We're posting up notes from the 2013 Value Investing Congress in New York. Next up is Mick McGuire of Marcato Capital Management and his presentation was entitled "Don't Buy This Recovery." He pitched United Rentals (URI).
Mick McGuire's Value Investing Congress Presentation
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United Rentals (URI)
$5.9M market cap, $13B EV
5.6x EBITDA
12.2x P/E
Largest rental co in the
world, built as a roll-up.
Fragmented market, they
are biggest player but still only 15% of market. 400k unit fleet, original cost is $8B. Just bought RSC that was 5% of the market, which added to their 10% share.
Pure play on North
American Construction and Industrial markets. NOT exposed to residential
construction- that is only 4% of their revenue. 39% is Industrial, 47% is commercial construction. Have yet to see a robust recovery in
commercial construction.
Thesis: cyclical trends
are positive, secular trends help, strategic merger creates the industry's only
scale player. Good capital
structure, attractive valuation. 6.8%
FCF yield, 12.2x P/E. Says
synergies, rides the cycle. PT
implies 72% appreciation.
Risks: cycle. How robust the recovery is. Also, company could lose capital discipline and overspends
on growth CAPEX.
They own 4.7% of the company and wield influence on CAPEX.
MarketFolly note: URI was featured in the equity analysis section of our Hedge Fund Wisdom newsletter last year and is up 39% since then.
Q&A:
On Sotheby's (BID): How is the board reacting to their proposals?
"We've had a good
dialogue so far."
Be sure to check out the other presentations from the New York VIC here.
