One of Oakmark Fund’s portfolio managers, David Herro (Trades, Portfolio), will be joining GuruFocus for a Q&A session in the next few weeks. Have questions about Herro’s investing philosophy or international markets? Simply ask in the comments section below, and stay tuned for his answers.
David Herro (Trades, Portfolio) has been a manager of the Oakmark International Fund since 1992, the Oakmark International Small Cap Fund since 1995, and the Oakmark Global Select Fund since 2006. He also serves as the chief investment officer for International Equities at Harris Associates.
In 2006, Herro was named Morningstar’s International Stock Fund Manager of the Year, and was later named the International Stock Fund Manager of the Decade for 2000-2009.
Herro’s top five holdings as of the fourth quarter are: Credit Suisse Group (XSWX:CSGN), BNP Paribas (XPAR:BNP), Cie Financiere Richemont (XSWX:CFR), Allianz (XTER:ALV), and Diamler AG (DAI.Germany).
Oakmark was formed in 1991 and seeks to identify companies that are priced at a significant discount to their underlying business value. The Oakmark funds usually hold less than 75 positions, so that the best investment ideas have a meaningful impact on the portfolio.
Performance and outlook
For the three months ended Dec. 31, the International Fund declined -0.45%, while the MSCI World Index ex. U.S. declined -3.69%. Since inception, the fund has had an average annual return of 10.39%, compared to the Index’s 6.22%.
According to the fourth-quarter letter, Daimler AG, a leading vehicle manufacturer, was the top contributor returning 9%. At the quarter’s end, 81% of assets were in Europe, 11% in Japan, and 4% in Australia.
In his market commentary for the quarter, Herro wrote the largest factor affecting returns has been the strengthening U.S. dollar. A second factor was the decline in oil prices, which has affected global markets in general.
Referencing a recent trip to China, Herro noted that crackdowns on corruption and reform of state-owned enterprises will bring about positive change for the Chinese economy. Two risks that remain are that shadow banking has destroyed more wealth and savings than previously believed, and the government’s tendency to manage what is good and bad consumption.
Don’t miss the opportunity to ask Herro your questions about the global markets. Check back soon for the full interview.
Please leave your questions in the comment area below.