Thursday, September 15, 2016

What We're Reading ~ 9/15/16

Pre-Suasion: A Revolutionary Way to Influence and Persuade [Robert Cialdini]

How to overcome the high cost of inconsistent decision making [HBR]

If you're buying, who's selling? [Irrelevant Investor]

On simplifying investment checklists [Base Hit Investing] 

Profile of a short seller [Barrons]

Simple rules of capitalism [Collaborative Fund]

On asking questions to get answers that matter [Medium]

A look at one of the country's biggest franchisees [Forbes]

Why you should hire people toughened by failure [Entrepreneur]

Middle class incomes had fastest growth on record last year [Washington Post]

Gloom descends on luxury goods industry [Bloomberg]

A look at Bank of the Ozarks (OZRK) [MicroCapClub]

Shenzhen is making hardware like Silicon Valley makes apps [Fusion]

Wednesday, September 14, 2016

Sohn Conference San Francisco 2016 Only A Few Weeks Away

The 7th Annual Sohn Conference San Francisco is coming up in a few weeks.  If you're on the West Coast, this is the premiere event that features prominent investors sharing investment ideas to benefit  various charities.   For more information on the event, head to

The beneficiaries this year include SEO Scholars, First Place for Youth, Alive and Free, Squash Drive and Meritus College Fund.  Also, a portion of the proceeds benefit their partner the Sohn Conference Foundation in their dedicated efforts toward the treatment and cure of pediatric cancer and childhood diseases.

Speakers List: Sohn Conference San Francisco 2016

This year's event features:

- Mason Morfit (ValueAct Capital)
- Chamath Palihapitiya (Social Capital)
- Carson Block (Muddy Waters Capital)
- Mick McGuire (Marcato Capital)
- Arjun Divecha (Grantham, Mayo, Van Otterloo & Co)
- Joseph Lawler (JFL Capital)
- Christpher Lord (Criterion Capital)
- Jeff Osher (Harvest Capital Strategies)
- Peter Palmedo (Sun Valley Gold)
- Alvin Roth (Stanford University)
- Mihir Worah (PIMCO)

Event Details

When: October 5th, 2016  11:00 AM to 6:00 PM

Where: Hyatt Regency San Francisco

Agenda:  Includes access to the Next Wave Sohn Panel of rising investors, buffet lunch, the main Sohn Conference San Francisco conference, and cocktail reception

RegistrationClick here to register for the conference

Embedded below is the conference flyer:

This is always a fantastic event and it's for great causes.  Head to to find out more about the conference and to get tickets before they're all gone.

Pershing Square Reduces Air Products & Chemicals Stake

Bill Ackman's Pershing Square has been busy in the markets lately.  The latest activity includes selling some shares of his stake in Air Products and Chemicals (APD).  This comes after Pershing recently acquired a new stake in Chipotle (CMG) as well.

Per an amended 13D filed with the SEC, Pershing Square now owns 7.8% of APD with over 16.97 million shares (via 4 million common stock and 12.9 million underlying call options).

This is down from the previous 9.5% of the company they owned (with 20.54 million shares exposure).  The 13D filing notes that on September 12th Pershing sold over 3.5 million shares. 

The rationale for this transaction was: "The three-year commitment period for Pershing Square's co-investment vehicles in the issuer ends on September 30th, 2016.  The Reporting Persons sold the Common Stock to return capital to the PSV Funds co-investors."

Per Google Finance, Air Products & Chemicals is "an industrial gases company. The Company's Industrial Gases business provides atmospheric and process gases and related equipment to manufacturing markets, including refining and petrochemical, metals, electronics, and food and beverage. The Company operates through seven segments: Industrial Gases-Americas, Industrial Gases-Europe, Middle East, and Africa (EMEA), Industrial Gases-Asia, Industrial Gases-Global, Materials Technologies, Energy-from-Waste, and Corporate and other. The Company is also a supplier of liquefied natural gas process technology and equipment. The Company's Materials Technologies business serves the semiconductor, polyurethanes, cleaning and coatings, and adhesives industries. The Company manufactures and distributes products in two lines of business: Industrial Gases and Materials Technologies."

ValueAct Capital Continues To Reduce MSCI Stake

Jeff Ubben's activist firm ValueAct Capital has been reducing its stake in MSCI (MSCI).  That trend continued with the latest Form 4 they filed with the SEC.

On September 9th, 12th, and 13th, ValueAct sold a combined 225,000 MSCI shares at prices of $85.78, $85.45, and $84.99.  After these sales, Ubben's firm only owned 625,900 shares of MSCI.

