Our portfolio management team has been featured in TV and other news outlets worldwide, while written works have been published within the investment industry.

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Smart Investor: The Return Equation You Should Be Chasing
Bernard Horn of Polaris Capital discusses the need for global diversification, illustrating how one’s home country might face a lull on weak commodity prices. It may make sense to invest in another country or sector that benefits from these lower prices. Mr. Horn discusses Polaris’ required rate of return equation, which the firm employs to make investment decisions. For more details on this full-length interview, which highlights the importance of returns after inflation, and Mr. Horn’s views on emerging markets, please visit the Australian Financial Review website.
Old Age and the Decline In Financial Literacy
To Our Clients and Friends:
Polaris Capital has its roots in counselling individuals about their college, retirement, and investment plans as well as estate planning needs from the early 1980s. We like to keep clients aware of best practice developments in this area. I recently attended the second Annual Conference of the MIT Center for Finance and Policy in September, 2015. There was a session on the Implications of Behavioral Finance during which a paper was presented on the subject of how old age affects the ability of individuals to analyze, comprehend, and make financial decisions. The paper is attached. We felt it is worthy of your attention because the findings are definitive. Regardless of sex, education, profession, and many other control factors people experience a natural decline in fluid and crystallized intelligence that results in diminishing financial literacy and their ability to manage money effectively. Interestingly, the confidence level of people undergoing this change does not also decline.

The paper notes that in the United States households age 60 and over hold 51% of all financial wealth. As we work with many clients in this demographic we feel it is a good idea that if you are in this situation or you know someone that is, it is very worthwhile to make sure you are vigilant of these findings and include trusted family members, advisors, or others who are aware of the details of the investment, estate plans, and so on. We also recommend that the various advisors including investment, accounting, and legal be aware of each other and work together with family members to make sure all your financial affairs are managed as well as they should be.

PLEASE READ: “Old Age and the Decline in Financial Literacy”apple_opt
Michael S. Finke, Texas Tech University*, John S. Howe, University of Missouri, Sandra J. Huston, Texas Tech University
(* Marks presenting author at the conference.)

Bernard R. Horn, Jr.

Speaker Bernard R. Horn: Deflation Beaters
As a speaker at the annual American Association of Individual Investors conference, Bernie Horn explains why lower commodity prices and disruptive technologies may add to deflationary pressures, focusing value investment firm Polaris’ attention on identifying deflation-beating companies. He discusses the specific traits these companies share that are the marks of efficiency, a necessity for succeeding in a competitive global economy. Mr. Horn reveals how Polaris identifies and adds deflation beaters to the portfolio. For more details on his speech, visit:
China Woes, Fed Questions Drive Down Stocks
Bernie Horn of Polaris Capital believes that Chinese officials will ultimately make smart moves to keep the world’s second-largest economy running at a moderate pace. He doesn’t believe the economy will come to a grinding halt, with China still consuming vast amounts of raw materials. Mr. Horn went on to discuss lower oil prices evident in the U.S. economy. He noted that the reduction in commodity prices will eventually filter through to the prices consumers pay for retail goods. That may prove a boon to consumers who have more available free cash.
Dialing For Dollars: Investors See Hope In Telecom
The telecommunications sector, which lagged most others over the past few months, is starting to attract new looks per a recent article in IBD. Bernie Horn of Polaris Capital Management, LLC expressed more interest in certain telecom operators – especially those that provide wireless, landline and Ethernet internet services – than in hardware and software vendors. Mr. Horn discussed various U.S. communications companies, as well as offerings in Japan and Germany.
The Greek Debt Crisis Turned These European Stocks Into Even Better Buys
The article discusses how global managers – who can invest in stocks anywhere in the world – are focusing on companies that can withstand Europe’s geopolitical dysfunction. The reporter pointed to Polaris Capital Management’s Bernie Horn, who takes advantage of swoons generated by sour headlines about Greece and Ukraine to buy more stock in undervalued European companies, including some on France, Germany and Norway.
Polaris’ Team Discusses Funds
In an article about a Polaris sub-advised mutual fund, Kiplinger’s writer Ryan Ermey discusses the investment process and performance. The Polaris team scours the globe in search of cheap stocks, screening for firms that generate robust cash flow. They narrow the field of stocks to those that they think will return at least two percentage points per year above the respective indices. Only about 10% of stocks that pass the screens make the final cut. Polaris’ Bernie Horn prefers firms that consistently cut costs and provide goods and services that save customers money. These are marks of efficiency, a trait necessary for succeeding in a competitive global economy.
Interest Rate Hike: Stocks Poised to Benefit
Bernie Horn of Polaris Capital Management discussed current interest rates in the context of banking stocks. In particular, Mr. Horn believes that smaller banks and life insurers have more room to run because of valuations that remain low compared with the broad S&P 500. Mr. Horn also noted another potential advantage for smaller banks: a lighter regulatory burden. He goes on to reference a bank that appears likely to benefit from more consumer spending due to lower energy costs and a strengthening economy.
Mutual Fund Honor Roll
For more information, please visit
Professor Robert C. Merton: The Crisis In Retirement Planning
Introduction from Polaris Capital’s Bernie Horn:
Professor Robert C. Merton describes, at a very general level, the method of retirement planning I have ascribed to since the early 1980s. Prior to viewing the video and in order to introduce the subject, there are a few retirement planning basics of which to be aware.

