As investors gear up for the 2023 GuruFocus Value Conference, which takes place in two weeks, five stocks in keynote speaker Bernard Horn (Trades, Portfolio)’s fourth-quarter equity portfolio that are undervalued based on the discounted cash flow model are Colony Bankcorp Inc. (CBAN, Financial), Berry Global Group Inc. (BERY, Financial), Capital One Financial Corp. (COF, Financial), Tyson Foods Inc. (TSN, Financial) and Allison Transmission Holdings Inc. (ALSN, Financial).
Horn founded Boston-based Polaris Capital Management in April 1995 and has been managing the firm’s global and international value portfolios since inception. The investor’s pure global value philosophy combines investment technology with traditional research. His over 40-year track record exceeds most current competitors in length and has produced admirable risk-adjusted returns since inception.
Polaris seeks long-term growth appreciation through several pillars, including the belief that global market fluctuations produce mispriced stocks. The firm seeks to invest in stocks that are undervalued compared to the implied intrinsic value based on the company’s future cash flows.
GuruFocus is pleased to have Horn as a keynote speaker at the value conference, which takes place at the Hilton Omaha Hotel on May 4 and 5. Seats are limited, so register now to secure your spot!
Portfolio overview
As of December 2022, the firm’s $377 million equity portfolio contains 94 stocks with a quarterly turnover ratio of 10%. The top four sectors in terms of weight are financial services, consumer cyclical, health care and technology, representing 24.37%, 16.78%, 13.99% and 11.70% of the equity portfolio.
Investors should be aware that portfolio updates for mutual funds do not necessarily provide a complete picture of a guru’s holdings. The data is sourced from the quarterly updates on the website of the fund(s) in question. This usually consists of long equity positions in U.S. and foreign stocks. All numbers are as of the quarter’s end only; it is possible the guru may have already made changes to the positions after the quarter ended. However, even this limited data can provide valuable information.
Colony Bankcorp
Polaris owns 219,774 shares of Colony Bankcorp (CBAN, Financial), giving the position 0.74% equity portfolio weight.
Shares of Colony Bankcorp traded around $9.81 on Thursday, showing the stock is modestly undervalued based on its price-to-GF Value ratio of 0.80.
Based on earnings of $1.14 per share and a 10-year growth rate of 20%, Colony Bankcorp has a margin of safety of 74.99% assuming the default DCF Calculator parameters, which include a discount rate of 10% and 10 years of terminal growth at 4%.
The Fitzgerald, Georgia-based bank has a GF Score of 63 out of 100 based on a GF Value rank of 9 out of 10, a financial strength rank of 3 out of 10, a momentum rank of 1 out of 10 and a rank of 5 out of 10 for growth and profitability.
Berry Global
Polaris owns 76,400 shares of Berry Global (BERY, Financial), giving the position 1.22% equity portfolio weight.
Shares of Berry Global traded around $58.11 on Thursday, showing the stock is modestly undervalued based on its price-to-GF Value ratio of 0.90.
Based on earnings of $5.78 per share and a 10-year growth rate of 20%, Berry Global has a margin of safety of 70.76% assuming the default DCF Calculator parameters.
The Evansville, Indiana-based packaging company has a GF Score of 92 out of 100 based on a rank of 10 out of 10 for momentum and growth, a profitability rank of 9 out of 10, a GF Value rank of 6 out of 10 and a financial strength rank of 4 out of 10.
Berry Global’s high growth rank is driven by several positive investing signs, which include a four-star business predictability rank and a three-year revenue growth rate that outperforms approximately 88% of global competitors.
Capital One
Polaris owns 45,800 shares of Capital One (COF, Financial), giving the position 1.13% equity portfolio weight.
Shares of Capital One traded around $96.88 on Thursday, showing the stock is significantly undervalued based on its price-to-GF Value ratio of 0.70.
Based on earnings of $17.81 per share and a 10-year growth rate of 10.1%, Capital One has a margin of safety of 69.02% assuming the default DCF Calculator parameters.
The McLean, Virginia-based financial services company has a GF Score of 83 out of 100 based on a GF Value rank of 10 out of 10, a growth rank of 9 out of 10, a profitability rank of 6 out of 10, a momentum rank of 5 out of 10 and a financial strength rank of 4 out of 10.
Capital One’s high growth rank is driven by several positive investing signs, which include a five-star business predictability rank and a three-year revenue growth rate that outperforms more than 70% of global competitors.
Tyson Foods
Polaris owns 65,000 shares of Tyson Foods (TSN, Financial), giving the position 1.07% equity portfolio weight.
Shares of Tyson Foods traded around $61.10 on Thursday, showing the stock is significantly undervalued based on its price-to-GF Value ratio of 0.70.
Based on earnings of $6.73 per share and a 10-year growth rate of 17.6%, Tyson Foods has a margin of safety of 68.93% assuming the default DCF Calculator parameters.
The Springdale, Arkansas-based chicken and beef producer has a GF Score of 84 out of 100 based on a GF Value rank of 10 out of 10, a growth rank of 9 out of 10, a profitability rank of 8 out of 10, a financial strength rank of 6 out of 10 and a momentum rank of 2 out of 10.
Allison Transmission Holdings
Polaris owns 142,300 shares of Allison Transmission Holdings (ALSN, Financial), giving the position 1.57% equity portfolio weight.
Shares of Allison Transmission Holdings traded around $46.59 on Thursday, showing the stock is fairly valued based on its price-to-GF Value ratio of 0.91.
Based on earnings of $5.53 per share and a 10-year earnings growth rate of 16%, Allison Transmission Holdings has a margin of safety of 67.85% assuming the default DCF Calculator parameters.
The Indianapolis-based vehicle propulsion solutions company has a GF Score of 91 out of 100 based on a profitability rank of 10 out of 10, a growth rank of 9 out of 10, a financial strength rank of 4 out of 10 and a rank of 6 out of 10 for GF Value and momentum.
Register now to hear Horn and other gurus like David Rolfe (Trades, Portfolio) and William Smead speak at the Value Conference!
