David Herro: Tune Out Macro White Noise

As portfolio manager of  Oakmark International , David Herro joins us again for a Fund Manager Q&A feature, discussing why selling at first signs of trouble might be overreactive and that instead of focusing on the European crisis as a whole when investing, it's important to look at where companies are making their money. He also gives us some examples of companies that are currently trading at deep discounts, and tells us why the energy sector does not look promising at this time.

About the Author Liana Madura is an assistant site editor with Morningstar.com Contact Author | Meet other investing specialists

1. Investors moved out of Japan after the tsunami hit in March 2011, and as economic turmoil and uncertainty rises, investors are hesitant to put their money in financials stocks. Despite the general consensus, you tend to move in the opposite direction and actually increased the fund's exposure in both Japan and the financials sector. What gives you the confidence to make these moves against the trend, and what would you say to an investor who is worried about the potential increase in risk by doing so? Our belief is that the value of any business is a function of all cash flows from the present to perpetuity. Natural disasters, such as last March's earthquake and tsunami in Japan, are short-term phenomena, and though they may hurt businesses for a quarter or two, they have only a small impact on value because only a small part of the future cash flow stream is affected. They are not indicators of structural problems, but the market tends to aggressively sell at the first sign of trouble. Japan continues to lead the world in terms of discounted valuation. In late 2011, the Japanese market was trading at less than 1 times book value, and companies were seeing rising profitability despite a very strong yen. The tsunami and, later, the prolonged flooding in Thailand really slowed corporate activity, but we expect to start seeing increased business activity and greater profitability, and perhaps even a V-shaped economic recovery for Japan.

On the financials, it is widely assumed that all financial institutions in Europe are under duress as a result of the sovereign debt crisis. But those who look past the apocalyptic headlines can find healthy, well-capitalized, and profitable companies. This is not the best of times for these companies. However, they are still making money, and their shares are selling at well below half their book value. We think those who use the daily headlines to make their portfolio decisions provide a buying opportunity for those of us interested in acquiring good-quality businesses caught up in the short-term run for the exits. We are not particularly worried about the risk of trying to buy good companies on the cheap and for the long term. As we see it, the real risk investors face is overpaying for such assets during periods of market euphoria.

2. Do you continue to hold the same view in that the market is overreacting to the current eurozone crisis and economic uncertainty in the United States? Why or why not? What's different about the current market situation compared with what you've seen in similar scenarios during the last 20 years? As I alluded to in the previous answer, yes, there is some short-term overreaction in the market. But I'll provide a little elaboration on that theme. First, one needs to be careful when making broad statements about the economics of Europe and the eurozone because neither are homogeneous. We see Northern Europe as being relatively healthy, while most of Southern Europe is not so healthy. Conditions look to be improving in Eastern Europe, and you have a mixed bag in the western portion of the continent. All this said, there's no doubt that parts of Europe are in crisis.

But we judge businesses not by their country of domicile, but by where they make their money. Many market participants take a contrasting view, so the macroeconomic challenges scare them. Because we are concerned with cash flow streams over the long term, we believe short-term, macro-induced panic enables us to find and purchase good companies with global asset bases, global revenue, global cash flow, and global profits that just happen to have their headquarters in Europe.

Regarding the eurozone, I believe that its current troubles will strengthen the ties between the members. This has to be the outcome for Europe to remain relevant; if the eurozone doesn't become more integrated fiscally and monetarily, its position on the world stage will diminish as the U.S. and China assume a greater role in global economic policy.

3. What do you think investors should be paying close attention to in this market? I think investors need to focus on the degree to which the so-called white noise of macroeconomic worry is hampering the market's ability to objectively analyze companies on their individual merits. It seems that an entire sector gets flushed at the slightest whiff of worry. How else can you explain what happened to  Daimler displayPTip('DAI', 'DAI','YTD', '', '', '', '', '', '','msg','P'); in the second half of 2011? The carmaker lost nearly half of its market value between late July and late November, and this was during a time that Mercedes-Benz had some of its best sales ever. BMW saw strong sales, too, and it lost one third of its market cap during the same time period.

