Nikkei plunge an 'overreaction,' Oakmark managers say

Nikkei plunge an 'overreaction,' Oakmark managers say
Firm's International Fund has 23% of assets in Japan; 'high-quality companies'
MAR 17, 2011
The precipitous drop in the Japanese stock market could be a buying opportunity, according to David Herro and Robert Taylor, portfolio managers of the popular Oakmark International fund. "We believe a buying opportunity may be created when select Japanese equities instantly decline significant amounts," they said in a statement today. "In our view, even in light of current events, such price drops seem an overreaction when applied to high-quality companies that are globally diversified, both in terms of production and sales. In prefacing their thoughts, Mr. Herro and Mr. Taylor extended condolences to the people of Japan. They said they were ascertaining the impact of the disastrous earthquake on the intrinsic values of the businesses the fund owns and "if prices overreacted, then [we will] try to take advantage of it." Separately, in an interview with Morningstar Inc. this morning, Mr. Herro said a company like Toyota Motor Corp. likely would not be effected in the long term because it " produces cars all over the world and sells cars all over the world." "Tokyo Electric Power, I think it would be a different story," he added. "If we owned some of the insurers, it would be a different story." Mr. Herro said it appeared that none of the stocks his fund owns had "sustained a material hit to their intrinsic value." The Oakmark International Fund had 23% of its assets in Japanese stocks as of Dec. 31, its single largest country weighting.

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