I believe that a retirement plan must be based on some basic data like how much, in today’s dollars, you need for retirement income, how much current savings you have and how much you can save each year for retirement. If properly analyzed, the combination of these facts will determine the allocation of your retirement investment portfolio among low and high risk investments.

The investment time horizon is that of life expectancy. Life expectancy depends on your age, health, etc. Based on actuary tables, females and males that reach age 65 live to age 85.5 and 82.9 respectively. However, people in good health can live well into their 90s. So for a 50- or 60-year-old individual, the investment time horizon can be 30 to 40 years. This period is often longer than the number of years people save for retirement. For a retirement nest egg to produce enough income for 30 to 40 years, the allocation often must be weighted more toward equities than bonds. It is important to note once this asset allocation has been established, it should not be changed as one ages. This is why we think target date funds or investment strategies that recommend shifting assets to bonds or low risk investments “at retirement” is the wrong recommendation. If a person unexpectedly saves much more than initially predicted, inherits money, or sells assets like real estate that substantially increase the size of the retirement portfolio, it is possible the larger investment portfolio will produce more retirement income than needed. Then and only then should the risk profile be reduced.

Many of Polaris’ clients receive sales calls from advisors offering to perform analyses of their portfolios; such analyses typically recommend dramatic changes in asset allocation. Such recommendations often incorrectly analyze the retirement income projections, expected returns, etc. in order to arrive at a recommendation to change something about a portfolio. We think this is wrong advice. The primary reason such analyses go wrong is that the projected returns from a portfolio are not in real, inflation adjusted terms.

Real returns must be used to avoid the inaccuracies of trying to predict inflation over many decades. This is why we also use a person’s current income to judge how much they need to live on in retirement. Accurate retirement plans should use today’s real income and expected future portfolio returns in real terms. The wrong analysis uses higher nominal returns (excluding inflation) to project portfolio values. These nominal returns overinflate future portfolio values that then overestimate the amount of income, in today’s terms, that will be available for retirement. This is quite dangerous. For instance, we see many recommendations that assume bond returns of 3-5% or more, which is what some bonds may yield today. But when we observe what investments have earned after inflation or in real terms over the last 75 to 100 years we see the following:

Treasury Bills:                            0.5%
10 Year Government Bonds:  0.75% to 1.0%
30 Year Government Bonds:  2.0%
Equities:                                       7.0%

Mistakes in personal retirement planning are similar to those experienced in corporate/government retirement planning and accounting. What Professor Merton discusses in this video is not so much the basics as described above but how the financial industry, companies and governments must change the way retirement information and retirement assets are presented and communicated to people.

Professor Merton was awarded the Nobel Prize in Economics in 1997 for his work with my other Sloan Professor Fischer Black and Myron Scholes of University of Chicago on option pricing theory. Professor Black passed away prior to the Nobel Award, which was not given posthumously. This work changed the world of finance as we know it today. Professor Merton remains an important influence on the investing principals used at Polaris. If Professor Merton’s legacy was not already enough, he now wants to spur a revolution in the field of retirement planning. We agree with his many comments about the retirement crisis in the world today. We also agree that the shift from defined benefit plans to defined contribution plans has been a gross injustice to people saving for retirement through work-funded pension plans. The talk is one of the best Professor Merton has given on the topic and should be viewed by anyone who gives or receives advice on retirement planning. Enjoy!

Please note: Polaris does not currently provide individualized retirement planning analyses for new clients.

Far And Wide: “Investor behavior almost always leads to market inefficiency somewhere in the world.”
Bernard Horn, Sumanta Biswas and Bin Xiao of Polaris Capital describe how they cull their 40,000-company universe, why they believe an all-cap strategy is best suited to today’s world, why their global team consists of generalists based in the same office, and why they see mispriced value in Linde, WorleyParsons, Capital One, Rexlot Holdings and Thai Oil. To read the complete article, visit
Assistant Portfolio Manager Bin Xiao On MoneyLife Radio
In an interview with Chuck Jaffe of MoneyLife Market Call, Assistant Portfolio Manager Bin Xiao discussed Polaris’ methodology and the basic buy/sell discipline. As a value manager, Polaris seeks out companies generating free cash flow, but remain undervalued by the market.