I see a level of anxiety in the financial markets that is not fully embraced in the consumer market. And as long as that fear does not overtake the consumer, I see brighter days ahead that could help settle equity markets. Some parts of Europe appear to be heading toward recession, but the global economy is expected to grow 3%-4% this year. The U.S. is seeing accelerating growth, and Asia, including Japan, is growing at a meaningful rate. Growth at or close to 4% bodes well for increases in corporate profitability. When one combines low valuations with economic growth, it is generally positive for stock prices.

4. What quality companies do you believe are currently trading at deep discounts? I would certainly put Daimler into that category. Even though shares have rebounded nicely from their November low price of less than EUR 30, the stock is still trading at just more than 1 times book value. This is a company with a single-digit P/E, and we expect its free cash flow to be in double digits in 2012. Daimler has a bullet-proof balance sheet, in our view, and a good spread of global businesses. Its only crime seems to be that it is based in Europe.

Another European name is Publicis Groupe displayPTip('PUB', 'PUB','YTD', '', '', '', '', '', '','msg','P');, which is a global leader in digital advertising. Publicis has a very attractive valuation, with its P/E roughly 13 times. It has a strong balance sheet and operations all over the world. It's well-positioned in the world's fastest-growing areas, with one third of its revenue coming from developing markets, and its business in the highly competitive eurozone is also expanding. Although most media companies are thought to be cyclical, Publicis demonstrated otherwise during the last downturn, when its operating margins barely dropped.

5. Why have you stayed away from the energy sector? All of our investment decisions are made based on price and quality, and now we are not able to find quality energy companies selling at a discounted price. We think political uncertainty, most recently ratcheted up by the stand-off between Iran and the West over shipping through the Persian Gulf, is mostly responsible for the current oil price around $100 a barrel. Iraq, offshore Africa, onshore U.S., and other regions are all increasing production. Iraq says its production has reached a 20-year high at more than 3 million barrels a day, so future supply is there. If and when the political situation brightens, we see the price of oil falling toward equilibrium. We have nothing against the energy companies. We've owned them in the past, and I wouldn't rule out owning them in the future. But right now they just don't fit our value criteria. 

