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Harris bumps Glencore holding to above 5 percent

(Adds quotes from Harris (Stuttgart: HRS.SG - news) )

By Michael Flaherty

NEW YORK, Aug 27 (Reuters) - Harris Associates has increased its stake in mining and commodity group Glencore Plc (Xetra: A1JAGV - news) to more than 5 percent, the firm's international portfolio manager told Reuters on Thursday, betting the battered shares are set for a rebound.

In an interview with Reuters, Harris Associates' David Herro said the fund is not taking an activist position with Glencore, and that it is happy with its management.

"We think it's a high quality business, trading at an artificially low price," said Herro, portfolio manager and chief investment officer for international equity at Harris, which manages the $29 billion Oakmark International Fund.

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Glencore shares rose 5 percent on Thursday to 145.80 pounds. The shares were up 2.5 percent earlier in the day, prior to news that Harris was continuing to build its stake.

Herro took issue with an initial U.K. media report that said Harris was taking an activist approach and planned to shake up the company. Herro said even though the firm took an activist approach with the shakeup of British ad agency Saatchi & Saatchi, that was more than 20 years ago.

"We never enter a share as activists. We do not consider ourselves activist shareholders. When something heads south at a company, against our investment thesis, our first inclination is to sell the stock," Herro told Reuters.

"If there is a circumstance where we believe the board is not doing the right thing for the owners of the business, then we may be become involved in trying to make the board stay focused on building shareholder value for the owners."

Glencore shares have plunged this year, hitting around 316 pounds in May before dropping more than 50 percent, hit by a global slowdown in commodities.

"We think management is fine, and we think the copper position is good," Herro said.

Oakmark held 0.77 percent of Glencore as of June 30, according to Thomson Reuters (Dusseldorf: TOC.DU - news) data. As of mid-August, Oakmark had built a position of around 4.5 percent and in the last few days has increased that to more than 5 percent, Herro said. Based on its $28 billion market value, a more than 5 percent stake is worth around $1.4 billion.

(Reporting by Michael Flaherty; Editing by Chizu Nomiyama and Alan Crosby)