For more details about the audio transcript or to obtain details about the Polaris Global Value Fund, please visit:

Frontiers of Finance
Courtesy of MIT Sloan School of Management
Konecranes Shares Have Been Picked Up
Recent statements from Polaris were referenced in an article about Konecranes, a Finnish manufacturer of industrial cranes. The online publication specifically cited Polaris on the following: “(Konecranes) highlighted growing order books for both equipment and services businesses. Konecranes Oyj is confident in its 2015 guidance, expecting better revenues and profitability than in prior years.” Seeking Alpha also referenced Polaris’ outlook on rising global shipping in the wake of lower commodity prices.
Polaris Global Value Fund Wins Lipper Awards – Best in Category for 3- and 5-Year Periods
For more information about this award, please read the complete press release at:
An Exclusive Interview With Bernard Horn
(also appeared on, and In a recent interview, Mr. Horn discussed the beginning of his career, founded on education and experience at real companies learning about cash flow creation. He was inspired by one of his professors to launch his first global value portfolio in 1980. Mr. Horn went on to discuss the global portfolio’s current investment weightings as well as buys and sells. Future additions to the portfolio might include “deflation beaters”, which are defined as companies that offer a fixed-price product that saves a consumer money. Mr. Horn ended the conversation with some salient thoughts regarding investment decision making.

For the complete article, visit GURU FOCUS at

Speaker Line-Up For Mutual Fund Observer
Why schedule an investor conference call with Mr. Horn? Three things led the editor from MFO to the interview. According to MFO, the Polaris Global Value “is really good and really small”. Second, the Polaris sub-advised small cap international portfolio continues to get better, and it trawls the waters where active management has the greatest success. Third, the MFO team had a conversation with Mr. Horn in November, impressed by his reflections of both failures and successes.


Observer Fund Profiles: PGVFX
The Mutual Fund Observer recently penned an article about the Polaris Global Value Fund, noting that the Fund sports one of the longer records among global stock funds, low expenses, excellent tax efficiency, dogged independence and positive long term returns (since inception as of 7/31/89). Please visit the Polaris Global Value Fund site,, for a more comprehensive summary.
Bernie Horn On MoneyLife Radio
In an interview with Chuck Jaffe of MoneyLife Market Call, Bernie Horn discussed the Polaris’ definition of value, current research and portfolio stocks. There are more than 800 stocks attractively priced in Polaris’ research screens, with many opportunities in both developed and emerging markets. In the U.S., good values can be found among financials, technology and consumer discretionary companies. Mr. Horn went on to discuss a number of current portfolio holdings including Norwegian fertilizer manufacturer Yara and U.S.-based General Dynamics. At the end of the interview, Mr. Horn participated in the “Hold It or Fold It” stock analysis. To hear the complete audio transcript or to obtain details about the Polaris Global Value Fund, please visit:
Assessing Investors’ Needs A Decade From Now Drives Manager Selection
In a brief interview, Mr. Horn recalls how he set out as a global value investor in 1980, at a time when doing such was unusual for a U.S. money manager. Investing then was very different from today. For one thing, information moved much more slowly then it does now (a month to receive an annual report of a European listed company), and it was more difficult to make investments. Mr. Horn faced this global value investment challenge, believing it would be the right approach. Mr. Horn notes that 35 years later, the big global consultants are now really starting to adopt global equity mandates as “core” for investors.
FUND SPY: Keep An Open Mind On Open-Minded Funds
There are many funds, both active and passive, that don’t limit themselves to owning just one type of asset, or don’t fit neatly and consistently into one portion of the style box, and yet are worthy of consideration. These include the most wide-ranging, go-anywhere funds, like Polaris Global Value. To read a more comprehensive Morningstar summary about the Polaris Global Value Fund, please visit:
European Trader: At Yara, Expect A Bumper Crop Of Gains
During an interview, Bernie Horn discussed misconceptions about Yara International, the world’s leading producer of ammonia, nitrates, NPK and specialty fertilizers. Mr. Horn noted that investors misprice the stock because they see the company as a commodity urea producer.
CNBC Power Lunch
Bernie Horn was one of two featured commentators in the “All-Star Investors” segment of CNBC Power Lunch. In the TV interview, Mr. Horn discussed the Polaris investment philosophy, referencing the recent portfolio weightings between domestic and international stocks. He discussed U.S. portfolio holdings and various acquisitions completed year to date. To watch part of the segment, please visit the CNBC website at:
Fund Industry Stars At Morningstar Confab
During an interview, Bernie Horn discussed his preferred market cap and global locations for investing. For more information, please visit:
Bernie Horn On MoneyLife Radio
During an interview with Chuck Jaffe of MoneyLife Market Call, PGVFX Fund Manager Bernie Horn discussed basic concepts of value and the disciplined approach to stock picking. To hear the complete audio transcript or to obtained details about the Polaris Global Value Fund, please visit:
Polaris Global Value Fund: An Intriguing Option for Patient Investors
For more information about the Morningstar analyst report on the Polaris Global Value Fund, please visit:
International Guru Bernard Horn Reports His Top Five In The First Quarter
Bernie Horn, manager of the Polaris Global Value Fund, reported first quarter holdings for the fund. For more information or to read the article synopsis, visit
Zacks Ranked Global Mutual Funds
For more information about this article and the Polaris Global Value Fund, please visit:
9 Mutual Fund Winners With Long-Term Performance
For more information about this article and the Polaris Global Value Fund, please visit:
Polaris Global Value Fund Wins Lipper Awards – Best in Category for 3- and 5-Year Periods
For more information about this award, please read the complete press release at:
Polaris Capital Hires Jason Crawshaw
FEATURED IN: The Boston Globe, Boston Business Journal, Boston Herald, Capital IQ Power Moves, The Daily Deal (, SNL Financial
Polaris Capital Management, LLC, a leading global value investment management firm, today announced that Jason Crawshaw, 44, has joined the firm as a research analyst. In this role, Mr. Crawshaw will conduct fundamental analysis on global and international equities, capitalizing on his experience and tenure in both developed and emerging markets. He brings 19 years of investment industry experience to the firm.



