David Herro

David Herro Premium Guru

Last Update: 11-30-2017
Related: Oakmark Intl Small Cap

Number of Stocks: 61
Number of New Stocks: 2

Total Value: $38,323 Mil
Q/Q Turnover: 13%

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 (%)
20167.9111.96-4.1
2015-3.831.38-5.2
2014-5.4113.69-19.1
3-Year Cumulative-1.8 (-0.6%/year)29 (8.9%/year)-30.8 (-9.5%/year)
201329.3432.39-3.0
201229.221613.2
5-Year Cumulative64.1 (10.4%/year)98.2 (14.7%/year)-34.1 (-4.3%/year)
2011-14.072.11-16.2
201016.2215.061.2
200956.326.4629.8
2008-46.06-37-9.1
2007-0.515.49-6.0
10-Year Cumulative37.4 (3.2%/year)95.7 (6.9%/year)-58.3 (-3.7%/year)
200630.615.7914.8
200514.124.919.2
200419.0910.888.2
200338.0428.689.4
2002-8.46-22.113.6
15-Year Cumulative208.2 (7.8%/year)164.2 (6.7%/year)44 (1.1%/year)
2001-5.13-11.896.8
200012.5-9.121.6
199939.4721.0418.4
1998-7.0128.58-35.6
19973.3333.36-30.0
20-Year Cumulative340.9 (7.7%/year)339.2 (7.7%/year)1.7 (0%/year)
199628.0222.965.1
19958.3237.58-29.3
1994-9.061.32-10.4
199353.5810.0843.5
19920.437.62-7.2
25-Year Cumulative757.5 (9%/year)791.8 (9.1%/year)-34.3 (-0.1%/year)

Top Ranked Articles

David Herro Comments on General Electric Guru stock highlight
Next on the new purchase list (and probably far better known), General Electric (NYSE:GE) makes its first-ever appearance in the Global Fund. In contrast to the U.S. stock market indices, GE’s share price has been weak this year, and we believe that this decline is far more than what is warranted. Appointed this summer, new CEO John Flaherty will present to the investing community in November, and many expect that he will announce a “reset” in which he establishes a new (and lower) base for the company’s earnings. Although we agree that this is likely, we believe that the current stock price already reflects this expectation. GE has many positive attributes. It is composed of a portfolio of high-returning, dominant businesses, many of which generate recurring maintenance revenue (e.g., service contracts for jet engines). We believe that the company’s aviation and health care businesses are especially desirable, and they constitute more than half of our estimate of intrinsic value for the company. We expect Flannery to cut costs aggressively, which should also improve earnings. Read more...
Award-Winning International Fund Manager David Herro Picks 3 Stocks Morningstar's 2016 international manager of the year reports fourth-quarter portfolio
Oakmark Funds Manager David Herro (Trades, Portfolio) won Morningstar’s 2016 International-Stock Fund Manager of the Year in January, and disclosed his stock picks from the first quarter in February. Read more...
David Herro Comments on Liberty Global Guru stock highlight
Liberty Global (NASDAQ:LBTYA) is a European-based cable company with leading positions in the U.K. and Ireland, Germany, Belgium and Switzerland. Liberty is a significant beneficiary of the long-term structural growth in data consumption. Moreover, Liberty’s competitively advantaged network, which offers a clear speed advantage over the incumbent telco operators, provides the company with a strong competitive position that should lead to attractive incremental profitability. Liberty’s management team has proven to be adept operators while chairman (and fellow shareholder) John Malone is an outstanding capital allocator. We find Liberty’s valuation to be quite compelling; its shares trade at a significant discount to both our fundamentally driven intrinsic value as well as recent private market transactions. Read more...
David Herro Comments on H&M Guru stock highlight
H&M (OSTO:HM B), a global fashion designer and retailer, was the largest detractor for the quarter, declining 8%. As we anticipated, higher-than-normal inventory levels in the first quarter led to increased markdowns and lower margins. While H&M has started to see an improvement in a number of markets, including China, its performance in the U.S. and Central/Southern Europe remains weak. However, the company is taking definitive steps to improve results and increase its profitability. Last year, a new management team revised the company’s growth targets to focus more on comparable and profitable growth. Also it recently announced the launch of the Arket brand, a higher priced concept that will offer classic garments for women, men and children, as well as home furnishings. We support this move as the company has been successful with its other lines, including & Other Stories and COS. We believe that H&M’s substantial investments over the past few years will soon bear fruit and that the gross margin headwinds facing the company will also abate. For these reasons, we continue to believe that H&M provides good investment value and that Read more...
David Herro Comments on Melco International Development Guru stock highlight
For the one-year period, the top-performing stock was Melco International Development (HKSE:00200), a Hong Kong-based holding company that controls Melco Resorts & Entertainment, as well as other casino gaming and tourism assets. As we wrote last quarter, the recovery in Macau’s gross gaming revenues over the past several months has boosted Melco Resorts & Entertainment’s revenues and profits. Melco Resorts & Entertainment plans to grow its business in Macau, and we remain confident that leadership’s efforts will benefit the subsidiary’s shareholders, as well as the shareholders of Melco International Development. Read more...
» More David Herro Articles

