Oakmark’s David Herro has been one of the most successful fund managers in the world over the past two decades by keying on unloved stocks, and he is continuing to focus his efforts on fear-filled areas of the market.

“If there’s no fear, you’re not going to get a bargain, because then the company’s good news is in the price,” Herro tells Kiplinger’s. “We’re able to take advantage of macroeconomic fears to buy stocks at good prices.”

Currently, Herro is high on stocks in Japan, where the economy has gone through two decades of deflation. He thinks it’s finally recovering, and says the recovery is only in its “third of fourth inning”. While Japanese stocks have surged in recent months, he says most still trade below book value. Herro also likes some stocks in much-maligned Europe — including some financials, which may be the most-maligned of all.

One area Herro isn’t keen on: emerging markets. He says there are good companies in some EMs, but they’re just too pricey.