Price Matters: International Value Opportunities Today

Big price gap between US and foreign stocks is creating opportunity for value investor David Herro

In his 33 years of value investing, David Herro, CIO – International Equities, Portfolio Manager at Harris Associates, has witnessed countless market cycles and occurrences. In this video, he shares his deep insight on the discipline of buying low and selling high, how price and value converge over time, and attractive opportunities in Europe.

Adhere to a sound investment philosophy
Herro breaks down Harris Associates’ investment philosophy into three components. “First, we buy businesses at a significant discount to our estimate of intrinsic value. Second, we invest in companies expected to grow per share value over time. And lastly, we invest in quality companies with management teams that think and act as owners.” He maintains that when the price of a business and its estimated value converge, it becomes less attractive as an investment and it is time to trim or sell.

Price is what you pay, value is what you get
“Price mattered when you were looking for a new car, when you’re buying a refrigerator, a laptop, or an iPhone. Well, price matters when you’re buying businesses, too,” said Herro. Today, he sees a big value gap, especially when you compare the price of US to European stocks. This, he believes, spells opportunity to buy quality companies at low prices.

Why international equities are attractive today:

  • Price differential appears to be too high between US and international stocks
  • An overvalued US dollar is a tailwind for international equities
  • International and US equity leadership tends to be cyclical
  • Good value opportunities on quality companies in Europe and UK
The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Total return includes change in share prices and, in each case, includes reinvestment of dividends and capital gain distributions. To obtain most recent month-end performance data, visit Oakmark.com. This video is provided for informational purposes only and should not be construed as investment advice. The views and opinions expressed are as of January 16, 2020 and may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted, and actual results may vary.

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Risks: Before investing, consider the fund's investment objectives, risks, charges, and expenses. Visit im.natixis.com or call 800-225-5478 for a prospectus or a summary prospectus containing this and other information. Read it carefully.

This material is provided for informational purposes only and should not be construed as investment advice. There can be no assurance that developments will transpire as forecasted. Actual results may vary.

Equity securities are volatile and can decline significantly in response to broad market and economic conditions.

Value investing carries the risk that a security can continue to be undervalued by the market for long periods of time.

Foreign and emerging market securities may be subject to greater political, economic, environmental, credit, currency and information risks. Foreign securities may be subject to higher volatility than US securities, due to varying degrees of regulation and limited liquidity. These risks are magnified in emerging markets.

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