Notes From Value Investing Congress Las Vegas 2013: Day 2 ~ market folly

Wednesday, May 8, 2013

Notes From Value Investing Congress Las Vegas 2013: Day 2

Yesterday we posted up some quick notes from day 1 of the 2013 Value Investing Congress in Las Vegas and today we'll highlight key takeaways from day 2 below:

Whitney Tilson, Kase Capital: AIG, Hertz (HTZ)

He talked about how American International Group (AIG) is still a position he likes as it's still cheap and the company has been streamlined to something much easier to understand and there's been a lot of advancement since the financial crisis and even since last year.  It's around 14% of his portfolio and was his largest position as of last month.  Tilson also likes his long of Berkshire Hathaway (BRK.A / BRK.B) and recently adjusted his intrinsic value figure to just north of $193,000.  Additionally, he mentioned he's started a new position in Hertz (HTZ) and you can read the pitch on Hertz in this newsletter that convinced him.

Guy Gottfried, Rational Investment Group: WPX Energy (WPX)

His pitch was on WPX Energy, a spin-off from Williams Companies last year.  He says it trades at 8x free cashflow and .66x book value.  Gottfried feels it's a very cheap stock for a play on natural gas that doesn't require gas prices to head higher.

Mark Boyar, Boyar Value Group: Weight Watchers (WTW), Dole Foods (DOLE), Western Union (WU)

He thinks we might be in the midst of multiple expansion.  Boyar likes Weight Watchers (WTW) as a play on the weight management industry and notes it's down 50% over the past 12 months.  He also pitched Dole Foods (DOLE) as the company reduced its debt load by selling the packaged foods business.  His third and final pick was Western Union (WU).

Vitaliy Katsenelson, Investment Management Associates: Whistler Blackcomb (WB.TO)

He said that profit growth is slowing down and that the market is actually getting expensive on a P/E basis.  Katsenelson argued that there's no secular bull market, at least not yet.  In the mean time, he likes stocks with solid dividends and says that the vast majority of returns in sideways markets are derived from dividends.  He's the author of The Little Book of Sideways Markets, by the way.  His pick was a high dividend payer (over 7%) in Whistler Blackcomb, the owner of the popular ski resort.  He likes their lower costs due to no property development etc.

Zeke Ashton, Centaur Capital Partners: Fidelity National (FNF), First American (FAF)

He emphasized the importance of learning from mistakes.  While you will encounter your own mistakes as an investor, it's also easy to learn from others' mistakes too.  Ashton argued that emotional mistakes are much more prevalent than analytical ones and so obviously behavioral finance is an important part of investing.  As far as current opportunities in the market go, he's having a hard time finding good ones as so many shares have been bid up.  He's not a big fan of homebuilders but if you want a play on housing, he said to look at the title insurers as a proxy with lower risk.  His picks were Fidelity National (FNF) and First American (FAF).

Joe Altman & Chris Kyriopoulos, COMPOUND Capital: TARP Warrants, Nathan's (NATH)

They launched their fund at a hell of a time: during the financial crisis when Lehman Brothers failed.  These two mentioned that they like TARP warrants, which we'd note has been a hedge fund favorite (especially AIG and BAC warrants, though Compound prefers AIG and COF ones).  They note these are liquid plays that are often underfollowed.  However, their pitch today was Nathan's (NATH), the popular hot dog proprietor.

David Hurwitz, SC Fundamental: Long KISCO, Short (CRM)

He pitched one long: KISCO in Korea (001940.KRX) and one short: (CRM).  He says KISCO is much cheaper than CRM.

Chris Mittleman, Mittleman Brothers:  Revlon (REV)

He pitched this as a turnaround story, praising management for a good effort.  Ron Perelman owns a ton of the company and that's partially the reason it's so cheap.  Mittleman likes that it's essentially a recession resistant business.  A solid portion of their revenues come from Walmart.  He also mentioned Carmike Cinemas (CKEC).

Ori Eyal, Emerging Value Capital: Hilan Tech

Eyal talked about the opportunities to invest in Israel, somewhere he specializes in (launching the Emerging Value Israel Fund).  He says the country is stable and pro-business and has a growing economy.  He pitched Hilan Tech, which he dubbed the 'ADP of Israel.'  He says Israeli stocks on the whole are cheap as they've largely traded sideways the past few years.

Harris Kupperman, Mongolia Growth Group: Real Estate

He touched on how there's too many investors out there all doing the exact same thing (i.e. herding).  One place that there certainly aren't many investors involved is Mongolia.  He says the country's GDP will explode 10x over the next decade or so, creating a big opportunity and he recommended real estate there.

For more from this event, head to notes from day 1 of the Value Investing Congress.

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