Commentaries and Stories

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David Herro's 4th Quarter Oakmark Global Select Fund Shareholder Letter Discussion of holdings and market David Herro - David Herro's 4th Quarter Oakmark Global Select Fund Shareholder Letter
Quarter and Calendar Year Review More...

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Greece's Titan Cement Is on Sale The company has nice profit margins and makes half its sales in the US David Herro - Greece's Titan Cement Is On Sale
Titan Cement Co. SA (TITCY) (ATH:TITK) is a Greek cement and aggregates manufacturer. Titan receives half its sales and profits in the U.S. The stock is very reasonably priced. It is a holding of Oakmark Small Cap Value. More...

CEMENT, GREECE


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David Herro Comments on Sky Network Television Guru stock highlight
Another weak performer during the quarter—and the largest detractor from performance for the one-year period—was Sky Network Television (ASK:SKT). Sky is an entertainment provider and the dominant supplier of pay-television services in New Zealand. Earlier in the year, we reported that Sky’s stock price had been negatively impacted after its merger with Vodafone was terminated. During the most recent quarter, Sky released first-half results that were slightly below expectations due to a drop in subscribers. However, profitability remained in line with expectations because management took action to reduce costs. While Sky has been a detractor for the year, the business generates cash flow, and we receive a significant dividend from our investment. We continue to believe the management team is working to increase shareholder value by adapting to the competitive environment, investing in content and connectivity, improving the OTT offering, and planning important initiatives, including potentially tightening the company’s relationship with Vodafone. More...

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David Herro Comments on Melco International Development Guru stock highlight
For the one-year period, the top-performing stock was Melco International Development (HKSE:00200), a Hong Kong-based holding company that controls Melco Resorts & Entertainment, as well as other casino gaming and tourism assets. As we wrote last quarter, the recovery in Macau’s gross gaming revenues over the past several months has boosted Melco Resorts & Entertainment’s revenues and profits. Melco Resorts & Entertainment plans to grow its business in Macau, and we remain confident that leadership’s efforts will benefit the subsidiary’s shareholders, as well as the shareholders of Melco International Development. More...

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David Herro Comments on Wirecard Guru stock highlight
The top-performing stock for the quarter was Wirecard (XTER:WDI), a Germany-based online payment services provider. Wirecard’s clients include retail and banking companies that utilize its software and systems for online payment, mobile payment, risk and fraud management, enterprise solutions, and other services. Wirecard’s share price rose after its first-half earnings results were released in August. The company reported transaction growth of 38%, and both transaction volumes and order intake increased on a year-over-year basis. In our view, the integration of Citibank’s Prepaid Card Services is progressing well, and adjusted earnings are expected to modestly exceed previous guidance thanks to the positive surprise of very high retention of Citibank’s clients following the acquisition and early signs that other large corporate accounts are interested in adopting Wirecard’s technology more quickly than expected. Additionally, the industry is shifting to tech-led vendors, and we believe that Wirecard’s ability to innovate in a rapidly evolving landscape meaningfully differentiates it from traditional bank-led payment More...

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David Herro Comments on Glencore Guru stock highlight
Glencore (LSE:GLEN), one of the world’s largest mining companies and commodities traders, was the top contributor to performance for the fiscal period and the most recent quarter. The company’s first-half earnings were largely in line with our expectations and showed a significant improvement with a 58% increase in EBITDA and 334% increase in EBIT year-over-year. Notably, the company’s industrial business has shown dramatic improvement thanks to the combination of higher commodity prices and continued cost control measures. During the quarter, Glencore, in conjunction with Yancoal, announced the acquisition of the Hunter Valley Operations coal assets in Australia. The assets are a great complement to Glencore’s existing assets in the region. This transaction will boost Glencore’s production of high-quality thermal coal and, more importantly, there should be significant operational synergies. As a result, we believe this transaction is attractive both strategically and financially and that Glencore remains an attractive investment opportunity for More...

