Bernard Horn's Polaris Global Fund Reveals Top 4th-Quarter Trades
- By James Li
Bernard Horn (Trades, Portfolio), president of Polaris Global Management, disclosed this week that his Polaris Global Value Fund's top five trades during the fourth quarter of 2020 included new buys in Cinemark Holdings Inc. (NYSE:CNK), Berry Global Group Inc. (NYSE:BERY) and CVS Health Corp. (NYSE:CVS). The fund also exited its holdings in Zhongsheng Group Holdings Ltd. (HKSE:00881) and Infosys Ltd. (NYSE:INFY)(BOM:500209).
The Boston-based firm seeks long-term capital appreciation on the beliefs that country and industry factors are important determinants of security prices and that global market fluctuations may produce mispriced stocks. While global markets are generally efficient, investment behavior may engender volatility that could result in market inefficiency.
As of December 2020, Polaris' $442 million equity portfolio contains 97 stocks, with five new positions and a turnover ratio of 7%. The top three sectors in terms of weight are financial services, consumer cyclical and basic materials, representing 21.64%, 16.77% and 12.26% of the equity portfolio.
Cinemark
Polaris purchased 325,900 shares of Cinemark (NYSE:CNK), allocating 1.28% of its equity portfolio to the stake. Shares averaged $12.61 during the fourth quarter; the stock is significantly overvalued based on Tuesday's price-to-GF Value ratio of 2.33.
GuruFocus ranks the Plano, Texas-based movie theater chain's financial strength 2 out of 10 on several warning signs, which include a low Piotroski F-score of 3, a weak Altman Z-score of 0.09 and debt ratios that underperform over 90% of global competitors.
Other gurus with holdings in Cinemark include Jim Simons (Trades, Portfolio)' Renaissance Technologies, Paul Tudor Jones (Trades, Portfolio)' Tudor Investment and Lee Ainslie (Trades, Portfolio)'s Maverick Capital.
Berry Global
The fund purchased 87,600 shares of Berry Global (NYSE:BERY), giving the position 1.11% equity portfolio space. Shares averaged $52.01 during the fourth quarter; the stock is modestly undervalued based on a price-to-GF Value ratio of 0.88.
GuruFocus ranks the Evansville, Indiana-based packaging company's profitability 7 out of 10 on the back of operating margins trending near 10-year highs and outperforming over 75% of global competitors.
CVS Health
The fund purchased 71,200 shares of CVS Health (NYSE:CVS), giving the position 1.1% weight in the equity portfolio. Shares averaged $65.16 during the fourth quarter; the stock is fairly valued based on a price-to-GF Value ratio of 0.97.
According to GuruFocus, the Woonsocket, Rhode Island-based pharmacy company's profit margins and returns are currently underperforming more than half of global competitors.
Zhongsheng Group Holdings
Having purchased 903,000 shares of Zhongsheng Group (HKSE:00881) during the second quarter of 2020, Polaris sold the shares during the fourth quarter of 2020, trimming the equity portfolio 1.51%. Shares averaged 55.3 Hong Kong dollars ($7.13) during the fourth quarter, up from the second quarter-average price of HK$35.42.
GuruFocus ranks the Chinese automobile company's profitability 8 out of 10 on several positive investing signs, which include expanding profit margins and returns that are outperforming over 85% of global competitors.
Infosys
The fund sold 313,240 shares of Infosys, curbing the equity portfolio 1.16%. Shares averaged $15.33 during the fourth quarter.
GuruFocus ranks the Indian information technology service provider's profitability 10 out of 10 on several positive investing signs, which include a 4.5-star business predictability rank, a high Piotroski F-score of 8 and an operating margin that outperforms over 91% of global competitors.
Disclosure: No positions.
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This article first appeared on GuruFocus.