In other recent activity from the firm, ValueAct also built up its Seagate (STX) stake.

Per Google Finance, MSCI "offers content, applications and services to support the needs of institutional investors throughout their investment processes. The Company's operating segment includes Index, Analytics and All Other segment. All Other segment comprises ESG and Real Estate segments. The Index operating segment is a provider of investment decision support tools, including equity indexes and equity index benchmarks. The Analytics operating segment consists of products and services used for portfolio construction, risk management and reporting. The ESG operating segment offers products institutional investors use for assessing risks and opportunities arising from environmental, social and governance issues. ESG tools are used to evaluate both individual securities and investment portfolios. The Real Estate operating segment is a provider of real estate performance analysis for funds, investors, managers, lenders and occupiers." 

Carl Icahn Files 13D on Freeport McMoRan (FCX)

Activist investor Carl Icahn has filed an amended 13D with the SEC regarding his stake in Freeport McMoRan (FCX). The filing's main purpose was to send a statement from Icahn:

"This is a classic example of activists working constructively with an existing Board and management.  Since the Company announced the "Review of Strategic Alternatives" for its Oil & Gas business in October 2015 (not coincidentally the date of our arrival on the Board), the analyst community has heavily doubted the Company's ability to execute asset sales in this environment (particularly the Deepwater Gulf of Mexico assets along with all liabilities and potential future bonding obligations).  Yesterday's announcement demonstrates the Company is making good on its stated goal of deleveraging and is on track to cut its net debt by half, from year end 2015 through the end of next year, at current copper prices.  I applaud management and the whole Board of Directors for all steps taken in this regard.     

In light of the Company's recent initiatives, and as a large shareholder with two representatives on the Board of Directors, I completely endorse CEO Richard Adkerson's recent comments that Freeport is "…open for all strategic moves, whether that means selling assets, [or] selling the company" to create value for all shareholders."

For more on this investor, we just highlighted Icahn's talk at the Delivering Alpha conference yesterday.

Per Google Finance, Freeport McMoRan is "a natural resource company with a portfolio of mineral assets, and oil and natural gas resources. The Company's segments include the Morenci, Cerro Verde, Grasberg and Tenke Fungurume copper mines, the Rod & Refining operations and the U.S. Oil & Gas Operations. It has organized its operations into five primary divisions: North America copper mines, South America mining, Indonesia mining, Africa mining and Molybdenum mines. Its portfolio of assets includes the Grasberg minerals district in Indonesia, mining operations in North and South America, the Tenke Fungurume (Tenke) minerals district in the Democratic Republic of Congo (DRC) in Africa, and oil and natural gas assets in the United States. Its Atlantic Copper smelts and refines copper concentrates, and markets refined copper and precious metals in slimes. It has a smelter at its Miami, Arizona, mining operation, and molybdenum conversion facilities in the United States and Europe."

Tuesday, September 13, 2016

Delivering Alpha Conference Notes 2016: Singer, Dalio, Chanos, Miller & More

CNBC & Institutional Investor's Delivering Alpha Conference is underway and below are some notes.  This post will be updated throughout the day as the various speakers/panels are ongoing:

Delivering Alpha Conference Notes 2016

Paul Singer (Elliott Associates)Said that it's a "very dangerous time in global markets" right now.  Argued central bank independence doesn't really exist.  Noted that Bank of Japan is basically a top-10 shareholder of various Japanese corporations but the economy hasn't rebounded.  Called it insane, "It's not working, but they keep going."  Feels that investors are careless about inflation threat.  Says sell long-term bonds.    "There will come a time when inflation, despite growth suppressive policies can blow through targets and surprise everyone."  Says we're basically in the middle of close to a 40 year experiment in how leveraged a system can be, and in how many ways.  Thinks gold as a directional asset is underrepresented in portfolios "as the only money and store of value that has stood the test of time that is, in my view, undervalued and underpriced in today's world and sort of is the opposite of confidence in central banks."

Ray Dalio (Bridgewater Associates):  Discussed ways to spur economic growth with Timothy Geithner.  Dalio says, "We're in a situation where central banks want to drive you out of cash and out of bonds."  Called it a dangerous situation, as central banks run out of assets to buy and push investors into riskier assets.  Dalio thinks raising rates is risky as it's not priced into the yield curve.  "There's only so much you can squeeze out of a debt cycle and we're there, globally."

