Thursday, September 14, 2017

Boyar's Latest Issue Profiling 3 Stocks That Have Declined ~23% On Avg

We wanted to bring your attention to a limited-time offer from our friends at Boyar Research. Normally their equity research reports, which many of the world’s most successful institutional investors have been subscribing to for over 40 years, are sold exclusively on a subscription basis. These subscriptions cost tens of thousands of dollars. However, for a very limited amount of time, Boyar is making its most recent issue available for purchase for just $945. This issue features three companies including AMC Entertainment Holdings, The TJX Companies, and Harley-Davidson that they believe to be selling at significant discounts to their estimate of intrinsic value.

Act quickly as this offer expires on September 18th at Noon EST.

To take advantage of this limited time offer, please click here.

Investment highlights of companies featured in Boyar's latest issue:

1)  AMC Entertainment Holdings, Inc.  (current price $15.20, Boyar’s 2019 estimate of intrinsic value is $26 per share)

AMC has declined ~60% from its 52-week high due to both weak attendance trends as well as fears that controlling shareholder Wanda could be forced to sell its stake. However, the upcoming film slate looks promising, which could cause a quick rebound in industry sentiment. Even assuming revenue growth slows from 8% (2014-2016 average) to 4% by 2020 and attendance fails to recover to 2016 levels, Boyar estimates AMC’s intrinsic value could exceed $26/share by YE2019 using conservative multiples.

2)  The TJX Companies, Inc. (current price $73.47, Boyar’s 2021 estimate of intrinsic value is $120 per share)

In Boyar’s view, TJX is a classic case of throwing the “baby out with the bathwater” as shares have declined ~10% from their 52-week high in sympathy with the carnage experienced by traditional brick and mortar retailers (as well as margin pressures Boyar believes to be temporary). However TJX has significant growth opportunities and unlike most retailers possesses a “moat” that protects it from online competition.

3) Harley-Davidson, Inc. (current price ~$47.96, Boyar’s 2019 estimate of intrinsic value is $62 per share)

HOG has declined ~25% from its 52-week high due to a multitude of factors, including a reduction in shipping guidance as well as fears associated with the greying of its traditional customer base. However the company possesses an iconic brand, sells at a below market multiple, and sports an ~11% FCF yield. Boyar believes HOG has a significant opportunity for capital appreciation if some of its marketing initiatives are properly executed.

This offer expires on September 18th at Noon EST, click here to purchase.

For additional information on Boyar Research or this offer, please email

Wednesday, September 13, 2017

Delivering Alpha Conference Notes 2017: Robertson, Dalio, Chanos, Cooperman & More

CNBC and Institutional Investor's Delivering Alpha Conference just took place and featured many big name speakers.  Here's notes from the event itself and summaries of television interviews as well:

Delivering Alpha Conference Notes 2017

Julian Robertson (Tiger Management)

Robertson noted that interest rates need to increase because there's a bubble forming in the stock market.  Since rates are low, stocks don't really have much in the way of competition for money.  He also predicts that Trump will ask Janet Yellen to stay on as Federal Reserve Chair.

He recently got back into Alibaba (BABA).  He previously owned it at "a very low price" (seven years ago) but sold it around $100 but now he's back in.  Says it's unbelievable how the company has seen 50% in earnings.  While other investors claim it to have accounting issues, Robertson said, "It would have to be such a giant fraud.  I mean, I can't imagine anything would be that colossal."

Argued that Apple (AAPL), Facebook (FB), and Google (GOOG) are cheaper than they would have been in the 1960's, 70's or 80's.  On Netflix (NFLX), he noted "does anyone not like it?"  He said it "might be a little out of reach" now but it's still tempting him because it's run by good people and he loves it.

He likes the cruise industry, saying that "(It) has come of age.  And older people my age are attracted to the cruise ship industry.  And they are booming right now, and all over the world they are booming.  And I think they're for the golden oldies."

Robertson still also owns Air Canada: "We got into it at around 8 or 9.  And it's now 23, approaching 24, and the multiple is about the same as when we got in, which is all of five times earnings.  So we have too much Air Canada, but I can't make myself sell it."

Also noted he doesn't think he'll ever understand Bitcoin.

He also continued to share his view that part of the hedge fund crisis is exacerbated by the fact that there's so many of them now and they compete against each other.

Robertson also gave advice to the younger generations: be sure that you love the field and let that be what guides you.

Ray Dalio (Bridgewater Associates)

Dalio's biggest concerns were the following: wealth gap, social conflict, and various financial burdens (debts and pensions).

