David Herro

David Herro

Last Update: 2014-11-21
Related: Oakmark Intl Small Cap

Number of Stocks: 60
Number of New Stocks: 4

Total Value: $28,919 Mil
Q/Q Turnover: 10%

Countries: USA JPN ITA CHE GBR DEU FRA 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...
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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Oakmark's David Herro Buys 5 New Small Caps David Herro,Oakmark International Small Cap Fund - Oakmark's David Herro Buys 5 New Small Caps
David Herro (Trades, Portfolio) runs several funds at Oakmark, including the Oakmark International Small Cap Fund. Through the first nine months of 2014, this fund declined 2%, just beating its benchmark MSCI World ex U.S. Small Cap Index, which declined 3%. Since inception in 1995, it has given investors 10% returns on average per year. More...

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David Herro's 4 International Stock Picks of Q3 David Herro - David Herro's 4 International Stock Picks Of Q3
David Herro (Trades, Portfolio) (Trades, Portfolio) leads Oakmark’s International Fund, which declined 1 percent in the year’s first three quarters, underperforming the MSCI World ex U. S Index’s 5 percent gain. Since inception though the fund has averaged an 11 percent return compared to 6 percent for the index. More...

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David Herro: Risk/Reward More Attractive in Europe David Herro - David Herro: Risk/Reward More Attractive In Europe
As eurozone recession fears mount, Europe-based firms with a global footprint are becoming attractively valued; meanwhile bargains are harder to find in Japan and the emerging markets, says the Oakmark International manager. More...

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David Herro Comments on Fugro
Fugro (XAMS:FUO) was the largest detractor from performance for the fiscal year and recent quarter end. This Netherlands-domiciled geological engineering company released a profit warning in July, indicating that first-half margins would be in the low single-digits (lower than both market and our expectations) and that it would be booking EUR 300-350 million of impairments in its subsea joint venture and multi-client library. These disappointments caused the share price to decline over 40% during July. The very weak first-half results were a culmination of both a soft end market (a majority of Fugro’s profits are derived from the offshore oil and gas market) and a number of company-specific operational issues. The slowdown in offshore exploration and production (E&P) spending looks like it will likely continue into 2015 and possibly beyond. We have adjusted our forecasts and estimates of intrinsic value to reflect this lower growth environment. However, longer term, we believe that off-shore capital expenditure trends will eventually improve as oil demand continues to increase moderately, while production from More...

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David Herro Comments on Altran Technologies
Altran Technologies (XPAR:ALT), an engineering and technology consulting company that offers services throughout Europe, was the largest contributor to performance for the fiscal year ended September 30. Altran’s restructuring efforts demonstrate how our emphasis on quality management teams can pay off. First, the management team reduced overhead costs, and second, Altran has more recently shown material improvements in the utilization of its engineers, causing invoicing rates to rise quarter over quarter. Higher invoicing rates are necessary for Altran to narrow the margin gap compared with its best-in-class peers. We are optimistic that these positive trends will continue into the second half of 2014 and that Altran will report another year of margin improvement. More...

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David Herro Comments on BS Financial
The Fund’s regional South Korean banks, DGB Financial Group and BS Financial, were two of the top-performing stocks for the recent quarter. BS Financial (XKRX:138930)’s proposed acquisition of another small regional bank, Kyongnam Bank, would be a strategic use of capital that could further enhance the company’s competitive position, should the deal close. We also think BS’s strong deposit franchise gives it a significant funding advantage over its peers and should generate substantial profitability once interest rates normalize. We continue to believe the valuation of this high quality regional bank with dominant market share remains attractive, offering a compelling reason to own. More...

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David Herro Comments on DGB Financial Group
The Fund’s regional South Korean banks, DGB Financial Group and BS Financial, were two of the top-performing stocks for the recent quarter. We believe that strong economic growth in DGB (XKRX:139130)’s primary business region and a current undervaluation of the stock adds to DGB’s attractiveness. (DGB, like BS, should also benefit from interest rate normalization.) More...

