Polaris: Seeking hidden gems in global equities

Polaris Capital LLC, the company that Bernie Horn founded in 1995, seeks stable, reliable cash-flows as one indicator for investment. The diverse team, representing many continents across the world, scours the globe for interesting opportunities that deviate from the trodden path for investors. With their firm foothold in various markets and native understanding, team members are equipped to uncover opportunities that traditional investment firms may overlook.

Bernie Horn is also incurably inquisitive, and this quality is another great asset in his toolkit. Some years ago on a site visit to a South African paper mill in which Polaris invested, Horn chanced upon a conversation with management about their difficulties in sourcing kaolin. Research into the product revealed that it’s a mined mineral compound that costs less than pulp, and is used to give paper a shiny appearance that’s desirable for magazine stock and other high-end paper products. It’s a relatively low-cost material that helps to produce a high-quality end product. So he set out to discover more about how to access this sought-after compound. 

Horn’s research revealed that kaolin is mined alongside other industrial materials including calcium carbonate and talc. And that a French company – Imerys – had recently purchased a kaolin miner English China Clays. England is one of the world’s few sources of quality kaolin, alongside Brazil and the South of the United States, primarily Georgia. Imerys had a robust industrial materials business as well as a complementary business in roofing tiles. The combination supplied Imerys with strong cash flows – a prerequisite for Polaris to consider investment – and as a result of this chance conversation while walking through a South African paper mill, Polaris invested in the business. Imerys is a company that Polaris has held in its portfolio for a long time. 

“It’s something we stumbled across on a paper mill visit and followed it through,” Horn says.  “We’ve had a pretty successful relationship in the investment, but also with the management team that we’ve seen develop new materials and products over the years. It’s a good long-term investment that not too many people know a whole lot about,” he adds. 

This boots-on-the-ground approach to research, coupled with meticulous attention to detail, has enabled Polaris to become an investment business that seeks – and finds – opportunities that Wall Street firms may miss. It’s an attitude that Horn fosters in his staff, and one that seeks to generate strong returns for investors over time.

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To find out more about the Polaris Global Equity Fund (available via the Macquarie Professional Series), visit our website.

Important notice: Macquarie Investment Management Australia Limited (ABN 55 092 552 611 AFSL 238321) is the issuer and responsible entity of the Polaris Global Equity Fund. Polaris Capital Management, LLC is the investment manager of the Fund. Other than Macquarie Bank Limited (MBL), none of the entities noted in this document are authorised deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities, unless noted otherwise. This is general information only and does not take account of investment objectives, financial situation or needs of any person. It should not be relied upon in determining whether to invest in the Fund. You should read the relevant product disclosure statement, available at macquarie.com.au/pds or by contacting us on 1800 814 523, before deciding to invest in the Fund.