Bernard Horn (Trades, Portfolio), manager of the Polaris Global Value Fund, disclosed in a regulatory portfolio filing that his firm’s top five trades included new positions in Alrosa PJSC (MIC:ALRS, Financial) and Discovery Inc. (DISCK, Financial) and the closure of its positions in Ameris Bancorp (ABCB, Financial), Lanxess AG (XTER:LXS, Financial) and Valmet Corp. (OHEL:VALMT, Financial).
Polaris' philosophy is based on two basic beliefs: country and industry factors are important determinants of security prices, and global market fluctuations produce mispriced stocks. Global markets have proven generally efficient over time, but investor behavior creates volatility that leads to inefficiency somewhere in the world. During these periods, the stock price may not reflect a company's long-term fundamental valuation or future cash flows. The firm seeks to buy such undervalued companies worldwide.
As of Sept. 30, the fund’s $501 million equity portfolio contains 99 stocks with a turnover ratio of 5%. The top four sectors in terms of weight are financial services, consumer cyclical, basic materials and health care, representing 21.08%, 15.88%, 12.19% and 10.62% of the equity portfolio.
Alrosa
Polaris purchased 3,418,600 shares of Alrosa (MIC:ALRS, Financial), dedicating 1.15% of its portfolio to the position. Shares averaged 136.23 rubles ($1.85) during the third quarter; the stock is fairly valued based on Wednesday’s price-to-GF Value ratio of 1.04.
GuruFocus ranks the Russian diamond miner’s profitability 7 out of 10 on the back of profit margins and returns outperforming more than 86% of global competitors despite three-year revenue and earnings decline rates underperforming more than 70% of global metals and mining companies.
Discovery
The fund purchased 206,000 Class C shares of Discovery (DISCK, Financial), giving the position 1% equity portfolio space. Shares averaged $26.77 during the third quarter; the stock is modestly undervalued based on Wednesday’s price-to-GF Value ratio of 0.73.
GuruFocus ranks the Silver Spring, Maryland-based mass media company's profitability 8 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7, a 3.5-star business predictability rank and profit margins and three-year revenue growth rates that outperform more than 81% of global competitors.
Other gurus with holdings in Discovery include Hotchkis & Wiley, Mason Hawkins (Trades, Portfolio)’ Southeastern Asset Management, Smead Value Fund (Trades, Portfolio) and Jim Simons (Trades, Portfolio)’ Renaissance Technologies.
Ameris Bancorp
The fund sold all 112,450 shares of Ameris Bancorp (ABCB, Financial), chopping 1.11% of its equity portfolio.
Shares of Ameris averaged $48.70 during the third quarter; the stock is fairly valued based on Wednesday’s price-to-GF Value ratio of 0.99.
GuruFocus ranks the Atlanta-based bank’s financial strength 2 out of 10 on the back of cash-to-debt ratios underperforming over 83% of global competitors despite equity-to-asset and debt-to-equity ratios outperforming more than 78% of global banks. Banks usually have higher leverage compared to other sectors.
Lanxess
The fund sold all 72,316 shares of Lanxess (XTER:LXS, Financial), trimming 0.97% of its equity portfolio.
Shares of Lanxess averaged 60.73 euros ($68.90) during the third quarter; the stock is modestly undervalued based on Wednesday’s price-to-GF Value ratio of 0.85.
GuruFocus ranks the German chemical company’s financial strength 6 out of 10 on the back of a high Piotroski F-score of 7 despite a low Altman Z-score of 1.6 and an interest coverage ratio that underperforms more than 77% of global competitors.
Valmet
The fund sold all 113,195 shares of Valmet (OHEL:VALMT, Financial), trimming 0.96% of its equity portfolio.
Shares of Valmet averaged 34.75 euros ($39.72) during the third quarter; the stock is significantly overvalued based on Wednesday’s price-to-GF Value ratio of 1.49.
GuruFocus ranks the Finnish industrial product company’s profitability 7 out of 10 on the back of a high Piotroski F-score of 7 and profit margins and returns that are outperforming more than 63% of global competitors.
