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Oakmark International Invests in Japanese Bank, Media Company

David Herro-led fund buys 3 new holdings

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Feb 29, 2016
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David Herro (Trades, Portfolio) of the Oakmark International Fund purchased three new holdings during the fourth quarter across a variety of industries.

In his fourth quarter market commentary, Herro maintained a positive outlook despite troubled conditions in 2015, writing that low oil prices are still a positive for many aspects of the economy, and the eurozone is slowly recovering due to limited reforms.

“Overall, despite the negatives… the world economy is still expected to grow at a 3% rate,” Herro wrote.

Sumitomo Mitsui Financial Group Inc. (

TSE:8316, Financial)

The fund purchased 7,114,000 shares for an average price of ¥4768.11 per share during the quarter. Sumitomo provides commercial banking and other financial services in Japan.

The stock price has declined 33% over the past year and currently trades at 7.8x earnings. In the third quarter of 2015 ended Dec. 31, Sumitomo reported EPS of ¥133.18, down from ¥213.36 in the year-ago quarter.

The operating margin level has held steady at about 30% since FY 2012.

02May2017175047.png

The bank’s trailing dividend yield is 4.86%, and the payout ratio is 38%.

Grupo Televisa SAB (

TV, Financial)

Herro bought 9,586,000 shares in Grupo Televisa, a media company that operates four broadcast channels in Mexico, for an average of $25.70 per share.

Over the past year, the stock has declined 25%, and now trades at 27.5x earnings. GuruFocus rates Grupo Televisa’s business predictability as 3.5 out of 5 stars based on revenue and earnings growth. During the third quarter, the company earned 67 cents per share, an improvement from losses of 2 cents per share in the prior year.

The dividend yield is 0.44%, and the low payout ratio of 9% indicates the company has room to continue growing the dividend.

Wolseley PLC (

LSE:WOS, Financial)

The fund’s third purchase during the quarter was 526,000 shares in Wolseley for an average £37.45 per share. Herro had closed out a prior position in the previous quarter, and reopened a holding as Wolseley’s stock price has continued to lower.

02May2017175047.png

The company is a trade distributor of plumbing and heating products, as well as a supplier of building materials. In FY 2015 ended July, the company reported EPS of 82 pence, down from £1.89 in the prior year.

The trailing dividend yield of 2.46% is close to the five-year high, and the payout ratio is 69%.

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