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David Herro is the Chief Investment Officer for International Equities at Harris Associates, which he joined in 1992.

He has been running the Oakmark International Fund since its inception in 1992, and has delivered an impressive track record, logging a five-year annual average return of more than 13 per cent.

The highlights of his career include being named Morningstar's International Stock Fund Manager of the Year in 2006 and International Stock Fund Manager of the Decade for 2000-09.

Herro has an M.A. in Economics from the University of Wisconsin-Milwaukee (1985) and a B.S. in Business/Economics from the University of Wisconsin-Platteville (1983).

Herro believes investors should buy businesses that are trading at a significant discount to their estimate of the company's intrinsic value.

According to Herro investors should invest with companies expected to grow shareholder value over time. He feels value investors can sometimes fall into the trap of buying a stock that is inexpensive for a reason because the company just does not grow.

He suggests investors look for good quality, growing businesses with positive free cash flow and intelligent investment of cash.

He says investors should invest with management teams that think and act as owners and should look for companies with management teams that understand the dynamics of per share value growth and are focused on achieving such growth.

Herro stays focused on buying overseas firms that sell for a discount and ignores short-term price swings.

According to Herro, many investors have a home bias, which is just wanting to invest in their home country and hence miss out on attractive opportunities abroad.

"It’s a big world. The number-one reason to invest internationally is to increase the available subset of places to put your money and not limit your opportunities," he said in an interview to a financial website.

Herro says investors should find value by pricing businesses as accurately as possible and then act upon the information available.

He says if the price is rich, do nothing and if it’s selling at a discount, then invest in it.

"You have to have the courage to do that. A lot of investors don’t like to buy stocks that have fallen. People in our business like stocks that go up and dislike stocks that go down. We see price as exogenous: If price gives us an opportunity, we’re poised to take advantage of that," he says.

Herro says investors should look to diversify in markets around the world as they don’t move in tandem and the number-one place where value resides is in global stock markets.

Herro says market gossip and breaking news drives share prices in the short term, but not in the long term as on any given day, a stock can only go up or down upto a point, and yet the intrinsic value, or what the business is worth, doesn’t change anywhere near that amount.

"What ultimately drives stock prices is the value created by management when it efficiently converts sales to cash flow that can be used to grow the business. We buy when the stock is selling for less than we think the business is worth," he said.

Herro says during his career of more than 35 years there has been no shortage of macro events like wars, banking crisis, regional economic crisis, pandemics, that have caused large disturbances in global equity markets.

Although there are no two events that are ever alike, macro events cause similar share price reactions as investors tend to act in a synchronized, knee-jerk fashion because of unknown fears that these events precipitate.

"As more of the “unknowns” become “known,” equity prices often recover. Investors also like to replicate past behavior, despite circumstances differing for each macro event. Despite these differences in circumstance, we see no investor behavior change. We believe this provides an opportunity for the true long-term investor," he says.

Herro says investors shouldn't panic and change their investing style if they have a solid investment strategy when a stock goes south.

Following value investing principles investors should look for companies trading below their intrinsic worth and wait for a pickup in the stock.

Herro says investors should always be prepared to factor in all the worst-case scenarios that can affect even well-run companies, such as huge currency fluctuations that alter foreign balance sheets for a long time.