David Herro

David Herro Premium Guru

Last Update: 06-01-2017
Related: Oakmark Intl Small Cap

Number of Stocks: 61
Number of New Stocks: 2

Total Value: $28,345 Mil
Q/Q Turnover: 12%

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 Konecranes Guru stock highlight
The top contributor for both the quarter and fiscal year was Konecranes (OHEL:KCR1V), a Finnish company that specializes in the manufacturing and servicing of cranes, such as workstation cranes, industrial cranes, and cranes for shipyards and ports, as well as other lifting equipment. The company produces one out of every ten of the world’s cranes, and it sells primarily to industrial companies and to harbors and shipyards around the world. In addition, Konecranes is a global leader in maintenance, inspection and repair services. Read more...
David Herro Comments on Credit Suisse Guru stock highlight
Credit Suisse (NYSE:CS), a Swiss financial services group, was the largest detractor from performance for the fiscal year. Credit Suisse’s share price has been weak over the past year for multiple reasons. The company’s investment banking results have struggled, although we recognize that the underperformance is partially due to restructuring activity and we expect performance to strengthen once restructuring is complete. One-off expenses related to litigation, pension true-up charges and write-downs on certain credit assets also hurt performance. Additionally, the U.K.’s decision to leave the European Union negatively impacted the share price. Credit Suisse’s management has responded to these challenges with a series of restructuring measures. Its management has made progress expanding its wealth management franchise, which we believe is a good move since that business is fee based, requires little capital and has very good secular growth trends. Additionally, Credit Suisse has reduced its exposure to the global markets business, which has enabled it to de-risk its balance sheet and operate with a more efficient cost structure. Read more...
David Herro Comments on Royal Bank of Scotland Guru stock highlight
We initiated a position in Royal Bank of Scotland (NYSE:RBS), a U.K.-based commercial and retail bank, during the quarter after the share price plummeted on news that the U.K. had voted to leave the European Union. We believed the market had overreacted as shares of RBS fell nearly 40% in the two weeks following the announcement. We used the opportunity to purchase shares of the company at a significant discount to our estimate of intrinsic value. We believe RBS has a strong competitive position and a solid management team that has made tremendous strides in de-risking the business. The company’s historical earnings have been hurt by restructuring, litigation and other non-permanent items. While RBS was the quarter’s largest detractor, we expect a significant improvement in profitability and free cash flow in the quarters ahead. Read more...
Bill Nygren and David Herro Comment on LafargeHolcim Guru stock highlight
LafargeHolcim (XSWX:LHN), the largest cement maker in the world, was the largest contributor to performance for the quarter, returning 30%. Shares reacted positively to news that LafargeHolcim agreed to sell Lafarge India for approximately $1.4B with proceeds going to pay down debt. We are impressed with the progress management has made on defining and implementing true synergies following the merger. Additionally, second quarter results exceeded expectations and illustrated Europe’s improving pricing environment. Management reaffirmed its 2016 outlook as well as its commitment to targets set for 2018. Read more...
David Herro Comments on Olympus Guru stock highlight
We also initiated a position in Olympus (TSE:7733), the Japanese camera and endoscopes company, during the quarter. We owned Olympus in the past and most recently sold our shares in February 2016 as it approached our estimate of intrinsic value. However, by mid-August the share price had fallen over 30%, and since our investment thesis was intact, we repurchased the name into the Fund. Read more...
» More David Herro Articles

Commentaries and Stories

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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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David Herro’s International Fund Gains 2 Holdings, Divests 1 in 1st Quarter Oakmark manager buys European companies, sells Japanese company David Herro,Bestinfond,Invesco European Growth Fun - David Herro’s International Fund Gains 2 Holdings, Divests 1 In 1st Quarter
Oakmark’s David Herro (Trades, Portfolio) added two new holdings and divested another during the first quarter. More...

