Polaris Global Value Fund

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investor's business daily
"Fund Follows Cash Trail Across Globe"
December 21, 2004
In order to get into the Polaris Global Value Fund portfolio, stocks must clear a hurdle rate set for each, based on expected earnings growth, local economic growth rates and exchange rates, says Fund Manager Bernard R. Horn Jr.   He argues that international markets have averaged about 6% after inflation and as a rule of thumb, if the fund's management can't buy a stream of cash thrown off by a company at a price that beats that particular market, then the management will look somewhere else.

Mr. Horn has learned valuable lessons about how firms operate overseas, providing examples of how earnings can be manipulated. If you really want to get a good picture of a company's profitability, Mr. Horn claims, you should look at cash flow rather than just earnings.  After checking with regional hurdle rates, Mr. Horn and his management team come up with an estimate of how much a firm can produce in cash flow for the next several years.  Usually, Polaris is looking at three- to five-year horizon.  Horn and his team dig into a company's financial statements, talk with rivals and then meet with individual company managements.

portfolio international
"Economic Power To Shift From US"
November 2004
(Byline Highlights -- Author Bernard R. Horn Jr.)

cnnfn: the money show
"TELEVISION TRANSCRIPT: The Money Show"
November 16, 2004
Bernie Horn, president of Polaris Capital Management, discusses the Polaris Global Value Fund's portfolio holdings and current market weightings.  Mr. Horn describes the research infrastructure and the firm's competitive advantage of "scrubbing down" financial statements for top global values.  Among the management team's recent stock picks are: PacificCare Health, which is improving care system efficiencies and controlling costs; Portugal Telecom, which dominates Portugal's fixed line, mobile phone, cable franchise and Internet business; and BHP Billiton, a diversified resources firm that benefits from strong price increase across commodities.

pensions & investments
"Tried Strategies Still Winning: Top-Performing Managers"
November 15, 2004
Polaris President Bernard Horn says the best strategy for investing is to take positions in undervalued areas of the institutional marketplace, such as utility companies.  This sector has appeared on Polaris' research screens as undervalued because utilities purchase energy in the form of coal, gas and oil.  As those input costs increase, investors express concern about utility companies' cash flow. Currently, Polaris' management team favors Kansai Electric Power Co. Inc. and Tokyo Electric Power Co. In. -- both of which will are well positioned to prosper on the back of a stronger yen against the dollar and an expected decline in oil prices when supply returns.

fortune magazine
"The Best Of The Bantam-Weights"
November 1, 2004
The Polaris Global Value Fund racked up admirable returns over the past 1, 3 and 5 year time periods, outpacing the MSCI World Index for the period ended 9/30/04. The Fund management has posted positive numbers using a multi-pronged strategy that begins with a screening of more than 24,000 companies in 40 countries, including the U.S.  The Fund looks for companies with strong, sustainable free cash flow that are trading at discount prices.  The result is a watch list of 250 names and a portfolio that currently holds nearly 75 stocks, most of which are not actively traded on the U.S. exchanges.  In the past few months, management has been finding more opportunities overseas than in the U.S.  Mr. Horn notes the price-to-cash flow ratio for the U.S. market was 12.1 at the end of September, while for the rest of the world it stood at 8.5.  These valuations have led the management team to hold less than 37% of the portfolio's assets in U.S. stocks, and to consider increasing investments in foreign countries including Japan and Portugal.

pbs: wall street week with fortune
"Successful Small Funds"
October 22, 2004
Smaller investment managers may outperform large competitors due to unrestricted investing options (ability to invest in multi-caps worldwide without certain index requirements), according to Bernie Horn, manager of the Polaris Global Value Fund. These options are tempered by Polaris' strict investment discipline -- that may be contrary to current market trends.  A prime example: during the dotcom bubble, many investors chased companies with very little value and no long-term business plans.  According to Mr. Horn, Polaris didn't chase this market which proved beneficial to the Fund. Currently, the Fund management team is investing extensively in foreign markets, as they view the U.S. market as "richly valued".

louis rukeyser's mutual funds
"Something Special: Disciplined Traveler"
October 2004
Management for the Polaris Global Value Fund has one goal: to beat the return of the Fund's benchmark, the MSCI World Index, with less volatility.  So Bernard R. Horn Jr. and his team invest in a diversified range of countries and industries -- focusing on 50-75 companies with the largest divergence between share price and Polaris' estimate of future cash flow.  The Fund's management team starts by ranking all of the world's countries and industries according to five valuation factors; next, the team screens financial statements; and lastly, a company specific fundamental analysis is completed.  The Fund's management purchases two to three new stocks per month and tries to keep the portfolio holdings weighted about equal.  According to Mr. Horn, a stock is sold when its estimated future return no longer beats the "global cost of equity" (6%, the long-term annualized return of global stocks historically, plus 2% points, plus some additional percent depending on each country's risk.)