Jim Chanos (Kynikos Associates):  Still short Alibaba (BABA), says they're "buying anything that's for sale, just burning cash."  He's also still short Tesla (TSLA) and SolarCity (SCTY).  Says the two companies combining basically puts TSLA on a path to potential bankruptcy.

Carl Icahn (Icahn Capital): Said he's requesting from the FTC the right to own up to 50% of Herbalife's (HLF) outstanding shares.  Currently has the right to around 35% of the company.  Re: the market, "I think it's very dangerous in the market right now.  If they don't raise rates, I think we're in a major bubble."  There's a problem either way with a dilemma if you raise rates or if you don't.  Says the economy is messed up because of people like Janet McCabe at the EPA.  Also: "I hate to be immodest but I've returned 28% annualized since inception."

Marc Lasry (Avenue Capital):  Said that you can "make a lot of money on direct lending," stepping in for reluctant banks.  On investing - find people who are talented / engaged / who care and invest with and then don't worry about daily/monthly liquidity.

Bill Miller (Legg Mason):  Likes Amazon (AMZN) or Facebook (FB) compared to Alphabet (GOOG/L) due to the growth rates and margins.  Thinks AMZN doubles in 3 years.  Also likes Valeant Pharmaceuticals (VRX) long, one of his larger positions.  His main trade idea was long S&P 500, short 10-year Treasury (dividend yield on S&P is higher).

Robert Bishop (Impala Asset Management):  Best idea was Teck Resources (TCK): improving China demand, management has cut costs, end of metals 5-year downtrend.  Says Freeport McMoran (FCX) still has a worrisome debt picture.

Barry Sternlicht (Starwood):  Real estate in New York City is "a disaster" with rents at the high-end down 15%.  Noted the problem many investors face: "you have to invest in something, you can't just sit in cash."  On Tesla, says he loves the car but would probably be short the company.  Questioned Pinterest's valuation, arguing it seemed like a lot of money for a bulletin board.  Said Doppler Labs could be like the next Oculus Rift.

Mary Erdoes (JPMorgan):  "They're called crowded trades when they don't work and momentum trades when they do work."  Says it's time to weed out the stock pickers who aren't the best. 

Dawn Fitzpatrick (UBS):  Likes merger-arbitrage, argues that bank prop trading desks exiting keeps spreads attractive and wide on bigger deals.  Said short-term alpha is harder and that investors need to be more patient.  Says women are less emotional investors and better at cutting losers.

Passport Capital Ups Habit Restaurants Stake

John Burbank's hedge fund firm Passport Capital has filed a 13G with the SEC regarding shares of Habit Restaurants (HABT).  Per the filing, Passport now owns 5.6% of HABT with 1 million shares.

This is up from the 429,257 shares they owned at the end of the second quarter.  The filing was made due to activity on August 22nd.

For more from this manager, we've previously posted up notes from Burbank's talk at the SALT Conference.

Per Google Finance, The Habit Restaurant is "a fast casual restaurant company. The Company is engaged in preparing made-to-order char-grilled burgers and sandwiches featuring tri-tip steak, grilled chicken and sushi-grade albacore tuna cooked over an open flame. In addition, it offers salads, sides, shakes and malts. The Company prepares its burgers with char-grilled preparation, topped with caramelized onions, melted cheese, lettuce and tomatoes. The Company's Char burgers menu includes Double Char burger, Mushroom Char, Teriyaki Char burger, BBQ Bacon Char Burger and Santa Barbara Style. Its Sandwich menu includes Chicken, Tri-tip, Albacore Tuna, Veggie burger, Chicken club and Pastrami. The Company operates at over 140 locations in over 10 markets in approximately nine states. It operates a variety of restaurant formats, including end-cap, free-standing, inline and drive-in, primarily within suburban shopping centers and retail settings."

Bow Street Increases Adamas Pharmaceuticals Position

Akiva Katz and Howard Shainker's hedge fund Bow Street has filed a 13G with the SEC regarding its position in Adamas Pharmaceuticals (ADMS).  Per the filing, Bow Street now owns 5.3% of Adamas with over 1.15 million shares.

This is up from the 486,747 shares they owned at the end of the second quarter.  The filing was made due to activity on September 2nd.

About Bow Street

Prior to founding Bow Street, Katz worked Brahman Capital and Shainker worked at Third Point.  Bow Street was originally seeded by Blackstone Group.

