David Herro (Trades, Portfolio) (Trades, Portfolio) leads Oakmark’s International Fund, which declined 1 percent in the year’s first three quarters, underperforming the MSCI World ex U. S Index’s 5 percent gain. Since inception though the fund has averaged an 11 percent return compared to 6 percent for the index.
The third quarter ended with 79 percent of the fund allocated in Europe, followed by 13 percent in Japan and 4 percent in Australia.
Herro remarked on the fund in his third quarter letter:
“The U.S. dollar has strengthened significantly versus most global currencies. This is because of the U.S.’s strong relative economic growth outlook, directions in quantitative easing and geopolitical tensions in other parts of the world. As a result, the Australian dollar, Swiss franc and Swedish krona depreciated during the quarter. Our defensive hedge positions of these overvalued currencies boosted performance for the quarter. We continue to hedge these overvalued currencies and ended the quarter with 42% of our Australian dollar, 33% of our Swiss franc and 30% of our Swedish krona exposure hedged.”In the third quarter, Herro also acquired four new international holdings: Melco Crown Entertainment Ltd. (HKSE:06883, Financial), EXOR Spa (MIL:EXO, Financial), Swedish Match AB (OSTO:SWMA, Financial) and G4S PLC (LSE:GFS, Financial).
Melco Crown Entertainment Ltd. (HKSE:06883, Financial)
Herro purchased 7,482,000 shares of Melco Crown Entertainment Ltd. in the third quarter, a holding that equates to 0.68% of the portfolio. Melco Crown Entertainment Shares averaged 78 Hong Kong dollars each during the quarter.
Melco Crown Entertainment Ltd. was incorporated under the name of Melco PBL Entertainment (Macau) Limited on Dec. 17, 2004. Melco Crown Entertainment Ltd. has a market cap of 110.72 billion Hong Kong dollars; its shares were traded at around 67.50 Hong Kong dollars with a P/E ratio of 19.50 and P/S ratio of 2.84. The dividend yield of Melco Crown Entertainment Ltd. stocks is 0.58%.
Herro purchased 2,972,000 shares of EXOR Spa, making it 0.4% of the portfolio. Its shares cost 30 euro on average for the quarter.
EXOR Spa was oncorporated on March 1, 2009 after the merger of IFIL with IFI, which changed its name to EXOR S. Exor Spa has a market cap of 7.8 billion euro; its shares were traded at around 35.56 euro with a P/E ratio of 16.50 and P/S ratio of 0.05. The dividend yield of Exor Spa stocks is 0.76%. Exor Spa had an annual average earnings growth of 53.0% over the past 10 years.
Swedish Match AB (OSTO:SWMA, Financial)
Herro’s new Swedish Match holding comprised 1,914,000 shares, worth 0.21% of the portfolio. Its share price averaged 232 kroner for the quarter.
Swedish Match AB develops, manufactures, markets, and sells quality products with the product areas Snus and snuff, Other tobacco products (cigars and chewing tobacco), and Lights (matches and lighters). Swedish Match AB has a market cap of 48.61 billion kroner; its shares were traded at around 245.40 kroner with a P/E ratio of 18.60 and P/S ratio of 3.73. The dividend yield of Swedish Match AB stocks is 3.0%. Swedish Match AB had an annual average earnings growth of 8.10% over the past 10 years. GuruFocus rated Swedish Match AB the business predictability rank of 4-star.
Herro purchased 1,554,000 G4S PLC shares in the third quarter, which equals 0.022% of the portfolio. The company’s average share price was 3 pounds for the quarter.
G4S PLC was incorporated on Nov. 12, 2003. The company, together with its subsidiaries, is an integrated security company, specializing in the provision of security products, services and solutions. G4S Plc has a market cap of 4.18 billion pounds; its shares were traded at around 2.69 pounds with and P/S ratio of 0.53. The dividend yield of G4S Plc stocks is 3.32%. G4S Plc had an annual average earnings growth of 3.6% over the past 10 years.
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