Bernard Horn (Trades, Portfolio), president and portfolio manager of Polaris Capital Management, opted to buy only one new stock and add to four other positions in the first quarter, according to a portfolio reveal this week.
The position he established was in Next PLC (LSE:NXT, Financial), a U.K. based retailer. He bought additional shares of Cineworld Group PLC (LSE:CINE, Financial), Allergan PLC (AGN, Financial), Bellway PLC (LSE:BWY, Financial) and Magna International Inc. (TSX:MG, Financial).
Because the SEC does not require U.S.-based managers to report holdings from foreign exchanges, Horn may have purchased other stocks globally.
Horn founded Polaris in 1995 and approaches investing with a combination of technology and classic focus on fundamentals. His firm also prefers value to growth stocks, and companies with strong free cash flows and conservative balance sheets in particular. The team typically buys when the market presents mispriced opportunities.
In the first quarter, the Polaris Global Value Fund posted negative return of 2.49% versus a 1.28% slide in the MSCI World Index. Since its inception in 1989, the fund has blown past the benchmark index, returning 9.69% on an annualized basis, versus 6.61% in the index.
In a first quarter letter, Horn said the fund was favorably positioned in raw materials, commodities, select IT companies, financials, consumers, discretionary and industrial sectors, saying, “We may seek to replace current portfolio holdings with more attractively-valued companies at opportune periods.”
“Regardless of sector, the majority of undervalued, but fundamentally strong, companies remain centralized in Asia (China, Japan, Korea, Taiwan) and the U.S. We benefit from a globally diverse analyst team, all of whom conduct on-the-ground research, meet with companies/competitors, visit manufacturing plants, and carefully analyze prospective companies using local and global accounting standards,” he wrote.
New buy
Horn purchased 122,528 shares of Next PLC in the first quarter, giving it 1.6% portfolio weight. The company’s first quarter share price averaged 49 British pounds.
Next PLC has a market cap of 8.15 billion pounds; its shares were traded around 57.90 pounds with a P/E ratio of 13.92 and P/S ratio of 2.03. The trailing 12-month dividend yield of Next PLC stocks is 2.73%. The forward dividend yield of Next PLC stocks is 2.73%. Next PLC had an annual average earnings growth of 9.40% over the past 10 years. GuruFocus rated Next PLC the business predictability rank of 4.5-star.
Adds
Cineworld Group PLC (LSE:CINE, Financial)
Horn increased the position by 400%, adding 2,052,400 shares for a total holding of 2,565,500 shares. The holding became 1.66% of the portfolio.
Cineworld Group PLC has a market cap of 3.53 billion pounds; its shares were traded around 2.57 pounds with a P/E ratio of 36.71 and P/S ratio of 4.02. The trailing 12-month dividend yield of Cineworld Group PLC stocks is 3.40%. The forward dividend yield of Cineworld Group PLC stocks is 11.97%. Cineworld Group PLC had an annual average earnings growth of 0.70% over the past 10 years.
Horn increased his Allergan position by 26.45%, buying 4,600 shares for a total of 21,989 shares. The holding represented 1.48% of the portfolio.
Allergan PLC has a market cap of $51 billion; its shares were traded around $150.42 with and P/S ratio of 3.13. The trailing 12-month dividend yield of Allergan PLC stocks is 1.89%. The forward dividend yield of Allergan PLC stocks is 1.86%.
Bellway PLC (LSE:BWY, Financial)
Horn increased his position in Bellway PLC by 2.3%, adding 3,953 shares of the company for a total holding of 175,602 shares. The holding represented 1.47% of the portfolio.
Bellway PLC has a market cap of 4.08 billion pounds; its shares were traded around 33.21 pounds with a P/E ratio of 8.37 and P/S ratio of 1.60. The trailing 12-month dividend yield of Bellway PLC stocks is 3.99%. The forward dividend yield of Bellway PLC stocks is 3.99%. Bellway PLC had an annual average earnings growth of 40.60% over the past five years.
Magna International Inc. (TSX:MG, Financial)Top of Form
Horn increased his position in Magna International by 0.58%, buying 781 shares for a total of 134,676 shares. The holding represented 1.48% of the portfolio.
Magna International Inc. has a market cap of 29.92 billion Canadian dollars; its shares were traded around 83.50 Canadian dollars with a P/E ratio of 10.49 and P/S ratio of 0.59. The trailing 12-month dividend yield of Magna International Inc. stocks is 1.85%. The forward dividend yield of Magna International Inc. stocks is 2.05%. Magna International Inc. had an annual average earnings growth of 22.70% over the past 10 years. GuruFocus rated Magna International Inc. the business predictability rank of 2-star.