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Securities mentioned in this article Ticker Price($) Change(%) Morningstar Rating Morningstar Analyst Report With Morningstar Analyst reports you can get our expert Buy/Sell opinions on over 3,900 Stock and Funds Liana Madura does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies. Video Reports Herro: Quality Has Been... More Videos... Most Popular Related News Also in Fund Manager Q&A Default Risk Remains Low for High YieldSequoia: Looking for the Next BerkshireTaubes: Good Environment for Corporates, but Equities More AttractiveTreasuries: The Safest Place to Lose Money? Asia Is Front-Runner in Global-Growth Race Sponsored Links Buy a Link Now Sponsor Center Please Wait... MUTUALFUNDS DEU_DAI,FRA_PUB,USA_OAKIX E0_DEU_DAI E0_FRA_PUB FO_USA_OAKIX &primaryKeyword=MUTUALFUNDS 2 {CommentWebService} .bloomreach-wrap a { color: #000000; text-decoration: none; } .bloomreach-wrap a:hover{ text-decoration: underline; } .bloomreach-wrap { text-align:left; padding-left:5px; margin:15px 0px 0px 4px; padding-top:15px; width: 370px; } .br-related-heading, .br-related-query, .br-found-heading, .br-sf-widget { border-bottom: 1px solid #CCCCCC; font-size: 11px; line-height: 15px; padding: 5px 0 5px; } .br-related-heading, .br-found-heading { border-top: 2px solid #999999; font-weight: bold; padding: 2px 0 7px; color:#333333; } .br-found-heading { margin-top:30px; } .br-sf-widget-merchant-desc { color: #999999; padding-top:6px; } var br_related_rid = "R7o0d3479dzl2unr2iw55-uf,r0,m0"; $(".br-sf-widget-merchant-qv").remove(); $(".br-sf-widget-merchant-img").remove(); $(".br-sf-widget").next("div[id^='br']").remove(); if($(".bloomreach-wrap #BloomreachWidgetProxy").length>0){ $(".bloomreach-wrap #BloomreachWidgetProxy").css("display","block"); } else{ if($("#BloomreachWidget").length>0){ document.getElementById("BloomreachWidget").innerHTML=$("#BloomreachWidgetProxy").html(); $("#BloomreachWidgetProxy").remove(); } } .br-related-heading, .br-found-heading { border-top: 3px solid #666666; font-weight: bold; font-size:10px; padding: 2px 0 7px; color:#000000; } OAS_AD('Bottom'); Content Partners Site Directory Site Map Our Products Corrections Help Advertising Opportunities Licensing Opportunities Glossary RSS Mobile Portfolio Affiliate Careers Company News International Sites: Australia Canada China France Germany Hong Kong Italy The Netherlands Norway Spain U.K. Switzerland Independent. Insightful. Trusted. Morningstar provides stock market analysis; equity, mutual fund, and ETF research, ratings, and picks; portfolio tools; and option, hedge fund, IRA, 401k, and 529 plan research. Our reliable data and analysis can help both experienced enthusiasts and newcomers. © Copyright 2012 Morningstar, Inc. All rights reserved. Please read our Terms of Useand Privacy Policy.Dow Jones Industrial Average, S&P 500, Nasdaq, and Morningstar Index (Market Barometer) quotes are real-time. var HeaderBox = initBoxQuote("AutoCompleteBox","AutoCompleteDropDown"); HeaderBox.IdleDisplayMsg = ""; HeaderBox.LocalRegion="USA"; HeaderBox.SetPreference('USA','EN',32); var FooterBox = initBoxQuote("AutoCompleteBoxFooter","AutoCompleteDropDownFooter"); FooterBox.IdleDisplayMsg = ""; FooterBox.LocalRegion="USA"; FooterBox.SetPreference('USA','EN',32); //clears all content/image boxes-------------------------------------------------------------------------------------- var imageIDs=new Array('siteDirectoryContent', 'siteMapContent', 'productsContent'); //content boxes .mi_row3{display: none} var _gaq = _gaq || []; _gaq.push(['_setAccount', 'UA-16669347-1']); _gaq.push(['_setDomainName', '.morningstar.com']); _gaq.push(['_trackPageview']); (function() { var ga = document.createElement('script'); ga.type = 'text/javascript'; ga.async = true; ga.src = ('https:' == document.location.protocol ? 'https://ssl' : 'http://www') + '.google-analytics.com/ga.js'; var s = document.getElementsByTagName('script')[0]; s.parentNode.insertBefore(ga, s); })(); var Name = $('meta[name=DC.Creator]').attr("content").split(','); var Title = $('meta[name=DC.Title]').attr("content"); var URL = window.location.href; var Author = Name[1] + " " + Name[0]; var PubDate = $('meta[name=DC.Date]').attr("content"); _gaq.push(['_trackEvent', 'Article Title From Morningstar', Title, URL]); _gaq.push(['_trackEvent', 'Author Name From Morningstar', Author, URL]); _gaq.push(['_trackEvent', 'Article URL From Morningstar', URL, Title + "(by " + Author + " on " + PubDate + ")"]); _gaq.push(['_trackEvent', 'Publish Date From Morningstar', PubDate, URL]); _gaq.push(['_trackEvent', 'Article Title', Title, URL]); _gaq.push(['_trackEvent', 'Author Name', Author, URL]); _gaq.push(['_trackEvent', 'Article URL', URL, Title + "(by " + Author + " on " + PubDate + ")"]); _gaq.push(['_trackEvent', 'Publish Date', PubDate, URL]);

