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Award-Winning International Fund Manager David Herro Picks 3 Stocks

- By Holly LaFon

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.


Herro manages three funds at Oakmark, the Oakmark International Fund, Oakmark International Small Cap Fund and the Oakmark Global Fund. He also co-manages the Oakmark Global Select Fund with another well-known investor, Bill Nygren (Trades, Portfolio). Since its 1992 inception, his International Fund returned an average of 10%, outperforming the 6% in the MSCI World ex. U.S. Index. Oakmark Funds is a group of mutual funds advised by Harris Associates, which has $109 billion in assets under management and has the following principles:

"Oakmark's investment philosophy is centered on the belief that superior, long-term results are achieved through investing as owners in quality companies that can be purchased at a significant discount to their true economic value. The Oakmark International Fund seeks capital appreciation by investing in larger capitalization companies located outside of the U.S."

In the fourth quarter, Herro purchased three new stocks for his $24.4 billion portfolio: Bayerische Motoren Werke AG (XTER:BMW), Infosys Ltd. (BOM:500209) and Sanofi SA (SAN.PA).

Bayerische Motoren Werke AG (XTER:BMW)

Herro bought 2.706 million shares of BMW, reflecting 1.03% of his portfolio. The stock's share price averaged 82 euros per share in the fourth quarter.

Bayerische Motoren Werke has a market cap of $57.26 billion; its shares were traded around $87.18 with a P/E ratio of 8.29 and P/S ratio of 0.61. The trailing 12-month dividend yield of Bayerische Motoren Werke stocks is 3.69%. The forward dividend yield of Bayerische Motoren Werke stock is 3.69%. Bayerische Motoren Werke had an annual average earnings growth of 2.4% over the past 10 years.

Infosys Ltd. (BOM:500209)

Herro bought 9.722 million shares of Infosys, reflecting 0.59% of his portfolio. The stock's share price averaged 988 Indian rupees per share.

Infosys Ltd. has a market cap of $2332.85 billion; its shares were traded around $1020.65 with a P/E ratio of 16.3 and P/S ratio of 3.47. The trailing 12-month dividend yield of Infosys Ltd. stocks is 2.46%. The forward dividend yield of Infosys Ltd. stocks is 2.46%. Infosys Ltd. had an annual average earnings growth of 17.3% over the past 10 years. GuruFocus rated Infosys Ltd. the business predictability rank of 4.5-star.

Herro made the following comment about Infosys in his fourth-quarter shareholder letter:


Infosys is the second-largest IT service company based in India and is our first India-domiciled investment. The company primarily serves large corporations, providing a complete suite of IT-related services, including consulting, application development and maintenance, product engineering, and software-related products. Many Infosys clients are located outside of India, with North American companies contributing over 60% of revenues. We believe Infosys will benefit from the increasing complexity of technology and the trend toward outsourcing IT services.



Sanofi SA (SAN.PA)

Herr bought 453,000 shares of Sanofi, reflecting 0.15% of the portfolio. The stock's share price averaged 73 euros per share.

Sanofi has a market cap of $106.37 billion; its shares were traded around $82.64 with a P/E ratio of 22.59 and P/S ratio of 3.06. The trailing 12-month dividend yield of Sanofi stock is 3.54%. The forward dividend yield of Sanofi stocks is 3.54%.

See Herro's portfolio here.

This article first appeared on GuruFocus.