HERRO, OAKMARK, INTERNATIONAL


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David Herro Comments on SKY Network Television Guru stock highlight
The Fund’s largest detractor for the quarter was SKY Network Television (ASX:SKT). Based in New Zealand, SKY Network Television provides pay-television services, with content ranging from news and sports to movies and pay-per-view events. SKY Network Television’s fiscal first-half earnings were largely in line with analysts’ expectations. However, news that the New Zealand Commerce Commission would not clear the company’s proposed merger with Vodafone New Zealand weighed on SKY’s share price in February and disappointed investors, including us, who believed the merger would benefit shareholders. Although we have reduced our estimate of SKY’s intrinsic value, we continue to remain shareholders, as we believe its standalone business is still trading at a large discount to the company’s true worth. More...

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David Herro Comments on IWG Guru stock highlight
The top-performing stock for the quarter was IWG (TSXV:IWG) (formerly known as Regus). IWG is a global flexible workplace provider whose network includes almost 3,000 locations across 900 cities in over 100 countries. IWG’s share price reacted favorably after the release of the company’s fiscal year 2016 earnings results in late February. The company reported 5% constant currency revenue growth, which was admittedly a little bit weaker than we had expected, but was more than offset by a 13% constant currency decline in overhead expense. This cost cutting was achieved even as the company expanded its network by 6%—a further illustration of IWG’s excellent progress in restructuring its cost base. The company’s strong operating leverage produced robust free cash flow and a material improvement in return on invested capital. We expect these trends to continue as management further rationalizes its overhead expenses while it increases the mix of capital contributions from third parties. These partnering relationships enable IWG to grow in a capital light manner while further reinforcing its significant scale advantage. (IWG More...

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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 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 again this quarter, returning 14%. Glencore reported full-year 2016 operating profit of $10.3 billion, which exceeded our estimates by approximately 5%. Improved profitability was driven by solid performance in both the Industrial and Marketing segments. In January, we met with CEO Ivan Glasenberg, who remains optimistic about copper prices given steady demand and deteriorating supply. In addition, Glencore officially completed its debt reduction plan in 2016, and its net debt declined by $14.1 billion over the last 18 months—a remarkable achievement that reflects management’s decisive action. As the company’s balance sheet health has improved, so has its generation of free cash flow, which will largely be returned to shareholders. Management plans to return at least $1 billion to shareholders in 2017 via dividends. We believe management is working to enhance shareholder value, and our investment thesis remains intact. More...

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David Herro Comments on Arconic Guru stock highlight
We purchased shares of Arconic (NYSE:ARNC) after it separated from Alcoa and became an independent public company. We believe Arconic represents an attractive investment opportunity given our favorable long-term outlook for many of its end markets, the durability of its underlying business segments, and its discount relative to precedent acquisition activity. Arconic designs and manufactures lightweight metal parts and components that are used within the aerospace, building and construction, transportation, and other industries. Its largest division, Engineered Products and Solutions, accounts for approximately half of the firm’s profits and is considered the “crown jewel” of the company. This segment has a similar product portfolio to Precision Castparts, which was acquired by Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway in 2016. We believe Arconic’s long-term revenue outlook is bright. More...

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David Herro Comments on Wirecard Guru stock highlight
Wirecard (XTER:WDI) is a vertically integrated online payment services provider, primarily operating in Europe and South Asia. The majority of the activities are online, which allows for attractive growth opportunities as credit card penetration increases and as e-commerce displaces in-store purchases. As one of the leading players in the industry, Wirecard benefits from significant scale and network effects that allow it to provide an increasingly superior value proposition to its clients (i.e., a virtuous cycle effect). We find Wirecard’s management team has added tremendous value for shareholders via its strategic and operational prowess, and the large insider ownership (CEO owns 7%) creates significant alignment with minority shareholders. Wirecard trades at a meaningful discount to both our fundamentally driven intrinsic value as well as recent private market transactions, and we took advantage of the short-term price weakness to initiate a position. More...

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Oakmark International Small Cap Fund First Quarter 2017 David Herro talks about the holdings of his fund David Herro - Oakmark International Small Cap Fund First Quarter 2017
The Oakmark International Small Cap Fund returned 10% for the quarter ended March 31, 2017, outperforming the MSCI World ex U.S. Small Cap Index, which returned 8% for the same period. Since the Fund’s inception in November 1995, it has returned an average of 10%, annualized. More...