1. Investors moved out of Japan after the tsunami hit in March 2011, and as economic turmoil and uncertainty rises, investors are hesitant to put their money in financials stocks. Despite the general consensus, you tend to move in the opposite direction and actually increased the fund's exposure in both Japan and the financials sector. What gives you the confidence to make these moves against the trend, and what would you say to an investor who is worried about the potential increase in risk by doing so? Our belief is that the value of any business is a function of all cash flows from the present to perpetuity. Natural disasters, such as last March's earthquake and tsunami in Japan, are short-term phenomena, and though they may hurt businesses for a quarter or two, they have only a small impact on value because only a small part of the future cash flow stream is affected. They are not indicators of structural problems, but the market tends to aggressively sell at the first sign of trouble. Japan continues to lead the world in terms of discounted valuation. In late 2011, the Japanese market was trading at less than 1 times book value, and companies were seeing rising profitability despite a very strong yen. The tsunami and, later, the prolonged flooding in Thailand really slowed corporate activity, but we expect to start seeing increased business activity and greater profitability, and perhaps even a V-shaped economic recovery for Japan.

On the financials, it is widely assumed that all financial institutions in Europe are under duress as a result of the sovereign debt crisis. But those who look past the apocalyptic headlines can find healthy, well-capitalized, and profitable companies. This is not the best of times for these companies. However, they are still making money, and their shares are selling at well below half their book value. We think those who use the daily headlines to make their portfolio decisions provide a buying opportunity for those of us interested in acquiring good-quality businesses caught up in the short-term run for the exits. We are not particularly worried about the risk of trying to buy good companies on the cheap and for the long term. As we see it, the real risk investors face is overpaying for such assets during periods of market euphoria.

2. Do you continue to hold the same view in that the market is overreacting to the current eurozone crisis and economic uncertainty in the United States? Why or why not? What's different about the current market situation compared with what you've seen in similar scenarios during the last 20 years? As I alluded to in the previous answer, yes, there is some short-term overreaction in the market. But I'll provide a little elaboration on that theme. First, one needs to be careful when making broad statements about the economics of Europe and the eurozone because neither are homogeneous. We see Northern Europe as being relatively healthy, while most of Southern Europe is not so healthy. Conditions look to be improving in Eastern Europe, and you have a mixed bag in the western portion of the continent. All this said, there's no doubt that parts of Europe are in crisis.

But we judge businesses not by their country of domicile, but by where they make their money. Many market participants take a contrasting view, so the macroeconomic challenges scare them. Because we are concerned with cash flow streams over the long term, we believe short-term, macro-induced panic enables us to find and purchase good companies with global asset bases, global revenue, global cash flow, and global profits that just happen to have their headquarters in Europe.

Regarding the eurozone, I believe that its current troubles will strengthen the ties between the members. This has to be the outcome for Europe to remain relevant; if the eurozone doesn't become more integrated fiscally and monetarily, its position on the world stage will diminish as the U.S. and China assume a greater role in global economic policy.

3. What do you think investors should be paying close attention to in this market? I think investors need to focus on the degree to which the so-called white noise of macroeconomic worry is hampering the market's ability to objectively analyze companies on their individual merits. It seems that an entire sector gets flushed at the slightest whiff of worry. How else can you explain what happened to  Daimler  in the second half of 2011? The carmaker lost nearly half of its market value between late July and late November, and this was during a time that Mercedes-Benz had some of its best sales ever. BMW saw strong sales, too, and it lost one third of its market cap during the same time period.

I see a level of anxiety in the financial markets that is not fully embraced in the consumer market. And as long as that fear does not overtake the consumer, I see brighter days ahead that could help settle equity markets. Some parts of Europe appear to be heading toward recession, but the global economy is expected to grow 3%-4% this year. The U.S. is seeing accelerating growth, and Asia, including Japan, is growing at a meaningful rate. Growth at or close to 4% bodes well for increases in corporate profitability. When one combines low valuations with economic growth, it is generally positive for stock prices.

