Polaris Capital Management leader Bernard Horn (Trades, Portfolio) released his second-quarter portfolio earlier this week.
Seeking to generate strong risk-adjusted returns and capital appreciation, the guru’s Boston-based firm invests in discounted but high-quality stocks in developed as well as emerging markets.
Keeping these criteria in mind, the 13F filing for the three months ended June 30 show Horn’s firm entered four new positions, sold out of one stock and added to or trimmed a number of other existing investments. Among its most notable trades are new positions in Teleperformance SE (XPAR:TEP, Financial), TotalEnergies SE (XPAR:TTE, Financial) and Cullen/Frost Bankers Inc. (CFR, Financial), an increased bet on Horizon Therapeutics PLC (HZNP, Financial) and the divestment of Hyundai Mobis Co. Ltd. (XKRX:012330, Financial).
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
Teleperformance
Polaris invested in 27,400 shares of Teleperformance (XPAR:TEP, Financial), allocating 1.16% of the equity portfolio to the position. The stock traded for an average price of 169.81 euros ($184.64) per share during the quarter.
The French company, which provides digital business services like telemarketing, debt collection and customer relationship management, has a market cap of 7.25 billion euros; its shares closed at 124.65 euros on Monday with a price-earnings ratio of 10.98, a price-book ratio of 1.89 and a price-sales ratio of 0.87.
The GF Value Line suggests the stock is significantly undervalued based on its historical ratios, past financial performance and analysts’ future earnings projections.
At 86 out of 100, the GF Score indicates the company has good outperformance potential. While it received high ratings for profitability and growth, the financial strength and value ranks are more moderate and momentum is low.
Of the gurus invested in Teleperformance, the Tweedy Browne (Trades, Portfolio) International Value Fund has the largest holding with 0.92% of its outstanding shares. The iShares MSCI ACWI ex. U.S. ETF also owns the stock.
TotalEnergies
The firm picked up 77,200 shares of TotalEnergies (XPAR:TTE, Financial), dedicating 1.12% of the equity portfolio to the holding. Shares traded for an average price of 55.46 euros each during the quarter.
The French integrated energy and petroleum company has a market cap of 139.57 billion euros; it shares traded around 57.89 on Monday with a price-earnings ratio of 7.87, a price-book ratio of 1.34 and a price-sales ratio of 0.64.
According to the GF Value Line, the stock is modestly undervalued currently.
The GF Score of 87 implies the company has good outperformance potential on the back of high ratings for all five criteria.
With a 0.27% stake, the T Rowe Price Equity Income Fund (Trades, Portfolio) is TotalEnergies’ largest guru shareholder. Other top guru investors include Tweedy Browne (Trades, Portfolio), the iShares ETF and the Invesco EQV European Equity Fund (Trades, Portfolio).
Cullen/Frost Bankers
Horn’s firm entered a 24,700-share investment in Cullen/Frost Bankers (CFR, Financial), giving it 0.67% space in the equity portfolio. During the quarter, the stock traded for an average per-share price of $104.46.
The San Antonio, Texas-based bank has a $6.12 billion market cap; its shares were trading around $95.47 on Tuesday with a price-earnings ratio of 8.95, a price-book ratio of 1.89 and a price-sales ratio of 3.15.
Based on the GF Value Line, the stock appears to be significantly undervalued currently.
The GF Score of 77 means the company is likely to have average performance going forward, driven by a high value rank and more moderate ratings for the other four criteria.
Mairs and Power (Trades, Portfolio) is Cullen/Frost’s largest guru shareholder with 0.18% of its outstanding shares. The stock is also being held by Simons’ firm, Lee Ainslie (Trades, Portfolio) and Steven Cohen (Trades, Portfolio).
Horizon Therapeutics
Polaris boosted its Horizon Therapeutics (HZNP, Financial) position by 51.76%, buying 20,600 shares. The transaction impacted the equity portfolio by 0.54%. The stock traded for an average price of $105.56 per share during the quarter.
The firm now holds 60,400 shares in total, which occupy 1.57% of the equity portfolio as the eighth-largest holding. GuruFocus estimates it has gained 23.97% on the investment so far.
The Irish biotech company headquartered in Dublin has a $25.76 billion market cap; its shares were trading around $112.51 on Tuesday with a price-earnings ratio of 60.16, a price-book ratio of 4.85 and a price-sales ratio of 7.23.
The GF Value Line suggests the stock is fairly valued.
Supported by high ratings for three of the criteria and more moderate profitability and value ranks, the GF Score is 83. This means the company has good outperformance potential.
Holding a 1.51% stake, Simons’ firm has the largest stake in Horizon Therapeutics. George Soros (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) also have sizable investments.
Hyundai Mobis
The guru exited his 18,600-share investment in Hyundai Mobis (XKRX:012330, Financial), which impacted the equity portfolio by -0.79%. During the quarter, shares traded for an average price of 223,863 won ($169.77).
GuruFocus data shows Polaris lost an estimated 0.88% on the investment over its lifetime.
The Korean company, which manufactures car parts, has a market cap of 21 trillion won; its shares closed at 230,500 won on Tuesday with a price-earnings ratio of 6.99, a price-book ratio of 0.52 and a price-sales ratio of 0.35.
According to the GF Value Line, the stock is currently significantly undervalued.
The GF Score of 89 means the company has good outperformance potential due to the high ratings for all five criteria.
The Yacktman Fund (Trades, Portfolio) now has the largest stake in Hyundai Mobis with 0.60% of its outstanding shares. The Yacktman Focused Fund (Trades, Portfolio) and the iShares ETF also own the stock.
Additional trades and portfolio performance
During the quarter, Horn’s firm also entered a new position in Tecnoglass Inc. (TGLS, Financial), added to its investments in Mondi PLC (LSE:MNDI, Financial) and Inchcape PLC (LSE:INCH, Financial) and curbed its holdings of Marubeni Corp. (TSE:8002, Financial) and Crocs Inc. (CROX, Financial).
Polaris’ $396 million equity portfolio, which is composed of 96 stocks, is most heavily invested in the financial services sector, followed by smaller representations in the consumer cyclical, technology and health care spaces.
GuruFocus data shows the firm returned -12.07% in 2022, outperforming the S&P 500’s return of -18.11%.
