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By John Coumarianos | 01-27-2010 01:40 PM

Where the Hunt for Value Begins

International Manager of the Decade David Herro on the initial steps to unearth value and the crucial steps that follow.

John Coumarianos: Hi, this is John Coumarianos, senior mutual fund analyst at Morningstar, coming to you today from our studio in Chicago. And I'm delighted to have David Herro with us. David is, of course, the winner of our International Manager of the Decade award. And we awarded David this prize based on his work on three funds: Oakmark International, Oakmark International Small Cap, and Oakmark Global Select.

The first two funds have 10-year records. Oakmark International has produced a 119% cumulative return from January 1, 2000, through the end of 2009, while Oakmark International Small Cap has produced a 162% cumulative return over that time. And all that while, the MSCI EAFE Value Index has produced a 41% cumulative return.

David, congratulations on such an outstanding performance, and thanks so much for joining us today.

David Herro: Thank you, and thank you for giving me such an outstanding honor.

Coumarianos: You're very welcome. You've really earned it.

Before we jump into the portfolios, I wanted, for the benefit of the viewers, to basically tell us how you begin your research efforts as a value investor. Many value investors, of course, begin by simple screening on price-to-value metrics, and I was curious how you began.

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