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David Herro Comments on WPP Guru stock highlight
WPP (NYSE:WPP), a leading global advertising agency, was the largest detractor from performance for the fiscal year and most recent quarter. WPP’s fiscal first-half earnings fell short of market forecasts. The shortfall was driven by lower than projected like-for-like sales across segments. Profits before tax and earnings per share were also less than investors expected. Some of the factors that hurt WPP’s performance were account losses during the Mediapalooza event, exposure to developed market multinationals that have reduced advertising spending and digital revenues that are growing slower than those at Internet giants in the U.S. and China. Although management is expecting business to gradually improve in the second half of the year, the company lowered its full-year net sales organic growth guidance to a range of zero to +1% from the prior +2% growth prediction. However, this adjustment did not surprise us, as our growth estimates were closer to management’s revised outlook. More...

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David Herro Comments on Under Armour Guru stock highlight
Last of the new purchases alphabetically is Under Armour (NYSE:UA). We believe Under Armour to be an emergent global franchise trading at a discount to our estimate of intrinsic value. Until 2016, this athletic leisure apparel and footwear company had produced a long series of 20%+ revenue growth quarters, helping the stock to become a growth investor favorite. Deceleration finally set in, however, leading to a substantial drop in the share price. This gave us the occasion to invest in a company still growing better than 10% at a very reasonable valuation. We believe that CEO Kevin Plank and his newly augmented management team have the potential to restore the company’s prestige while taking advantage of international and footwear opportunities. More...

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David Herro Comments on Liberty Global Guru stock highlight
Liberty Global (NASDAQ:LBTYA) is a European-based cable company with leading positions in the U.K. and Ireland, Germany, Belgium and Switzerland. Liberty is a significant beneficiary of the long-term structural growth in data consumption. Moreover, Liberty’s competitively advantaged network, which offers a clear speed advantage over the incumbent telco operators, provides the company with a strong competitive position that should lead to attractive incremental profitability. Liberty’s management team has proven to be adept operators while chairman (and fellow shareholder) John Malone is an outstanding capital allocator. We find Liberty’s valuation to be quite compelling; its shares trade at a significant discount to both our fundamentally driven intrinsic value as well as recent private market transactions. More...

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David Herro Comments on General Electric Guru stock highlight
Next on the new purchase list (and probably far better known), General Electric (NYSE:GE) makes its first-ever appearance in the Global Fund. In contrast to the U.S. stock market indices, GE’s share price has been weak this year, and we believe that this decline is far more than what is warranted. Appointed this summer, new CEO John Flaherty will present to the investing community in November, and many expect that he will announce a “reset” in which he establishes a new (and lower) base for the company’s earnings. Although we agree that this is likely, we believe that the current stock price already reflects this expectation. GE has many positive attributes. It is composed of a portfolio of high-returning, dominant businesses, many of which generate recurring maintenance revenue (e.g., service contracts for jet engines). We believe that the company’s aviation and health care businesses are especially desirable, and they constitute more than half of our estimate of intrinsic value for the company. We expect Flannery to cut costs aggressively, which should also improve earnings. More...

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David Herro Comments on Axis Bank Guru stock highlight
We were fairly active in the quarter, initiating positions in four equities while eliminating two holdings. Beginning with the purchases alphabetically, Axis Bank (BOM:532215) is the Fund’s first holding ever to be domiciled in India. Axis is the third-largest private sector bank in India in terms of assets and deposits. We believe the country’s strong economic growth, coupled with low financial penetration, should result in attractive long-term growth rates for the Indian banking sector. Moreover, private sector banks are well-positioned to benefit from this growth since India’s public sector banks face considerable obstacles, including bureaucratic priorities, low capital levels and meager investments in technology. The public sector banks currently possess a market share of about 70%, and we expect the private banks’ recent share gains to accelerate in the years to come. Axis’ diversified business (45% retail, 40% corporate, 15% SME (small- and medium-sized enterprises)) and strong distribution platform make it well-positioned to capture new business as it leverages its recent infrastructure spending. The company’s More...

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David Herro's Oakmark International Small Cap Fund: 3rd Quarter 2017 Review of markets and holdings David Herro - David Herro's Oakmark International Small Cap Fund: 3rd Quarter 2017
The Oakmark International Small Cap Fund returned 26% for the fiscal year that ended September 30, outperforming its benchmark, the MSCI World ex U.S. Small Cap Index, which appreciated 20.4% for the same period. For the recent quarter, the Fund returned 3.8%, underperforming the MSCI World ex U.S. Small Cap Index, which returned 7.3% for the period. Since the Fund’s inception in November 1995, it has returned an average of 9.9% per year. More...