MoneyLife Radio Show – Market Call With Bernie Horn
Available as a PODCAST on

Bernie Horn discusses Polaris’ value philosophy in examining the more than 35,000 stocks in global markets. When the deep value discipline is applied, there is approximately 1000 stocks on the Polaris screens, at which time the research team conducts its bottom-up analysis. Geographically, the developed world economies (namely the U.S.) performed strongly this year, while emerging markets faltered. As a result, the Polaris team identified a wealth of global value investment opportunities in Asia. Good values were evident in almost every sector ranging from financials to real estate construction, as well as some basic materials and consumer staples.

Emerging Markets Become More Diverse
The disparity among emerging markets is a boon for active global value management, according to Bernie Horn of Polaris Capital. Since we are going into a more selective world, passive strategies following a broad index may suffer, he said.
2013 AAII Investor Conference
Bernard R. Horn, president and portfolio manager of Polaris Capital Management LLC, discussed interesting insights he has gained from his research in the U.S. and around the world. He referenced global markets in the context of three traditional investment theories: market efficiency, correlations and probability distributions of stock returns.

PRESENTATION SNAPSHOTSGlobal Value Investment Presentation

5th Annual Fund Forum USA
Bernard Horn Jr. of Polaris Capital Management and other industry veterans discussed global value investment strategies to enable U.S. investors to take advantage of growth in emerging markets.
The Wall Street Transcript – Investing Globally Across Industries and Market Caps
Mr. Horn’s interview with The Wall Street Transcript has been selected as one of the Top Ten Portfolio Manager Interviews of 2013.

Bernard Horn Jr. of Polaris Capital Management discusses some of the advantages of global value investment and how his outlook has evolved over recent decades. The Polaris Global Value Fund has holdings in at least 15 different countries and industry groups across market caps, and Mr. Horn explains where he sees additional opportunities. He also walks through the stock selection process and names key holdings.
READ THE ARTICLEGlobal Value Investment Article

MoneyLife Radio Show – Market Call With Bernie Horn
Available as a PODCAST on

Bernie Horn discussed Polaris’ definition of value during a radio interview with Chuck Jaffe of MoneyLife. Polaris believes that companies exist to generate cash flow for their shareholders; as a result, Polaris looks at company cash flows to determine which are trading at the highest expected return. In making Polaris Global Value Fund investment decisions, the investment and analyst teams screen more than 35,000 companies, whittled down to about 1500 companies that might meet the Polaris’ objectives. From there, Polaris conducts fundamental research to determine the approximate 75 companies in the Fund. Currently, Polaris is finding the most value opportunities in the U.S., Japan and other Asian countries. Although the U.S. economy is on an upswing, Polaris sees lots of pockets where business is not yet robust – and thus presents good values. On a sector basis, consumer discretionary stocks have been prominent in the screens and subsequent research.