forbes magazine
"Fund Focus: Scouring The Globe For Bargains"
September 2, 2004
The Polaris Global Value Fund -- recently named to Forbes Semi-Annual Best Buy list -- will invest in companies worldwide as long as the valuation is compelling.  The portfolio currently has investments in the U.S. and 17 other countries.  Mr. Horn and the investment management team have been able to beat the benchmarks by focusing on net cash from operations minus maintenance capital expenditures.  Each year Mr. Horn looks for 20 new good investment ideas from a list of 500 stocks that have already passed Polaris' preliminary screens for valuation and risk.  In 1998 and 1999, Polaris invested in British homebuilders when they were selling of between five and six times cash flow.  The two stocks, traded on the London exchange, have since doubled, according to Mr. Horn, but they still hold similar multiples.

bottomline personal
"The World's Best Stock Bargains -- From A Top Global Stock Picker"
September 1, 2004
Bernard Horn Jr., manager of the Polaris Global Value Fund, has built a reputation for finding bargain stocks from around the globe.  In June 2001, half of the fund's assets were in U.S. stocks; currently, Polaris' management team has cut U.S. holdings to 40% with additional decreases expected.  According to Mr. Horn, the U.S. stock market currently trades at a price-to-free cash flow ratio of 13, while the rest of the world trades at only 9.  To justify the current U.S. market multiple, earnings of U.S. companies would have to grow 50% faster than companies in other markets.  Mr. Horn believes U.S. growth is likely to outpace that of Europe and Japan but not by 50%, and Asian economies are growing faster than the U.S.  Polaris' management team sees better values in the United Kingdom, Japan, other Asian economies and South Africa.

kiplinger's personal finance
"Value Added: Make A Move Overseas"
August 25, 2004
The Polaris Global Value Fund has been in operation since 1998, and has a strong record.  The management team buys beaten-down companies and trades stocks infrequently.  Some of the portfolio's current holdings are in Japan, where many companies are trying to generate free cash flow rather than just grow in market share.  Bernard Horn, manager of the Polaris Global Value Fund, discusses his bullish outlook on British banking firm Lloyds TSB Group, Dutch financial company ABN AMRO, Italian oil company ENI Spa and United Kingdom homebuilders.

the washington post
"Think Globally"
June 27, 2004
Although the world is more integrated than in the past, there remain considerable differences in the pace of growth in different countries.  Bernard Horn Jr., manager of the Polaris Global Value Fund, says Americans should take advantage of booming Asia.  Over the next few decades, Asian competition may hold down U.S. wages.  One Asian company he recommends: Hong Kong-based ASM Pacific Technology Ltd., the world's largest supplier of assembly and packaging equipment for the semiconductor industry.

international herald tribune
"Take Advantage of Global Boom"
June 26, 2004
Bernard Horn Jr., president and portfolio manager of Polaris Capital Management, has concentrated on foreign markets for about a quarter of a century.  He points to the apparent correlation between foreign and U.S. stocks in the late 1990s and early 2000s as a fluke, resulting from a run-up in the telecom, media and technology sector.  According to Mr. Horn, high-tech stocks worldwide rose so much that they distorted the broader country indexes. As examples, Mr. Horn notes that Nortel became one-third of the Canadian market and Nokia became one-half of the Finnish market.  As a result of the sector rise, the indexes appeared more correlated.  But this shouldn't discourage investors from considering international investing, he says.

u.s. news & world report
"Money & Business: Time for an Accent?"
May 3, 2004
Bernard R. Horn, manager of the Polaris Global Value Fund, has grown optimistic about Japan's domestic economy.  He describes how many export companies already have high valuations, but many low-price opportunities exist in the smaller domestic-oriented companies.  Mr. Horn mentions Maruichi Steel Tube, a maker of steel pipes and tubes, as one of his picks in the region.  Elsewhere around the globe, Mr. Horn points to an upbeat U.K. market, where Polaris invests in homebuilders including Barrett Developments and George Wimpey.

