Investors, by and large, have ignored fundamentals in the ongoing selloff, five-star fund manager David Herro told CNBC on Thursday, before markets opened once again with sharp declines.
Herro, a portfolio manager at the Oakmark International Fund, said the turmoil gripping global markets has created opportunities for "true, long-term investors." The volatile selling on Wall Street has made fundamentally sound businesses a whole lot cheaper, he added during an interview on CNBC's "Squawk Box."
"At the end of the day, when you value businesses based on free cash flow, the value of these companies has not dropped 10, 15 percent," Herro said. "And that provides an opportunity for long-term investors."
Herro identified two stocks that fit the bill as value plays amid the sharp selloff:
Kering—The owner of luxury brands such as Gucci and Bottega has been hit hard in the last month. Investors should look at the company as a play on China's growing middle class, Herro said. The slowing growth in Asia is cyclical, not structural, he said.
"As more Asian consumers march from middle class to upper middle class, they'll want to buy these nice Gucci and Bottega goods," Herro said.
BNP Paribas—Despite suffering a €4.32 billion ($5.51 billion) loss last quarter because of a nearly $9 billion U.S. Department of Justice fine, the bank still appears more than well-capitalized, Herro said. It also has a "solid residential franchise" and low losses on its loans, he added.
"One would argue that they're probably overcapitalized," Herro said. "Again this is something that has dropped 20 percent in the last six weeks or so."
Disclosure: Herro's fund owns shares in Kering, BNP, Diageo and Richemont.