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David Herro's Oakmark International Fund 3rd Quarter Commentary Review of holdings and markets David Herro - David Herro's Oakmark International Fund 3rd Quarter Commentary
The Oakmark International Fund returned 34.9% for the fiscal year ended September 30, 2017, outperforming the MSCI World ex U.S. Index, which returned just over 18.7%. For the most recent quarter, the Fund outperformed the MSCI World ex U.S. Index, returning 9.1% versus 5.6%. Additionally, the Fund has performed well versus the MSCI World ex U.S. Index since its September 1992 inception, returning an average of 10.4% versus 6.2% over the same period. More...

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Bill Nygren and David Herro's Oakmark Global Select Fund: Third Quarter 2017 Commentary Review of holdings and market David Herro,Bill Nygren - Bill Nygren And David Herro's Oakmark Global Select Fund: Third Quarter 2017 Commentary
The Oakmark Global Select Fund returned 26.4% for the fiscal year, ended September 30, 2017, outperforming the MSCI World Index, which returned 18.2% for the same period. For the most recent quarter, the Fund returned 4.7%, underperforming the MSCI World Index, which returned 4.8%. The Fund has performed well versus the MSCI World Index since inception, returning on average 9.0% versus 5.6% for the benchmark. More...

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David Herro's 3rd Quarter 2017 Global Fund Commentary Review of holdings and market David Herro - David Herro's 3rd Quarter 2017 Global Fund Commentary
Quarter and Fiscal Year Review More...

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David Herro and Bill Nygren Comment on GE Guru stock highlight
GE (NYSE:GE), a global producer of industrial, household and medical goods, was the largest detractor for the quarter, declining 9%. Shares were weak due to the company’s exposure to energy end markets (which was increased via its merger with Baker Hughes, a contrarian acquisition we believe will prove to be well timed). The stock was also hurt by an analyst downgrade during the quarter, which cited concerns that GE’s cash flows were lagging behind the company’s reported profits. In our view, this concern will prove to be irrelevant to the long-term investment case, as two of GE’s longest cycle businesses (aviation and power) are in the midst of their largest new product launches ever, both of which require large investments in inventory and other working capital accounts that will reverse over time. In addition, GE has recently worked to reinvent its portfolio and possesses a renewed focus on achieving appropriate capital returns. As such, the company completely revamped its variable compensation plan for thousands of employees who are now paid on a number of factors that emphasize improving its return on invested capital. More...

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David Herro and Bill Nygren Comment on CNH Industrial Guru stock highlight
CNH Industrial (NYSE:CNHI), a global agricultural and construction equipment manufacturer, was the top contributor for the quarter, returning 18%. The company delivered positive first quarter earnings, as both its revenue and earnings exceeded consensus estimates. The industrial business saw an improvement with its year-over-year earnings increasing 34%, driven primarily by a 77% improvement in the agriculture equipment segment. The industry has seen stabilization in global agricultural equipment markets and is beginning to see the early stages of restocking. Also during the quarter, S&P raised CNH’s credit rating to investment grade, which should allow the company to improve its balance sheet efficiency and refinance its debt at lower rates. More...

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David Herro and Bill Nygren's Oakmark Global Select Fund Commentary for 2nd Quarter 2017 Review of holdings and markets David Herro,Bill Nygren - David Herro And Bill Nygren's Oakmark Global Select Fund Commentary For 2nd Quarter 2017
The Oakmark Global Select Fund returned 6.2% for the quarter ended June 30, 2017, outperforming the MSCI World Index’s 4.0% return. Most importantly, the Fund has returned an average of 8.8% per year since its inception in October 2006, outperforming the MSCI World Index’s annualized gain of 5.3% over the same period. More...

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David Herro Comments on Samsung Guru stock highlight
We did not initiate any new purchases for the Fund in the quarter. Our one elimination was Samsung (XKRX:5930), the South Korean technology company. As Samsung’s shares approached our sell target, we sold the name to increase our investment in more attractively priced issues. We note that Samsung’s shares performed particularly well in our view given the unfortunate problem that developed with the company’s Note 7 smartphone. More...

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David Herro's Oakmark Global Fund Second Quarter 2017 Commentary Why a global fund? David Herro - David Herro's Oakmark Global Fund Second Quarter 2017 Commentary
Investors today have literally thousands of options when considering where to place their long-term assets. Index funds, specialized exchange traded funds (ETFs) and mutual funds in many varieties all clamor for investors’ attention. So, why do we think that a value-based, all-capitalization global fund is worthy of your consideration? Value investing is a discipline that has stood the test of time. Combining its virtues with the flexibility inherent in an all-cap global fund offers the potential to identify and exploit undervalued securities wherever they may be found, and that is our intention for Oakmark Global. More...

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