Morningstar Fund Spy – An Intriguing International Fund Shines Outside the Spotlight
According to Morningstar, long-term investors who are willing to hold on or even add to their stakes during downturns might be interested in the Polaris Global Value Fund. Bernie Horn, who favors underpriced companies with solid market positions and strong long-term potential, builds portfolios that differ considerably from all major indexes, and he moves at a very measured pace. Indeed, the Fund’s country weightings, sector exposure, and individual holdings all stand out. Meanwhile, Horn’s investment approach will appeal to those who want their active managers to show true conviction. To read the full article, please go to Fund Spy at to read the August 6, 2013 article: An Intriguing International Fund Shines Outside the Spotlight.
Loan Growth Will Be Hard For Rockland Trust, Despite Demand
Polaris Capital’s Bernie Horn discussed the difficulties faced by some community banks, as they seek to attract new loans. Many smaller banks and some credit unions are proving to be strong competitors with an unfair advantage — no public shareholders, less stringent regulations and credit unions pay no taxes.
MoneyLife Radio Show – Market Call With Bernie Horn
Available as a PODCAST on

Polaris Capital’s Bernie Horn conducted a radio interview with MoneyLife’s Chuck Jaffe ( Mr. Horn discusses his nearly 30-year history of global value investment and the competitive and diversification benefits of this approach. He describes the Polaris’ methodology and analysis of companies as “streams of cash flow”. The Polaris investment team looks globally for values, noting a very mixed world market. Some companies — in European countries affected by political turmoil — have proven good values, including banks. Many companies in China and Japan have looked appealing on the surface, but have been rejected on fundamental grounds. Mr. Horn chatted with Chuck about various companies in the Polaris’ portfolios and then participated in the MoneyLife “Hold It or Fold It” segment, discussing the merits of individual stocks.


IBC Chips At Exit Strategy As Other Banks Repay TARP
IBC could sell new common stock to raise cash to take out the government as an owner. But that would dilute existing shareholders’ ownership, as it would if Treasury exercised its right to buy additional common stock. The bank’s unlikely to take that step. It doesn’t need to. “They’re lucky enough to be a profitable bank, so that they’re able to generate the capital to buy back the preferred stock,” said Bernard Horn Jr., president and portfolio manager of Polaris Capital Management, a Boston-based global and international investing firm. “They can earn their way out of it,” Horn added.
Fund Managers Realize Big Gains From Small Bank Stocks
Portfolio manager Bernard Horn can go anywhere in the world to find a stock for his global value fund. But some of Horn’s best stock picks have been small banks gathering deposits and making loans right in his own back yard. Shares of Independent Bank and other small-cap bank stocks soared as they increased their assets and set aside less money for problem loans. They’ve also capitalized on the woes of their big bank brethren, picking up some of their dissatisfied customers and key lending teams. “Small losses (of business) for big banks can be big gains for smaller banks,” Horn said. “Smaller banks also tell me they get loan officers leaving bigger banks, bringing with them healthy customer relationships. That’s real earnings growth at very little cost.”
Biography with Bernie Horn
Disclosure: Morningstar’s 2006 International Stock Manager of the Year Criteria: Fund managers were ranked by performance, long-term records, sound strategy and manager commitment toward the funds’ shareholders.
Upside: BRICs Are Sinking Like a Stone; It Might Be Time to Buy
A better approach than buying into a BRIC fund is to find one that shops in many emerging markets for companies that look cheap based on measures like cash flow, dividends and yields on local government bonds, says Bernard Horn, founder of Polaris Capital Management in Boston, which oversees $2 billion. Such funds can scoop up BRIC bargains as they arise, without being confined there.
Investment Experts Bullish on Natural Resources Funds, High-Yield Bonds, Real Estate
“Invest in companies that run lotteries or provide technology for them. Governments are going to have to rely more on lotteries and other new ways of getting revenue. We own Lottomatica, the world’s largest operator of lotteries.” — Bernie Horn, president and portfolio manager of Polaris Capital Management
Consuelo Mack WealthTrack With Bernie Horn
Video Disclosure: Morningstar’s 2006 International Stock Manager of the Year Criteria: Fund managers were ranked by performance, long-term records, sound strategy and manager commitment toward the funds’ shareholders
Pear Tree Polaris Foreign Value Fund Awarded By Lipper
Polaris Capital Management, LLC, a leading global and international investing firm headquartered in Boston, announced today that the Pear Tree Polaris Foreign Value Fund (QFVIX), the fund subadvised by Polaris, won the 2012 Lipper Fund Award for best international multi-cap value fund over the 3-year and 10-year periods. This is the third year in a row that the Fund has been awarded the 10-year distinction. The awards are for the 3-year and 10-year periods ended December 31, 2011, with 36 funds and 16 funds respectively in the international multi-cap value funds universe eligible for the distinction. The Fund posted the strongest trend of consistent risk-adjusted returns for the 3-year (+17.19%) and 10-year (+8.23%) time periods ending December 31, 2011.
Bloomberg Portfolio Manager Mash-Up Presentation
Bernard R. Horn Jr., president and portfolio manager with Polaris Capital Management, LLC, a leading Boston-based global and international investing management firm, was be a featured speaker at the inaugural Bloomberg Portfolio Manager Mash-Up Conference. Mr. Horn was be joined by a number of other leading investors at February 16, 2012 conference, hosted at the Union Square Ballroom in New York. Mr. Horn discuss Emerging Markets: Old and New, with emphasis on the deepening euro zone crisis, general malaise in developed markets, frontier markets to succeed the BRIC and emerging market debt.