4. What quality companies do you believe are currently trading at deep discounts? I would certainly put Daimler into that category. Even though shares have rebounded nicely from their November low price of less than EUR 30, the stock is still trading at just more than 1 times book value. This is a company with a single-digit P/E, and we expect its free cash flow to be in double digits in 2012. Daimler has a bullet-proof balance sheet, in our view, and a good spread of global businesses. Its only crime seems to be that it is based in Europe.

Another European name is Publicis Groupe displayPTip('PUB', 'PUB','YTD', '', '', '', '', '', '','msg','P');, which is a global leader in digital advertising. Publicis has a very attractive valuation, with its P/E roughly 13 times. It has a strong balance sheet and operations all over the world. It's well-positioned in the world's fastest-growing areas, with one third of its revenue coming from developing markets, and its business in the highly competitive eurozone is also expanding. Although most media companies are thought to be cyclical, Publicis demonstrated otherwise during the last downturn, when its operating margins barely dropped.

5. Why have you stayed away from the energy sector? All of our investment decisions are made based on price and quality, and now we are not able to find quality energy companies selling at a discounted price. We think political uncertainty, most recently ratcheted up by the stand-off between Iran and the West over shipping through the Persian Gulf, is mostly responsible for the current oil price around $100 a barrel. Iraq, offshore Africa, onshore U.S., and other regions are all increasing production. Iraq says its production has reached a 20-year high at more than 3 million barrels a day, so future supply is there. If and when the political situation brightens, we see the price of oil falling toward equilibrium. We have nothing against the energy companies. We've owned them in the past, and I wouldn't rule out owning them in the future. But right now they just don't fit our value criteria. 