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David Herro Comments on CNH Industrial
The largest detractor from performance for the quarter and the past twelve months was CNH Industrial (MIL:CNHI), a manufacturer of agricultural and construction equipment. As expected, the company’s agricultural equipment business is experiencing reduced sales due to lower crop prices and farm profitability. However, we believe the agricultural segment to be a structurally appealing industry. Higher adoption of double cropping, increases in farm sizes in emerging and frontier markets, and the global need to increase yield will increase the demand for larger equipment. We believe CNH will continue to benefit from these trends as the second largest leader in this industry. In addition, the company’s commercial vehicles (Iveco) and construction equipment businesses have performed more poorly than expected. Weakness in Europe and Latin America, combined with adverse currency movements, have negatively impacted these businesses and led to very low levels of profitability. As these conditions return back to a more normal level, we believe these two segments will significantly improve. We believe management is taking More...

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David Herro Comments on Olympus
Another top contributor was Olympus (TSE:7733), the world leader in endoscopes and other medical equipment, which returned 18% over the past twelve months. Management continues to invest in the medical business with a focus on growth in surgery. Olympus is the dominant player in the gastrointestinal space, but the company is a relative newcomer to surgery. Olympus plans to enlarge its sales staff and enhance its research and development capabilities in the surgical business. Management believes the medical segment will grow 10% this year, driven by higher sales in surgery in addition to endoscope growth in the emerging world. Although the camera business remains weak in our view, Olympus also plans to invest in this division, and management’s goal is to boost revenues enough to cover costs this year. 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 over the past 12 months, returning 50%. Intesa’s share price has rebounded as fears over Italy’s banking system and government have subsided. We have always believed these fears were overblown and that Italy was in much better long-term fiscal health than many of its periphery countries. The new CEO 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 should be over-capitalized compared with 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, and to exit non-core businesses and investments. We believe management has a solid plan for the future and believe the investment will continue to provide value for our shareholders. More...

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Oakmark's David Herro New Interview David Herro - Oakmark's David Herro New Interview
David Herro is a renowned value investor who is the chief investment officer of international equity at Harris Associates. He co-manages the Oakmarks International Fund (OAKIX) (which is closed to new investors), the Oakmarks International Small Cap Fund (OAKEX) and the Oakmarks Global Select Fund (OAKWY). All of the Oakmark funds have outperformed their respective benchmarks since the bottom of the financial crisis in 2009. In 2010, MorningStar named David Herro one of its fund managers of the decade. While David Herro was a guest host on Bloomberg Surveillance in September, he shared his three-fold formula for identifying value in the stock market More...

OAKMANRK,DAVID HERO,INTERNATIONAL VALUE INVESTOR,LONG-TERM,VALUE INVESTOR,LUXURY BRANDS,CHINA,BRAZIL,EUROPE,INDIA,


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David Herro's Oakmark International Fund Third Quarter 2014 Letter
The Oakmark International Fund declined 1% for the fiscal year ended September 30, 2014, underperforming the MSCI World ex U.S. Index, which gained 5%. For the most recent quarter the Fund also underperformed the MSCI World ex U.S. Index, declining 7% versus a decline of 6%. However, the Fund has performed well versus the MSCI World ex U.S. Index since its September 1992 inception, returning an average of 11% versus 6% over the same period. More...

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Rating: 4.5/5 (4 votes)

Oakmark Buys More Shares of Its Worst Performing Stocks David Herro,Bill Nygren - 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. More...

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Oakmark International: Positioned for the Long Term
At Oakmark, our primary goal is to grow our shareholders’ capital over time. We seek to accomplish this objective by adhering to a disciplined, long-term investment approach focused on selecting companies that we believe are high quality, intelligently managed and priced at a substantial discount compared to our estimate of their true business value. One of the sources of our success has been our patience and discipline during periods of underperformance. More...

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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...

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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...

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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...

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

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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...

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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...

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