Bernard Horn (Trades, Portfolio) of the Polaris Global Value Fund purchased two new holdings and exited three others in the third quarter.
Horn founded Polaris Capital Management in 1995. The firm invests in discounted but high-quality stocks in developed and emerging markets. All trades are managed on a team basis using a consistent process and approach. The investment philosophy is based on two basic beliefs: country and industry are important factors in price, and global market fluctuations produce mispriced stocks.
Horn purchased 101,700 shares of Andritz AG (WBO:ANDR, Financial) for an average price of 45.44 euros ($47.17) per share. The trade had an impact of 1.5% on the portfolio. He previously sold out in the first quarter of 2011.
Andritz AG is an Austrian plant engineering company. It provides plants, equipment and services to various industries. It has a market cap of 4.8 billion euros and an enterprise value of 4 billion euros. It has a price-earnings (P/E) ratio of 17.3, a forward P/E ratio of 15.11, a price-book (P/B) ratio of 4 and a price-sales (P/S) ratio of 0.8.
GuruFocus ranked the company’s financial strength 6 of 10. The Piotroski F-Score of 7 and Altman Z-Score of 2.23 suggest that while the company has healthy business conditions, it does have minor financial stress. The return on invested capital (ROIC) outperforms the weighted average cost of capital (WACC), meaning the company is creating value as it grows.
For profitability and growth, GuruFocus gave Andritz a ranking of 7 of 10. It has an operating margin of 6.4% and a net margin of 4.6%. The return on equity (ROE) and return on assets (ROA) outperform 93% and 72% of other companies in the global industrial distribution industry. The return on capital (ROC) outperforms 94% of competitors.
Horn is the only guru invested in the company. He holds 0.1% of outstanding shares. This represents 1.5% of his total assets managed.
The DCF Calculator gives the stock a fair value of 29.32 euros; it was trading at 47.31 euros on Tuesday.
The investor bought 132,900 shares of Popular Inc. (BPOP, Financial) for an average price of $35.6 per share. The transaction impacted the portfolio by 1.4%.
Popular is a financial services company that operates as Banco Popular in Puerto Rico and the Virgin Islands. In the U.S., the company operates as Popular Community Bank. The Puerto Rican company has a market cap of $4.6 billion and an enterprise value of $1.9 billion. It has a P/E ratio of 12.9, a forward P/E ratio of 12.14, a P/B ratio of 0.8 and a P/S ratio of 2.5.
GuruFocus ranked the company’s financial strength 6 of 10. The Piotroski F-Score of 4 suggests the company is in stable condition. However, it is destroying value as it grows because the ROIC underperforms the WACC.
In regard to profitability and growth, Popular was given a 4 of 10 ranking by GuruFocus. It has an operating margin of 22.8% and a net margin of 19.4%. The ROE underperforms 63% of other companies in the global banks – regional – U.S. industry. The ROA outperforms 57% of competitors.
Hotchkis & Wiley is the largest shareholder of Popular among the gurus with 5.5% of outstanding shares. This represents 0.9% of its total assets managed. Diamond Hill Capital (Trades, Portfolio), Jim Simons (Trades, Portfolio), Michael Price (Trades, Portfolio), Chuck Royce (Trades, Portfolio) and Richard Pzena (Trades, Portfolio) also hold positions.
The DCF Calculator gives the stock a fair value of $36.6; it was trading at $44.23 on Tuesday.
Horn sold out of Wincor Nixdorf AG (XTER:WIN, Financial). He sold the remaining 92,416 shares for an average price of 59.49 euros ($61.75) per share. The trade had an impact of -1.4% on the portfolio. He had been reducing his position since the second quarter.
He also exited his position in Astoria Financial Corp. (AF, Financial). He sold the remaining 298,904 shares for an average price of $14.93 per share. The transaction impacted the portfolio by -1.3%. He had been reducing the position since the first quarter of the year.
The third position Horn closed was REXLot Holdings Ltd. (HKSE:00555, Financial). He sold 18,586,616 shares for an average price of 0.13 Hong Kong dollars (2 cents) per share. The trade had an impact of -0.11% on the portfolio. He acquired the holding in the third quarter of 2014 and had been building onto it before selling out.
Disclosure: I do not own stock in any companies mentioned in the article.
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