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Securities mentioned in this article Ticker Price($) Change(%) Morningstar Rating Morningstar Analyst Report With Morningstar Analyst reports you can get our expert Buy/Sell opinions on over 3,900 Stock and Funds Liana Madura does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies. Video Reports Herro: Quality Has Been... More Videos... Most Popular Related News Also in Fund Manager Q&A Default Risk Remains Low for High YieldSequoia: Looking for the Next BerkshireTaubes: Good Environment for Corporates, but Equities More AttractiveTreasuries: The Safest Place to Lose Money? Asia Is Front-Runner in Global-Growth Race Sponsored Links Buy a Link Now Sponsor Center Please Wait... MUTUALFUNDS DEU_DAI,FRA_PUB,USA_OAKIX E0_DEU_DAI E0_FRA_PUB FO_USA_OAKIX &primaryKeyword=MUTUALFUNDS 2 {CommentWebService} .bloomreach-wrap a { color: #000000; text-decoration: none; } .bloomreach-wrap a:hover{ text-decoration: underline; } .bloomreach-wrap { text-align:left; padding-left:5px; margin:15px 0px 0px 4px; padding-top:15px; width: 370px; } .br-related-heading, .br-related-query, .br-found-heading, .br-sf-widget { border-bottom: 1px solid #CCCCCC; font-size: 11px; line-height: 15px; padding: 5px 0 5px; } .br-related-heading, .br-found-heading { border-top: 2px solid #999999; font-weight: bold; padding: 2px 0 7px; color:#333333; } .br-found-heading { margin-top:30px; } .br-sf-widget-merchant-desc { color: #999999; padding-top:6px; } var br_related_rid = "R7o0d3479dzl2unr2iw55-uf,r0,m0"; $(".br-sf-widget-merchant-qv").remove(); $(".br-sf-widget-merchant-img").remove(); $(".br-sf-widget").next("div[id^='br']").remove(); if($(".bloomreach-wrap #BloomreachWidgetProxy").length>0){ $(".bloomreach-wrap #BloomreachWidgetProxy").css("display","block"); } else{ if($("#BloomreachWidget").length>0){ document.getElementById("BloomreachWidget").innerHTML=$("#BloomreachWidgetProxy").html(); $("#BloomreachWidgetProxy").remove(); } } .br-related-heading, .br-found-heading { border-top: 3px solid #666666; font-weight: bold; font-size:10px; padding: 2px 0 7px; color:#000000; } OAS_AD('Bottom'); Content Partners Site Directory Site Map Our Products Corrections Help Advertising Opportunities Licensing Opportunities Glossary RSS Mobile Portfolio Affiliate Careers Company News International Sites: Australia Canada China France Germany Hong Kong Italy The Netherlands Norway Spain U.K. Switzerland Independent. Insightful. Trusted. Morningstar provides stock market analysis; equity, mutual fund, and ETF research, ratings, and picks; portfolio tools; and option, hedge fund, IRA, 401k, and 529 plan research. Our reliable data and analysis can help both experienced enthusiasts and newcomers. © Copyright 2012 Morningstar, Inc. All rights reserved. Please read our Terms of Useand Privacy Policy.Dow Jones Industrial Average, S&P 500, Nasdaq, and Morningstar Index (Market Barometer) quotes are real-time. var HeaderBox = initBoxQuote("AutoCompleteBox","AutoCompleteDropDown"); HeaderBox.IdleDisplayMsg = ""; HeaderBox.LocalRegion="USA"; HeaderBox.SetPreference('USA','EN',32); var FooterBox = initBoxQuote("AutoCompleteBoxFooter","AutoCompleteDropDownFooter"); FooterBox.IdleDisplayMsg = ""; FooterBox.LocalRegion="USA"; FooterBox.SetPreference('USA','EN',32); //clears all content/image boxes-------------------------------------------------------------------------------------- var imageIDs=new Array('siteDirectoryContent', 'siteMapContent', 'productsContent'); //content boxes .mi_row3{display: none} var _gaq = _gaq || []; _gaq.push(['_setAccount', 'UA-16669347-1']); _gaq.push(['_setDomainName', '.morningstar.com']); _gaq.push(['_trackPageview']); (function() { var ga = document.createElement('script'); ga.type = 'text/javascript'; ga.async = true; ga.src = ('https:' == document.location.protocol ? 'https://ssl' : 'http://www') + '.google-analytics.com/ga.js'; var s = document.getElementsByTagName('script')[0]; s.parentNode.insertBefore(ga, s); })(); var Name = $('meta[name=DC.Creator]').attr("content").split(','); var Title = $('meta[name=DC.Title]').attr("content"); var URL = window.location.href; var Author = Name[1] + " " + Name[0]; var PubDate = $('meta[name=DC.Date]').attr("content"); _gaq.push(['_trackEvent', 'Article Title From Morningstar', Title, URL]); _gaq.push(['_trackEvent', 'Author Name From Morningstar', Author, URL]); _gaq.push(['_trackEvent', 'Article URL From Morningstar', URL, Title + "(by " + Author + " on " + PubDate + ")"]); _gaq.push(['_trackEvent', 'Publish Date From Morningstar', PubDate, URL]); _gaq.push(['_trackEvent', 'Article Title', Title, URL]); _gaq.push(['_trackEvent', 'Author Name', Author, URL]); _gaq.push(['_trackEvent', 'Article URL', URL, Title + "(by " + Author + " on " + PubDate + ")"]); _gaq.push(['_trackEvent', 'Publish Date', PubDate, URL]);

I see a level of anxiety in the financial markets that is not fully embraced in the consumer market. And as long as that fear does not overtake the consumer, I see brighter days ahead that could help settle equity markets. Some parts of Europe appear to be heading toward recession, but the global economy is expected to grow 3%-4% this year. The U.S. is seeing accelerating growth, and Asia, including Japan, is growing at a meaningful rate. Growth at or close to 4% bodes well for increases in corporate profitability. When one combines low valuations with economic growth, it is generally positive for stock prices.

