INVESTMENT PHILOSOPHY & STRATEGY

Our global investment philosophy is simple: When market fluctuations (volatility) produce mispriced stocks, value managers like us pinpoint great buying opportunities.

Our global investment philosophy is based on two basic beliefs: (i) country and industry factors are important determinants of security prices, and (ii) global market fluctuations produce mispriced stocks. Global markets have proven generally efficient over time, but investor behavior creates volatility that leads to inefficiency somewhere in the world. During these periods, the stock price may not reflect a company’s long-term fundamental valuation and/or future cash flows; this is the opportune time to buy such companies. Learn more about Polaris’ investment criteria leading to buys and sells.

Polaris’ “statistically patient” global investment philosophy strongly emphasizes valuation over growth, and the team capitalizes on normal market fluctuations to opportunistically buy undervalued companies. Select companies that enter the portfolios typically generate strong sustainable free cash flows and have conservative balance sheets. These companies are capable of performing well in difficult economic environments, while potentially performing admirably in growth cycles too.

Our global investment philosophy was developed more than 40 years ago under the guidance of Bernard Horn and has been consistently applied by the same manager since inception. Today, our entire investment management team is dedicated to this philosophy, producing historically strong long-term risk-adjusted returns for investors.

 

Our global investment strategy allows for investment in any country, industry or market cap, with one rule: find the most undervalued companies with the strongest fundamentals.

• • ALL CAPITALIZATION GLOBAL INVESTMENT STRATEGY

    We employ an unconstrained pure value equity selection process that is characterized as an active, all-capitalization (multi-cap) global investment strategy. Portfolio construction attempts to balance the capitalization ranges subject to the firm’s value discipline.

  • GLOBAL INVESTMENT DIVERSIFICATION

    Global portfolios hold what we consider to be the most undervalued companies in the world, regardless of region or sector. We also have the flexibility to invest in emerging markets, providing an additional avenue for exposure to some of the world’s fastest growing economies. We conduct bottom-up stock selection, which results in portfolio weightings across industry, country and market capitalization that are a function of the companies we identified as the most undervalued in the world. We have focused on global diversification, ensuring that our portfolios have investments in at least 15 different countries and industry groups.

  • VALUE ORIENTATION

    The investment strategy strongly emphasizes valuation over growth. Committed to our global diversification mandate, the companies that typically enter the portfolios come from both developed and emerging markets, with two common elements: the companies generate strong sustainable free cash flows and have conservative balance sheets. These companies may be capable of growing stronger in difficult economic environments, while performing admirably in growth cycles too.

  • INVESTMENT VALUATION MODEL

    Each company’s valuation model is based on current cash flow from operations and a highly conservative 0% to 2% terminal real growth rate. However, many companies in the portfolios do grow faster than the assumed real growth rate, in which cases the market’s valuation of the firm can increase substantially as the market’s assessment of growth moves from pessimistic to optimistic. In short, the investment strategy is designed to invest in growth but not to pay for growth.

  • CONSERVATIVE ASSUMPTIONS

    The global investment strategy is highly likely to continue to be effective because the growth rates of cash flow needed to justify our investment is always far more conservative than those forecasted by the Street. The global equity and international equity portfolios are deliberately positioned for positive surprises.