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Oakmark International Fund First Quarter 2017 Shareholder Letter David Herro talks about the holdings of his fund David Herro - Oakmark International Fund First Quarter 2017 Shareholder Letter
The Oakmark International Fund returned 9% for the quarter ended March 31, 2017, outperforming the MSCI World ex U.S. Index, which returned 7% over the same period. Most importantly, the Fund has returned an average of 10% per year since its inception in September 1992, outperforming the MSCI World ex U.S. Index, which has averaged 6% per year over the same period. More...

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Oakmark Global Fund First Quarter 2017 Shareholder Letter David Herro comments on the holdings of his fund David Herro - Oakmark Global Fund First Quarter 2017 Shareholder Letter
Although the Oakmark Global Fund’s 8% absolute return this quarter was nearly identical to last quarter’s, the drivers of performance broadened to include more relative contribution from the Fund’s large international weighting and was less driven by the financials sector, though it still contributed nicely. While we are pleased with the back-to-back 8% quarterly returns, please understand that high-single-digit quarterly returns are more the exception than the rule. In the meantime, we trust that you appreciate the performance as much as we do, as fellow shareholders in the Fund. More...

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Award-Winning International Fund Manager David Herro Picks 3 Stocks Morningstar's 2016 international manager of the year reports fourth-quarter portfolio David Herro - Award-Winning International Fund Manager David Herro Picks 3 Stocks
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. More...

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T. Rowe Price Japan Fund Gains 4 New Holdings Fund releases quarterly portfolio T. Rowe Price Japan Fund,David Herro,Causeway Inte - T. Rowe Price Japan Fund Gains 4 New Holdings
The T. Rowe Price Japan Fund (Trades, Portfolio) acquired four new holdings in the final quarter of 2016. The new holdings are Sumitomo Electric Industries Ltd. (TSE:5802), Komatsu Ltd. (TSE:6301), Nidec Corp. (TSE:6594) and istyle Inc. (TSE:3660). More...

T ROWE PRICE. JAPAN, BUYS, Q4


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Herro and Nygren Comment on Ingenico Group Guru stock highlight
During the quarter, we initiated one new position in France-based Ingenico Group (XPAR:ING), a global leader in secure electronic payment solutions. The company provides products and services that include point-of-sale payment terminals, payment software and mobile e-payment solutions. We eliminated our positions in China ZhengTong Auto Services (China) and Ichiyoshi Securities (Japan) during the quarter. Also in December, the acquisition of gategroup (Switzerland) by Chinese conglomerate HNA Group was completed. More...

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Herro and Nygren Comment on Incitec Pivot Guru stock highlight
A top-performing stock for the quarter was Incitec Pivot (ASX:ISL), an Australian manufacturer of mining explosives, fertilizers and industrial chemicals. Incitec Pivot’s share price reacted favorably following the company’s fiscal year earnings report that was released in early November. Overall, these results were in line with our estimates and represent what we believe is solid performance in the face of significant macro headwinds across Incitec's businesses. We met with management in December, and found that their efforts to reduce costs during 2016 were substantive and helped counter tough market conditions that significantly affected their earnings, such as steep price declines for fertilizers. Overall, the company expects its markets to remain challenging in 2017. However, management is on track to deliver additional cost savings to help combat this, and certain markets seem to be improving, including the mining explosives and urea markets. In addition, the company is now in position to harvest the benefits of a period of significant capital investment. Even with the recent share price advance, we believe Incitec Pivot More...

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Herro and Nygren Comment on Citigroup Guru stock highlight
Citigroup (NYSE:C)’s global franchise gives it a unique advantage because it has more than twice as many country banking licenses as its closest competitor. This unique global reach is an attractive asset and difficult to replicate in today’s regulatory environment. We believe Citigroup has substantial excess capital, which—combined with its significant deferred tax assets—should give the management team many opportunities to increase shareholder value. More...

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