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David Herro Buys 1 Stock, Substantially Increases Existing Holdings

Outperforming international value manager reveals new pick

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Holly LaFon
Jun 11, 2019
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David Herro (Trades, Portfolio), chief investment officer for international equities at Harris Associates, announced Tuesday that he bought one stock, doubled a position and added to numerous existing holdings in his Oakmark International Fund.

Herro succinctly worded his criteria for stocks he buys in his first-quarter 2019 shareholder letter: “We continue to focus on finding attractive, undervalued international companies with management teams focused on building shareholder value,” he said. Using this strategy, his Oakmark International Fund has returned an average of 9.1% per year since its inception in 1992, versus a 5.8% annual average for the MSCI World ex U.S. Index.

Herro has concentrated the portfolio in Europe and the U.K., which represent 79.2% of holdings. Asia consumes a further 12.6%, followed by 2.1% in Australasia. He also favors financial services, which occupied 26.69% of holdings, followed by consumer cyclical at 24.73% and industrials at 21.45%.

At the end of the first quarter, the portfolio listed 61 stocks, which were valued at $32.49 billion. The largest holding, BNP Paribas (

XPAR:BNP, Financial), had a 4.48% weight.

During the quarter, Herro bought Rolls-Royce Holdings PLC (

LSE:RR., Financial). He made the largest increases to: Reckitt Benckiser Group PLC (LSE:RB., Financial), Akzo Nobel NV (XAMS:AKZA, Financial) and Accor SA (XPAR:AC, Financial).

Rolls-Royce Holdings PLC (

LSE:RR., Financial)

Herro purchased 29,338,000 shares of Rolls-Royce Holdings PLC, giving it 1.06% portfolio weight. The stock’s first-quarter share price averaged 9 British pounds.

1246952740.png

Rolls-Royce Holdings PLC has a market cap of 17.14 billion British pounds; its shares were traded around 9.00 British pounds Tuesday with a price-sales ratio of 1.05. The trailing 12-month dividend yield of Rolls-Royce Holdings PLC is 1.30%. The forward dividend yield of Rolls-Royce Holdings PLC is 1.30%.

Reckitt Benckiser Group PLC (

LSE:RB., Financial)

Herro increased his position by 112.1%, buying 1.252 million shares. The holding totaled 4.261 million shares, with a 1.09% portfolio weight. The stock’s first-quarter share price averaged 60 British pounds.

63424490-8c94-11e9-afeb-55011c88a052.png

Reckitt Benckiser Group PLC has a market cap of 45.32 billion British pounds; its shares were traded around $63.94 with a price-earnings ratio of 20.97 and price-sales ratio of 3.60. The trailing 12-month dividend yield of Reckitt Benckiser Group PLC is 2.67%. The forward dividend yield of Reckitt Benckiser Group PLC is 3.13%. Reckitt Benckiser Group PLC had an annual average earnings growth of 5.10% over the past 10 years. GuruFocus rated Reckitt Benckiser Group PLC the business predictability rank of 4-star.

Akzo Nobel NV (

XAMS:AKZA, Financial)

Herro increased his position by 45%, buying 678,425 shares. The holding totaled 2.186 million shares, with a 0.6% portfolio weight. The stock’s first-quarter share price averaged 79 euro per share.

83168790-8c94-11e9-a6cd-fb9ffd1c241c.png

Akzo Nobel NV has a market cap of 19.01 billion euro; its shares were traded around 79.75 euro with a price-earnings ratio of 2.80 and price-sales ratio of 1.96. The trailing 12-month dividend yield of Akzo Nobel NV is 2.32%. The forward dividend yield of Akzo Nobel NV is 3.59%.

Accor SA (

XPAR:AC, Financial)

Herro purchased 4.761 million shares of Accor SA, increasing the position 44.98%. The holding totaled 15.346 million shares, representing 1.91% of the portfolio. Its first-quarter share price averaged 38 euro per share.

98bc0ef0-8c94-11e9-86c0-6d6855d9b6dd.png

Accor SA has a market cap of 9.27 billion euro; its shares were traded around 34.61 euro Tuesday with a price-earnings ratio of 4.56 and price-sales ratio of 2.77. The trailing 12-month dividend yield of Accor SA stocks is 3.03%. The forward dividend yield of Accor SA is 3.03%.

See

David Herro (Trades, Portfolio)’s portfolio here.

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