"I think we're probably in a 2.5% type of growth environment.  I mean, the real question is, to some extent, whether you can unleash the productivity by some of the changes that a pro-business environment can produce."

He thinks tax reform etc will be a watered down version and will come later.

He likened the current environment to 1937 in terms of the early stages of a tightening.

Dalio thinks that we're in an environment with a lot of conflict: political, conflict between parties, conflict between countries.  "This is very important.  This is even more important than how the tax changes are going to take place."

The Bridgewater founder then talked about balancing alpha and beta.  He said gold is essential and part of that balance.  He called it "an effective diversifier of assets" as well as "an alternative version of cash."  He feels it should be 5-10% of everybody's portfolio.

He also thinks it'd be terrible if Gary Cohn left the administration and it'd be bad for the market too.

When asked what he's most worried about, Dalio mentioned risks like North Korea, but said his bigger worry is long-term: wealth and social gap and the conflicts that arise from that.  He's worried about the various debt and pension burdens.

We also recently posted Ray Dalio's TED talk which takes you inside a meeting at Bridgewater.  He also has penned a new book, Principles.

Leon Cooperman (Omega Advisors)

He said that "Conditions that normally lead to significant market decline are either not present or not forecastable."

"The market is in a zone of fair and full valuation.  I see very few signs of exuberance."

Stocks mentioned by Cooperman include First Data (FDC), which he's owned for some time now and called very cheap.

Also, United Continental (UAL), which he felt has solid management that's identified a lot of cost opportunities.  He thinks earnings there can see around 15% over the next few years.  Operating profits could rise by 50% over the next few years and the company has bought back 2% of its shares

He also pitched two energy ideas: Hess (HES), as well as WPX Energy (WPX).  "The solution for low oil prices is low oil prices.  These two (stocks) have growing production profiles and a net asset value well above current prices at existing oil prices."  He thinks oil is headed higher to $60.  Says the sector has been overly discounted.  Says Hess in particular will increase production.

He also likes Shire (SHPG), citing its growth, positive pipeline, and the expectation of stock buybacks.

Said bonds look like they're in a bubble but at same time notes the Fed has been 'forcing people into risk' via its monetary policies.  It will change one day he says, but not yet.

Boaz Weinstein (Saba Capital)

He warned investors to avoid junk bonds.  Argued that half or a third of junk bonds today are held by retail investors, who have a ton of exposure, partly due to the rise of ETFs.  He feels the high yield market is overheated and he's short bonds of various retailers and hospitals.  At the same time, he's long equity of some of those same companies.  "Equity is at a much more rational price and credit markets are ignoring those signals."

Noted that portfolio protection is cheap but few are buying it.  "Does everyone think they can get out on the top?"

Jim Chanos (Kynikos Associates)

He says that "what's worked will continue to work" and monetary will stay easy and investors will live with the valuations.

Chanos says it's easier to find short ideas in this environment, but those ideas "don't work" due to the underlying upward trend.  He says the market was far more correlated last year than it has been this year.

He's short Continential Resources (CLR).  "People have been looking at the industry with rose colored glasses.  This is a problem with the North American shale business.  If we don't get a pickup in the company's fortunes in the back half of the year it's going to struggle."

Jeff Smith (Starboard Value)

Pitched Perrigo (PRGO), generic drug maker.  Says a lot of these products are sold on Amazon now and the company can expand sales of its over-the-counter medicines via that channel.  Shares have been undervalued from pricing pressures.

Also mentioned Altaba (AABA) as a top idea.  This is the former Yahoo stub that is left after selling the core Yahoo business.  What's left is a stake in Alibaba (BABA) and Yahoo Japan, etc.  It's basically a holding company.

Mick McGuire (Marcato Capital)

The activist investor has taken a new stake in Terex (TEX), the company that makes construction equipment.  They started buying last year and roughly own around 1.1 million shares per a recent SEC filing as they own 6% of the company

McGuire feels the company should see a revenue boost after a strategic re-positioning.  It's in the middle of an operating turnaround and is reducing SG&A, so there's operational profit upside.  The company also switched its sourcing program which could potentially save them around $500 million annually.  Thinks shares could triple, and has already doubled since he invested in 2016.

Chamath Palihapitiya (Social Capital)

The venture capitalist who now also runs public investments, said that he's massively long cryptocurrency bitcoin.  He calls the blockchain technology disruptive.

He argued that tech investors need to look at a company's ability to innvoate: "There's just this massive trade right now between the disruptors and the disrupted."  He says there's a lot of opportunity to be long disruptors and short the disrupted.

