Bernard Horn (Trades, Portfolio) operates the Maine-based, strict value Polaris Global Value Fund (PGVFX, Financial). After a prosperous 2013, Horn predicted single-digit returns for stocks in 2014, which has proved accurate through the first three quarters. He still sees plenty of opportunity around the world, however, writing in his third quarter investor letter:
“There are signs of recovery in some previously hard-hit countries, including Spain, Portugal and Ireland, but it will take time for these regions to gain traction. In this environment, many foreign companies are reporting unimpressive but stable results, impacted by slack demand from emerging markets, worldwide geopolitical risks and currency devaluation. Importantly, the fundamentals of most of the Fund’s holdings have not changed; our research continues to support investment in well-run companies with substantial free cash flow and conservative balance sheets. Between market declines and weak economic trends, many companies are undervalued, resulting in more prospects for investment. The research team has been actively pursuing these opportunities.”
Horn bought four new stocks in the third quarter: Actavis Plc (ACT, Financial), FairPoint Comunications Inc. (FRP, Financial), Sberbank of Russia (SBRCY, Financial) and REXLot Holdings Ltd. (HKSE:00555, Financial).
Horn purchased 20,689 shares of Actavis Plc in the third quarter, making it 1.9% of his portfolio. The stock’s share price averaged $224 in the quarter.
Actavis Inc. was incorporated in 1985. The company's initial public offering was in February 1993. Actavis Plc has a market cap of $65.4 billion; its shares were traded at around $247.50 with a P/E ratio of 525.70 and P/S ratio of 4.0. Actavis Plc had an annual average earnings growth of 1.80% over the past five years.
FairPoint Communications Inc. (FRP, Financial)
Horn purchased 107,073 shares of FairPoint Communications, making it 0.62% of the portfolio. The stock’s third quarter price averaged $15 per share.
Fairpoint Communications Inc. or Fairpoint was incorporated in Delaware in February 1991 for the purpose of acquiring and operating incumbent telephone companies in rural and small urban markets. Fairpoint Communications Inc. has a market cap of $441.7 million; its shares were traded at around $16.54 with and P/S ratio of 0.50.
Sberbank of Russia (SBRCY, Financial)
Horn purchased 137,700 shares of Sberbank of Russia, accounting for 0.42% of the portfolio. The stock price averaged $9.
Sberbank of Russia is an open joint-stock commercial bank established in 1841 and was incorporated and is domiciled in the Russian Federation. Sberbank of Russia has a market cap of $40.04 billion; its shares were traded at around $7.42 with a P/E ratio of 5.60 and P/S ratio of 1.70. The dividend yield of Sberbank of Russia stocks is 4.10%. Sberbank of Russia had an annual average earnings growth of 88.40% over the past five years.
REXLot Holdings Ltd. (HKSE:00555, Financial)
Horn purchased 10,375,000 shares of REXLot Holdings, a 0.4% portfolio space. The stock’s third quarter price averaged 0.85 Hong Kong dollars.
REXLot Holdings Ltd. develops and produces lottery machines, related operating software system, and networks for lottery industry to the Chinese Lottery market. RexLot Holdings Ltd. has a market cap of $7.43 billion; its shares were traded at around $0.79 with a P/E ratio of 8.30 and P/S ratio of 3.64. The dividend yield of RexLot Holdings Ltd. stocks is 5.23%. RexLot Holdings Ltd. had an annual average earnings growth of 12.5% over the past five years.
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