Morningstar Conference: Managers Play Around the World

The opening salvoes of the Morningstar conference resounded with discussions of oil prices and offshore investing, according to U.S. News & World Report.   As for oil, Dan Rice of BlackRock expects crude prices to hover at least around $60 to $60 per barrel, although most stock prices assume the cap is about $53. Meanwhile, Fidelity Select Energy and Select Energy Service Fund manager John Dowd said demand from China could push it about $70 per barrel, especially with the steep cost of exploration and tight demand for antiquated refineries slowing the time to market.   China will also drive up the price of coal, according to Rice. This year, China became a net importer of coal, as domestic energy demand increased. “That will spread to the rest of the world,” Rice said.   David Herro, manager the Oakmark International and Oakmark International Small Cap funds, and who is held in high esteem by Morningstar analysts, said he shies away from Japanese stocks. Toyota, for example, aims for a return on equity of 10% per year, compared to 16% or better among its American counterparts. The reason? Toyota’s higher ups are worried shareholders might profit too much. “It’s a great car company. It’s a great manufacturer, but do they really care about their owners?” he asked.   Herro also said the major drivers that have pushed European returns are waning. Latin America, he said, is not for the faint of heart. “It’s kind of hard to even find names, unless you like risk,” he said.   Even when it comes to emerging markets, Herro was subdued. He warned against jumping into economies that have delivered 20% or better returns, and said the best bets are those that are out of favor.   Still, the risk cannot be ignored, he said. “What people fail to adequately price is the shallow and opaque corporate governance” in emerging markets, Herro said.    The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.