed mercy on funds this quarter, if they owned LinkedIn (NYSE:LNKD) stock. More...

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