Oakmark's Herro Loses About $300 Million as Glencore Plunges

  • Manager says stock decline not warranted by fundamentals
  • Fund is down about 8.1% this year, trailing 75% of peers

David Herro, head of international stocks at Harris Associates, boosted his stake in Glencore Plc in the third quarter, saying the shares were undervalued. So far, the investment has flopped.

Glencore, the commodities trading firm run by Ivan Glasenberg, dropped 29 percent to 69 pence in London as copper prices fell to the lowest in a month. Chinese industrial companies reported on Monday the biggest decline in profit since at least October 2011.

Herro, who manages the $27 billion Oakmark International Fund, told Bloomberg in August that he was making a long-term investment in Glencore because “the business at this price is substantially undervalued.” But analysts at Investec Plc said on Monday that the company may need to cut its debt load faster and undertake further restructuring.

“By no means is the current price warranted by the fundamentals of the business in our view,” Herro wrote in an email Monday.

Harris, based in Chicago, owns 5.1 percent of Glencore, making it the company’s third-largest shareholder. For Harris, which held 738 million Glencore shares as of Sept. 16, the decline translated into a one-day loss of more than $300 million. Since Aug. 18, when Herro disclosed he had been buying additional shares, Glencore has fallen about 60 percent.

Herro was named international stock manager of the decade by Morningstar Inc. in 2010. His fund lost 8.1 percent this year, trailing 75 percent of peers, according to data compiled by Bloomberg. Over five years the fund has topped 69 percent of rivals.

(An earlier version of this story corrected the spelling of the Glencore CEO’s name.)

Before it's here, it's on the Bloomberg Terminal.