Bernie Horn Spoke At 7th Annual New York Value Investing Congress
Bernard R. Horn Jr., president and portfolio manager with Polaris Capital Management, LLC, a leading Boston-based global and international investing firm, was a featured speaker at the 7th Annual New York Value Investing Congress. Polaris believes markets have returned to normal patterns of volatility and that investor pessimism has resulted in fundamentally strong companies trading at extraordinarily compelling stock prices — ripe for a value manager like Polaris. At the conference, Mr. Horn discussed global market inefficiencies, Polaris investment process and a wealth of currently undervalued stocks picks.
Finding Value Spanning The Globe
Bernard Horn of Polaris Capital Management spoke at the Value Investing Congress, where he referenced global and international investing opportunities around the world, including Europe. He uses a discounted cash flow method as his primary methodology for making investment decision. Horn, who manages $4 billion in assets, mentioned that equities historically have had a 6% real rate of return after inflation over the past 50 to 75 years. Horn described his style of investing as fundamental analysis, specifically Graham and Dodd style analysis. Horn looks for companies with sustainable free cash flow. His objective is to beat the benchmark but with lower than benchmark risk. The beta for Horn’s portfolio is lower than 1. Horn believes the volatility we have seen recently is very normal, and the current situation is very normal.
Late-Day Rally Pushes Stocks Into The Black
“Many banks, if they truly write down their Greek debt to where it probably should be, may have a capital problem,” said Bernard Horn, president of Polaris Capital Management in Boston.
Chinese Protest $5 Billion Losses Tied To U.S Reverse Mergers
Evidence of Xilan’s dispute with domestic shareholders and a high turnover of chief financial officers pushed Polaris Capital Management LLC, a $4.2 billion investment manager, to sell all of its shares in China Natural Gas this year, according to Bin Xiao, an analyst at Boston-based Polaris. “Our big concern was on the corporate-governance issues,” said Xiao, who visited the company in April 2010.
Brazil Set To Battle China Over Copper Bid In Africa
Copper and cobalt are in strong demand in China, noted Bernard Horn Jr., president of Boston-based Polaris Capital Management LLC, which manages over $4 billion and more than 25 million Metorex shares. “So it certainly doesn’t surprise me that some Chinese buyers are potentially interested.”
Stocks Fall On Negative Outlook For U.S. Debt
Bernard R. Horn Jr., president of Polaris Capital Management Inc., a Boston investment firm, said the current low cost of debt is part of the problem fueling government spending. Much like home buyers stretching when mortgage rates were at rock bottom, the government has spent freely because borrowing has been inexpensive, Mr. Horn said. The problem I have with free money or free capital is that it leads to horrible decisions by everybody in the economy, he noted.


International Diversification: Why It Still Makes Sense
A few quick article highlights: 1) The past few years have masked performance data: U.S. and foreign stocks are not highly correlated over the long term. 2) U.S. and foreign stocks become more correlated during times of crisis and less correlated afterward. 3)Including foreign stocks in your portfolio can increase returns and decrease risk.
READ THE ARTICLEGlobal Value Investment Byline
Around The Horn – Profile on Polaris Capital Management
Bernard Horn, Sumanta Biswas and Bin Xiao of Polaris Capital describe the “purist” aspects of their value approach, what they consider some of the most undervalued sectors in the world, why less volatile stocks can often be more mispriced,and why they see upside in certain stocks.

READ THE ARTICLEGlobal Value Investment Insight

Fundamental Discount
Companies generating free cash flows are likely to sustain their growth rates in the long term. Bernard R. Horn, Jr., president of Polaris Capital Management, looks for such names worldwide, using a rigorous global and international investing selection process that identifies companies trading at a discount to their intrinsic values.
Why Investors Should Care About The Greek Crisis
Bernie Horn, president of Polaris Capital Management, likes commodities because he expects growing demand from countries like China and India will be able to sustain prices for essentials like oil even if Europe’s economy tanks. Emerging markets are pulling the developed world along when it comes to commodities, Horn says.
STOCKS & MARKETS: Why Bank Stocks Could Vault Even Higher
Not everyone is wary of smaller bank stocks. Polaris Capital Management President Bernard Horn thinks smaller banks’ share prices were pulled down by the drone of negative speculation about regulatory reform throughout 2009 more than by any concerns about specific company risks. Horn cites a huge performance gap between the stocks of large banks that recovered quite a lot in 2009 and small and midsize banks that in some cases fell 30% to 40%. That, he says, has created an opportunity. When you normalize earnings over time, small or midsize banks appear to have much more upside to their stock prices than most of the large banks, Horn states. He thinks midsize banks may be among the of most undervalued investments in the world.
An Overseas Fund Comes On Strong
Polaris Capital’s fund management uses computers to thin the universe of 24,000 foreign stocks to about 1000 candidates that appear cheap based on estimates of how much cash the businesses generate. At that point, manager Bernard Horn and his four analysts turn to good old-fashioned company analysis, traveling the globe to find about 50 stocks (for the international portfolio) that they think have the best prospects over the next three to five years. Horn does not hedge the currency exposure or restrict how many stocks the portfolio can own in a particular country or industry…. A big bet on British homebuilders hurt returns during the bear market, but has paid off big in 2009.