4. What quality companies do you believe are currently trading at deep discounts? I would certainly put Daimler into that category. Even though shares have rebounded nicely from their November low price of less than EUR 30, the stock is still trading at just more than 1 times book value. This is a company with a single-digit P/E, and we expect its free cash flow to be in double digits in 2012. Daimler has a bullet-proof balance sheet, in our view, and a good spread of global businesses. Its only crime seems to be that it is based in Europe.

Another European name is Publicis Groupe , which is a global leader in digital advertising. Publicis has a very attractive valuation, with its P/E roughly 13 times. It has a strong balance sheet and operations all over the world. It's well-positioned in the world's fastest-growing areas, with one third of its revenue coming from developing markets, and its business in the highly competitive eurozone is also expanding. Although most media companies are thought to be cyclical, Publicis demonstrated otherwise during the last downturn, when its operating margins barely dropped.

5. Why have you stayed away from the energy sector? All of our investment decisions are made based on price and quality, and now we are not able to find quality energy companies selling at a discounted price. We think political uncertainty, most recently ratcheted up by the stand-off between Iran and the West over shipping through the Persian Gulf, is mostly responsible for the current oil price around $100 a barrel. Iraq, offshore Africa, onshore U.S., and other regions are all increasing production. Iraq says its production has reached a 20-year high at more than 3 million barrels a day, so future supply is there. If and when the political situation brightens, we see the price of oil falling toward equilibrium. We have nothing against the energy companies. We've owned them in the past, and I wouldn't rule out owning them in the future. But right now they just don't fit our value criteria. 