dow jones newswires
"TIP SHEET: As Workers' Wages Slide, Polaris' Fund Soars"
April 14, 2004
Future wages will soon be undercut by lower-cost employees around the world, according to Bernard R. Horn Jr., portfolio manager of the Polaris Global Value Fund.  He believes a coming wage slide in the U.S. is one reason investors should seek returns from international markets. Seeking to offset loss of human wages by increases in wealth, Polaris scours the globe looking for value plays. Polaris recently added positions in electrical utilities in Japan and the U.S.  Another sector where Mr. Horn has seen success is in United Kingdom homebuilders.  Finally, Mr. Horn highlights what he considers well-valued companies in the global paper and metals industries.

the boston globe
"Stocks Plummet in Wake of Bombing in Spain"
March 12, 2004
Bernard R. Horn, Jr., president of Polaris Capital Management, comments on U.S. market reactions and the vulnerability of the U.S. The threat of terrorist attacks continues to cause world markets' volatility. The Spain bombing allowed investors to sell, coming down off the stock valuations reached at the end of 2003, Mr. Horn says. Now that large and small stocks have shed gains, some prices are beginning to look more attractive to bargain-hunting shops like Polaris. A value-oriented firm with $235 million under its management, Polaris has been sitting on a larger-than-usual pile of cash, waiting to take advantage of lower stock prices.

financial advisor
"The Road to Recovery"
February 2004
Bernie Horn, manager of the Polaris Global Value Fund, discusses strong U.S. investment plays as the economy recovers.  He mentions telecom operators, which are generating free cash flow, as very strong competitors in the economic up cycle.  Verizon Communications likely will profit, according to Mr. Horn, as the company has a very strong fixed line and wireless network. Mr. Horn also expresses optimism with U.S. healthcare companies (insurers and HMOs).  He predicts that the growing collection of demutualized Blue Cross/Blue Shield plans could allow for Anthem Inc. to become one of the biggest healthcare providers in the country. Anthem's proposed merger with Wellpoint also leads to this conclusion, according to Mr. Horn.

entrepreneur
"World Class: Diversity Pays Off For This Global Fund"
January 2004
When shopping for new company investments, Polaris combines a number of investing strategies seeking positive fund performance.  Polaris uses a combination of high-tech quantitative analysis, old-fashioned bottom-up stock picking, and a proprietary value calculation to determine stocks for the Fund's portfolio.  Polaris' portfolios typically are well-diversified, holding at least 15 industries in 15 different countries.  Portfolios typically have a low turnover rate, as the manager doesn't mind holding onto stocks evidencing potential, such as British homebuilders.

smartmoney magazine
"Goodbye U.S.A., Hello World"
January 2004
Bernie Horn, fund manager of the Polaris Global Value Fund, spends a significant amount of time reviewing countries, industry sectors and companies that offer the best opportunities worldwide.  Mr. Horn has serious concerns about the U.S., finding that most stocks and the market are overpriced, even considering recent strong economic growth. As a result, Mr. Horn cut back his U.S. stock positions in the past year, trimming back on Amkor Technologies, Sears Roebuck, Ametek and others -- but not before getting great returns on all of these stocks. Mr. Horn's philosophy & process is worth consideration, as he has been one of the most consistently good world-equity managers of the past five years.  If not the U.S., then where does Mr. Horn see good opportunities? He mentions Japan utilities, UK homebuilders, Scandinavian basic-materials and industrial equipment firms and Swedish papermaker Svenska Cellulosa, among others.

On June 1, 1998, a limited partnership managed by the adviser reorganized into the Fund. The predecessor limited partnership maintained an investment objective and investment policies that were, in all material respects, equivalent to those of the Fund. The Fund's performance for the periods before June 1, 1998 is that of the limited partnership and includes the expenses of the limited partnership. If the limited partnership's performance had been readjusted to reflect the first year expenses of the Fund, the Fund's performance for all the periods would have been lower. The limited partnership was not registered under the Investment Company Act of 1940 ("1940 Act") and was not subject to certain investment limitations, diversification requirements, and other restrictions imposed by the 1940 Act and the Internal Revenue Code, which, if applicable, may have adversely affected its performance.

The MSCI World Index ("MSCI") measures the performance of a diverse range of global stock markets in the United States, Canada, Europe, Australia, New Zealand and the Far East. The MSCI is unmanaged and does include the reinvestment of dividends, net of withholding taxes. The S&P 500 Index is a broad-based, unmanaged measurement of changes in stock market conditions based on the average of 500 widely held common stocks. One cannot invest directly in an index. Price to cash flow is the ratio of a stock's latest closing price divided by cash flow per share for the past 12 months.