Investors Put Executives And Boards Under The Spotlight
In their due diligence efforts, investment companies interested in buying into financial institutions have been scrutinizing banks both in terms of their balance sheets as well as management’s view on credit. Because these are highly leveraged companies, small mistakes can have a disastrous effect on shareholder value, so we tend to spend a lot of time getting to know the management team and their credit culture, said Bernie Horn, president and portfolio manager of Polaris Capital Management based in the US. Polaris manages a portfolio of more than $2.1 billion and has stakes in Asian banks such as State Bank of India, the country’s largest. The global and international investing firm is increasingly looking to invest in other markets such as Japan, Korea and Thailand, currently, having invested about 20% of its total funds in Asia. Polaris prefers financial institutions with more conservative culture and slower growth than ones with much faster growth compared to its peers or sector, even if the bank looks to be of great value.
Taylor Better With Debt Than Share Sale, Polaris Says
Taylor Wimpey, the U.K. homebuilder negotiating a financial rescue, can generate enough cash to meet repayments without a rights offering if it can maintain and increase sales, according to global and international investing firm Polaris Capital Management. Polaris supports a share sale only when funds are needed or if Taylor Wimpey issued warrants or preferred stock prices at a future date when market have improved, commented Bernard Horn.
Taylor Wimpey Lenders Support Rescue, Polaris Says
Taylor Wimpey investor Polaris Capital Management says banks are very supporting of a financial rescue package, a sign that the risk of a debt-for-equity swap is diminishing. Polaris favors a refinancing deal and opposes boosting Taylor Wimpey’s cash through a share sale or direct investment from the Middle East.


Banks Surge On $250B Investment Plan
In an article referencing the U.S. government’s capital injection plan for the financial sector: Banks that have done an effective job of riding out the current market turmoil so far may not see the value in selling stakes to the government, noted Bernard Horn Jr., president and portfolio manager at the Boston-based Polaris Capital Management. The majority of medium sized institutions are still reasonably healthy, said Horn, whose firm manages about $3 billion.
With Eyes On Washington, Investors Reclaim Ground
News of the Irish government taking action to shore up its financial institutions was received positively in Europe and may have had a positive effect in the U.S., according to Bernie Horn, president of Polaris Capital Management in Boston. Ireland said it would guarantee the deposits and debts of all its major banks, after an index of Irish stocks dropped 13% on Monday, Sept. 29th. Mr. Horn stated that such action settled Europe down a fair amount, and it provided a very well thought out, good example of how governments can actually play a role in fixing a big problem, which is a crisis in confidence.
Polaris Capital’s Horn Hangs On In Rough Market
As he attempts to ride out the storm in the turbulent stock market, Polaris Capital Management’s Bernard Horn, who has much of his own personal fortune tied up in the firm’s portfolios, says he remains confident that the stock picks may eventually win out. Many years of admirable returns in Polaris’ global and international investing portfolios are backed by the tried and true tenets of value investing: invest in companies producing stable, diversified and undervalued streams of unencumbered cash. But with the collapse of the U.S. housing market and global credit crunch, traditional value picks have been hampered. Mr. Horn talks about his contrarian picks in U.S. and overseas financials as well as British homebuilders. He plans to hold on to his picks, which he calls the product of Yankee thrift, until other investors begin to look past their “emotional sense” and start looking at the companies themselves.
On The Lookout For Survivors
While many investors search for the next skyrocketing technology or hot-selling product, the best opportunities may lie in industries beaten down by the weakening economy, high oil prices and the credit crunch. Companies that outperform in tough times tend to be great investments when conditions improve, according to Bernie Horn of Polaris Capital Management.
Six Bank Stocks Worth Buying
Bernie Horn of Polaris Capital discusses Sovereign Bancorp, its branch network and the bank’s efforts to raise capital. Mr. Horn appreciates the hands-on approach of Sovereign’s management team in tackling the credit crisis.
Talking Global Investing With Bernie Horn
In an e-mail interview, Mr. Bernie Horn shares his views about global and international investing, new investment opportunities, and concerns regarding China. He discussed the firm’s unconstrained pure value equity selection process that is characterized as an active, all-capitalization investment approach. Polaris is considered a deep value manager; management believes that the best way to generate above average risk-adjusted returns is to wait for market fluctuations to produce undervalued companies. Although Polaris is coined as a “value investor,” the firm’s real strategy is to invest in companies that management believes are priced to give us a proper rate of return. From Polaris’ perspective, this is not just value investing: it is correct investing.