About Adamas Pharmaceuticals

Per Google Finance, Adamas Pharmaceuticals is "a pharmaceutical company. The Company is focused on the development and commercialization of therapeutics targeting chronic disorders of the central nervous systems (CNS). Its segment focuses on the development and commercialization of therapeutics targeting chronic disorders of the central nervous system. Its ADS-5102 is an extended-release version of amantadine that is intended for once daily administration at bedtime. It is developing ADS-8704, which is a fixed-dose combination of its controlled release version of memantine and donepezil for the treatment of moderate to severe dementia related to Alzheimer's disease. Its ADS 8902, a triple combination antiviral drug therapy for influenza. It also offers Namzaric (memantine hydrochloride extended-release and donepezil hydrochloride) capsules (formerly MDX-8704) and Namenda XR (memantine hydrochloride) extended release capsules."

Monday, September 12, 2016

Baupost Group Adds To PBF Energy, Trims SunEdison Semiconductor & Innoviva

Seth Klarman's investment firm Baupost Group has filed three 13G's with the SEC recently.  Here's the summary:

Baupost Group Adds To PBF Energy Stake

First, Seth Klarman's firm has filed with the SEC indicating they now own 16.07% of PBF Energy (PBF) with over 15.72 million shares.

This is an increase of over 5 million shares as they previously owned 8.37 million shares at the end of the second quarter.  The filing was made due to activity on August 31st.

To see the rest of Baupost's equity portfolio, check out the brand new issue of our newsletter.

Per Google Finance, PBF Energy is " is an independent petroleum refiner and supplier of unbranded transportation fuels, heating oil, petrochemical feedstocks, lubricants and other petroleum products in the United States. The Company operates through two segments: Refining and Logistics. The Refining segment produces a range of products at each of its refineries, including gasoline, ultra-low-sulfur diesel (ULSD), heating oil, jet fuel, lubricants, petrochemicals and asphalt. The Logistics segment includes PBF Logistics LP (PBFX), which engages in the receiving, handling and transferring of crude oil and the receipt, storage and delivery of crude oil, refined products and intermediates. It sells its products throughout the Northeast, Midwest and Gulf Coast of the United States, as well as in other regions of the United States and Canada, and ships products to other international destinations."

Trims SunEdison Semiconductor Stake

Second, Baupost Group has also disclosed a reduction in its SunEdison Semiconductor (SEMI) stake.  They now own 5.6% of the company with over 2.37 million shares

This is a decrease of 6 million shares as they previously owned 8.37 million shares at the end of the second quarter.  The filing was made due to activity on August 31st.

Per Google Finance, SunEdison Semiconductor is "engaged in the development, manufacture and sale of silicon wafers to the semiconductor industry. The Company also develops advanced substrates, such as epitaxial (EPI) wafers and wafers for the silicon-on-insulator (SOI) market, which enable computing and communications applications. Its products include polished wafers, EPI wafers and SOI wafers. The Company sells its products to the semiconductor manufacturers around the world, including integrated device manufacturers, pure-play semiconductor foundries and companies that specialize in wafer customization. It operates facilities in semiconductor manufacturing regions throughout the world, including Taiwan, Malaysia, South Korea, Italy, Japan, and the United States. Its wafers are used as the base substrate for the manufacture of various types of semiconductor devices, including microprocessors, memory, analog, mixed-signal and radio frequency (RF) integrated circuits, discrete and image sensors."

Also Reduces Innoviva Position

Lastly, Baupost Group has also disclosed a reduction in their Innoviva (INVA) position.  They now own 15.29% of the company with 17.37 million shares.

This is down from the 17.61 million shares they previously owned at the end of the second quarter.  The filing was made due to activity on August 31st.

Per Google Finance, Innoviva "focuses on bringing new medicines to patients in areas of unmet need. The Company is engaged in the development, commercialization and financial management of bio-pharmaceuticals. Its portfolio focuses on the respiratory assets partnered with Glaxo Group Limited (GSK), including RELVAR/BREO ELLIPTA (fluticasone furoate/vilanterol (FF/VI)) and ANORO ELLIPTA (umeclidinium bromide/vilanterol (UMEC/VI)). It operates in providing capital return to stockholders by maximizing the potential value of its respiratory assets partnered with GSK segment. RELVAR/BREO is a once-a-day combination inhaled respiratory medicine consisting of VI, a LABA and FF, an inhaled corticosteroid (FF/VI) delivered via the ELLIPTA dry powder inhaler. ANORO ELLIPTA is a dual bronchodilator consisting of UMEC, a long-acting muscarinic antagonist (LAMA) and VI, a LABA for the treatment of chronic obstructive pulmonary diseases (COPD)."