The Polaris Global Value Fund (“the Fund”) underperformed the MSCI World Index, net benchmark in the quarter, at -8.80%, while the Index dropped -8.45%. The quarter was marked by volatility in commodity prices, which had a negative short-term effect on some materials and energy companies. Ultimately, we believe lower oil prices will have a positive effect on consumer purchasing power worldwide; however, we must first weather this current spate of volatility.
A number of U.S. financials, including The Chubb Corp., Astoria Financial Corp., Ameris Bancorp and BNC Bancorp contributed positively to the Fund’s performance. Banks were buoyed by the expected Federal Reserve rate hike in September. The Fed’s decision to postpone the increase left banks lower at the end of the quarter. India’s IT company, Infosys, Ltd., had double digit gains after announcing impressive quarterly results and projected growth that triggered revised upward guidance. A more recent portfolio addition, Kia Motors Corp., benefited from new car model launches and top safety ratings from J.D. Powers and Associates. These gains could not offset losses elsewhere in the portfolio, including energy stocks WorleyParsons, Ltd., Marathon Oil Corp. and Maurel et Prom. Perennial outperformer, Canada’s Methanex Corp., saw methanol prices drop more than 30% due to lower commodity prices. Lower prices of coal used to produce methanol in China also impacted the stock. One of the Fund’s largest holdings, Greencore Group, was down modestly this quarter due to labor cost pressures in the U.K. and one-off start-up charges for its U.S. facilities. Continue Reading »