Investor’s Guide 2008 – Harvesting The Top Foreign Stocks
Smart value hounds continue to sift through the battered financial sector, looking for stocks that have been unfairly punished for the sins of others. The Bank of Ireland is one such name, suggests Bernard Horn, manager at Polaris Capital Management. The stock has taken a hit as Ireland suffers through its own housing slump, but Mr. Horn argues that the long-term picture for the Bank of Ireland remains solid, largely because favorable corporate tax rates could result in a continuing flow of businesses and immigrants into the country. The bank also has little exposure to structured investment vehicles or collateralized debt obligations.
Stocks Drop On Profit, Oil Concerns
Major U.S. stock indexes ended lower on continued worries about fourth-quarter corporate profits and the inflation implications of surging oil prices. Downbeat news on the housing sector also weighed on equities. This is the first quarter where the negative fallout is being seen from the upward adjustment of interest rates on the riskier loans the more aggressive banks began to make once credit spreads flattened, said Bernard Horn, Jr., a portfolio manager at Polaris Capital Management in Boston. The more aggressive banks may not have sufficient reserves to back the loans they’ve made, while the banks backed by deposits, on which the interest rates have come down since the Federal Reserve interest rate cut, should have a fair amount of [higher-quality] capital that should allow them to easily weather the storm, commented Mr. Horn.
Fishing for Values In Foreign Markets
A homebuilder based in Helsinki, Finland, YIT has discovered a profitable niche: building Western-style housing in Russia. Thousands of middle-class Russians are moving out of rundown Soviet-era apartments into modern, amenity-laden homes, and YIT is building those units as fast as it can. According to Bernard Horn of Polaris Capital Management: People are lifting themselves up in Russia and YIT is benefiting. You can’t buy into that trend with a U.S. company.
Screening The World’s Bargain Bins
Polaris Capital Management illustrates one of the advantages of a quantitative approach to stock picking: Computers are immune to pressure from fads and indexes. Not to mention they can crank through thousands of stocks like it’s nobody’s business — sometimes with marvelous results. Horn’s computers focus foremost on free cash flow, basically the amount of cash profits left after the capital expenditures needed to maintain a business. His quantitative models rank 24,000 companies around the globe on the basis of free-cash generation. The screens churn out about 500 names that merit further attention. Horn and his four analysts develop financial models of each company and in many cases meet with executives of potential investments, as well as officials from rival corporations. Horn brings a cautious eye to the global and international investing table — he likes companies that appear to be good buys regardless of future growth.
Global Investing: One-Stop Shopping
The case for buying a world stock fund can be pretty simple: The globe is your oyster. Managers of world-stock funds can pool the best ideas of analysts across their firms, regardless of where the companies those analysts follow are based. To get a look at the world funds category, The Wall Street Journal turned to three managers who Morningstar says represent different and smart ways of approaching a world fund – one of whom is Bernard Horn Jr. at Polaris Capital Management.

At Polaris Capital Management, stock selection begins with data crunching. Using proprietary software, computers continually screen thousands of stocks from around the world, zeroing in on free cash flow, a measure of a company’s available cash. Currency risk and country-specific data like economic growth and demographics are incorporated. Of the several hundred stocks that emerge from that process as candidates for investment, dozens end up in the portfolio at any one time based on further research. Historically, stock selections typically span about 15 countries and 15 industries and are held for three to five years.

Foreign Bazaars – Foreign Value Gets Exciting Returns From Dull Companies
Portfolio Manager Bernard Horn screens for companies with low prices and strong cash flows. Many of the holdings grow at modest rates, but they are in unglamorous industries that rarely skyrocket into the headlines.
Bernard Horn Jr. Is Marketwatch’s Mutual Fund Manager of the Year
Mr. Horn has shown how wordly investors can profit in both developed and emerging stock markets without shouldering excessive risk. To achieve strong risk-adjusted returns, Polaris ranks countries and industries from the most undervalued to the least attractive.

Rigorous tire-kicking (methodical stock picking) partially led to Mr. Horn’s recognition in Marketwatch. He passed a tough test in which about 2300 U.S., global and international investing stock-fund managers were assessed on the performance, expenses and tax efficiency of portfolios. Ironically, the Polaris portfolio has excelled by investing in stocks that haven’t met others’ expectations.

The views in article excerpts/hyperlinks were those of portfolio management as of each article’s publication date and may be subject to change. Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Please refer to the INTERNATIONAL COMPOSITE or GLOBAL COMPOSITE recent quarter end performance and related information. Excerpts/hyperlinks reference individual securities that may or may not

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