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Securities mentioned in this article Ticker Price($) Change(%) Morningstar Rating Morningstar Analyst Report With Morningstar Analyst reports you can get our expert Buy/Sell opinions on over 3,900 Stock and Funds Liana Madura does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies. Video Reports Herro: Quality Has Been... More Videos... Most Popular Related News Also in Fund Manager Q&A Default Risk Remains Low for High YieldSequoia: Looking for the Next BerkshireTaubes: Good Environment for Corporates, but Equities More AttractiveTreasuries: The Safest Place to Lose Money? Asia Is Front-Runner in Global-Growth Race Sponsored Links Buy a Link Now Sponsor Center Please Wait... MUTUALFUNDS DEU_DAI,FRA_PUB,USA_OAKIX E0_DEU_DAI E0_FRA_PUB FO_USA_OAKIX &primaryKeyword=MUTUALFUNDS 2 {CommentWebService} .bloomreach-wrap a { color: #000000; text-decoration: none; } .bloomreach-wrap a:hover{ text-decoration: underline; } .bloomreach-wrap { text-align:left; padding-left:5px; margin:15px 0px 0px 4px; padding-top:15px; width: 370px; } .br-related-heading, .br-related-query, .br-found-heading, .br-sf-widget { border-bottom: 1px solid #CCCCCC; font-size: 11px; line-height: 15px; padding: 5px 0 5px; } .br-related-heading, .br-found-heading { border-top: 2px solid #999999; font-weight: bold; padding: 2px 0 7px; color:#333333; } .br-found-heading { margin-top:30px; } .br-sf-widget-merchant-desc { color: #999999; padding-top:6px; } var br_related_rid = "R7o0d3479dzl2unr2iw55-uf,r0,m0"; $(".br-sf-widget-merchant-qv").remove(); $(".br-sf-widget-merchant-img").remove(); $(".br-sf-widget").next("div[id^='br']").remove(); if($(".bloomreach-wrap #BloomreachWidgetProxy").length>0){ $(".bloomreach-wrap #BloomreachWidgetProxy").css("display","block"); } else{ if($("#BloomreachWidget").length>0){ document.getElementById("BloomreachWidget").innerHTML=$("#BloomreachWidgetProxy").html(); $("#BloomreachWidgetProxy").remove(); } } .br-related-heading, .br-found-heading { border-top: 3px solid #666666; font-weight: bold; font-size:10px; padding: 2px 0 7px; color:#000000; } OAS_AD('Bottom'); Content Partners Site Directory Site Map Our Products Corrections Help Advertising Opportunities Licensing Opportunities Glossary RSS Mobile Portfolio Affiliate Careers Company News International Sites: Australia Canada China France Germany Hong Kong Italy The Netherlands Norway Spain U.K. Switzerland Independent. Insightful. Trusted. Morningstar provides stock market analysis; equity, mutual fund, and ETF research, ratings, and picks; portfolio tools; and option, hedge fund, IRA, 401k, and 529 plan research. Our reliable data and analysis can help both experienced enthusiasts and newcomers. © Copyright 2012 Morningstar, Inc. All rights reserved. Please read our Terms of Useand Privacy Policy.Dow Jones Industrial Average, S&P 500, Nasdaq, and Morningstar Index (Market Barometer) quotes are real-time. var HeaderBox = initBoxQuote("AutoCompleteBox","AutoCompleteDropDown"); HeaderBox.IdleDisplayMsg = ""; HeaderBox.LocalRegion="USA"; HeaderBox.SetPreference('USA','EN',32); var FooterBox = initBoxQuote("AutoCompleteBoxFooter","AutoCompleteDropDownFooter"); FooterBox.IdleDisplayMsg = ""; FooterBox.LocalRegion="USA"; FooterBox.SetPreference('USA','EN',32); //clears all content/image boxes-------------------------------------------------------------------------------------- var imageIDs=new Array('siteDirectoryContent', 'siteMapContent', 'productsContent'); //content boxes .mi_row3{display: none} var _gaq = _gaq || []; _gaq.push(['_setAccount', 'UA-16669347-1']); _gaq.push(['_setDomainName', '.morningstar.com']); _gaq.push(['_trackPageview']); (function() { var ga = document.createElement('script'); ga.type = 'text/javascript'; ga.async = true; ga.src = ('https:' == document.location.protocol ? 'https://ssl' : 'http://www') + '.google-analytics.com/ga.js'; var s = document.getElementsByTagName('script')[0]; s.parentNode.insertBefore(ga, s); })(); var Name = $('meta[name=DC.Creator]').attr("content").split(','); var Title = $('meta[name=DC.Title]').attr("content"); var URL = window.location.href; var Author = Name[1] + " " + Name[0]; var PubDate = $('meta[name=DC.Date]').attr("content"); _gaq.push(['_trackEvent', 'Article Title From Morningstar', Title, URL]); _gaq.push(['_trackEvent', 'Author Name From Morningstar', Author, URL]); _gaq.push(['_trackEvent', 'Article URL From Morningstar', URL, Title + "(by " + Author + " on " + PubDate + ")"]); _gaq.push(['_trackEvent', 'Publish Date From Morningstar', PubDate, URL]); _gaq.push(['_trackEvent', 'Article Title', Title, URL]); _gaq.push(['_trackEvent', 'Author Name', Author, URL]); _gaq.push(['_trackEvent', 'Article URL', URL, Title + "(by " + Author + " on " + PubDate + ")"]); _gaq.push(['_trackEvent', 'Publish Date', PubDate, URL]);

5. Why have you stayed away from the energy sector? All of our investment decisions are made based on price and quality, and now we are not able to find quality energy companies selling at a discounted price. We think political uncertainty, most recently ratcheted up by the stand-off between Iran and the West over shipping through the Persian Gulf, is mostly responsible for the current oil price around $100 a barrel. Iraq, offshore Africa, onshore U.S., and other regions are all increasing production. Iraq says its production has reached a 20-year high at more than 3 million barrels a day, so future supply is there. If and when the political situation brightens, we see the price of oil falling toward equilibrium. We have nothing against the energy companies. We've owned them in the past, and I wouldn't rule out owning them in the future. But right now they just don't fit our value criteria. 

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