Jamie Dimon (JPMorgan Chase)

He called bitcoin worse than Tulip Bulbs and thinks it will eventually blow up.  Said he'd fire any of his traders trading bitcoin for being stupid.  Says it could go up to $100,000 before it blows up, who knows.  His daughter bought it, it went up, now she thinks she's a genius, he said.  Thinks it could be vulnerable to government intervention.

Thinks government policies are stifling growth.  If things changed, we'd see 3% growth rather than sub 2% which we've seen annualized now.  Singled out small businesses as most impacted.

Argued banks in the US are very sound at the moment.  Says the successor to JPMorgan is inside JPMorgan.

Mary Erdoes (JPMorgan Asset Management)

When asked about US stocks or bonds, she said none of the above.  Sees enormous opportunities in Europe, Japan, and emerging markets.  Thinks that some investors are worried about emerging markets due to the US dollar as an 'anchor' currency.

Steve Mnuchin (Treasury Secretary)

He says that tax reform is too important not to be passed and that it can occur this year and might even be retroactive back to the beginning of 2017.  Said the President's number one concern is North Korea and security.  Said hedge funds wouldn't have the carried interest provision under Trumps tax proposal.

Steve Schwarzman (Blackstone Group)

He's optimistic on tax reform, saying the 'worst' we'd do is a tax cut somewhere around 25-28%.

He thinks the biggest risk to markets are geopolitical, in particular North Korea.  He said "i would not be buying office buildings in Seoul" though didn't comment further on how this would affect investment decisions.

Schwarzman also argued that he relationship between China and North Korea is not friendly as it is perceived to be.  "The Chinese do not want a nuclearized Korean peninsula, and they're very serious about that.  They also don't want to have a shooting war occur and have 20 million refugees from North Korea go into China.  So it's complicated for them as to what they do."

Barry Sternlicht (Starwood Capital)

"It feels like the ocean is full of money, but it could evaporate."  Says he's most worried about potential problems from North Korea or Syria.

Tuesday, September 12, 2017

Paulson & Co Reduces Enzymotec Stake

John Paulson's hedge fund firm Paulson & Co has filed an amended 13G with the SEC regarding its stake in Enzymotec (ENZY).  Per the filing, Paulson now owns 9.17% of the company with over 2.10 million shares.

This is a decrease of around 2.1 million shares in their position size.  They previously owned 4.2 million shares at the end of the second quarter.  The new filing was made due to portfolio activity on August 23rd.

For more on this hedge fund, we've posted other recent activity from Paulson & Co here.

Per Google Finance, Enzymotec is "a nutritional ingredients and medical foods company. The Company's technologies, research expertise and clinical validation process enables it to develop solutions across a range of products. The Company operates in two segments: Nutrition segment and VAYA Pharma segment. Both of the Company's segments offer a range of products that leverage its lipid-related offerings. Its product suite addresses the entire human life-cycle, from infancy to old age, and comprises ingredients in products ranging from infant formula to nutritional supplements, as well as branded medical foods, sold only under a doctor's supervision. It markets its product portfolio to established global consumer companies and physicians and target large and growing consumer health and wellness markets. The Company's clinically-validated products include bio-functional lipid-based compounds designed to address dietary needs, medical disorders and common diseases."

Tiger Global Adds To Apollo Position

Chase Coleman's hedge fund firm Tiger Global has filed yet another Form 4 with the SEC regarding its position in Apollo Global Management (APO). 

The latest filing shows they were buying on September 7th and 8th at weighted average prices of $28.465 and $28.503.  In total, they bought 253,672 shares.  After these buys, they now own over 34 million shares of APO.

We've highlighted other recent portfolio activity from Tiger Global here.

Per Google Finance, Apollo Global is "an alternative investment manager in private equity, credit and real estate. The Company raises, invests and manages funds on behalf of pension, endowment and sovereign wealth funds, as well as other institutional and individual investors. The Company's segments include private equity, credit and real estate. The private equity segment invests in control equity and related debt instruments, convertible securities and distressed debt investments. The credit segment invests in non-control corporate and structured debt instruments, including performing, stressed and distressed investments across the capital structure. The real estate segment invests in real estate equity for the acquisition and recapitalization of real estate assets, portfolios, platforms and operating companies, and real estate debt, including first mortgage and mezzanine loans, preferred equity and commercial mortgage backed securities."

Monday, September 11, 2017

Howard Marks' New Memo: "Yet Again?"

Oaktree Capital's Chairman Howard Marks is out with another memo.  This one is entitled "Yet Again?"

He says his previous memo, "There They Go Again... Again" received the most response he's ever received in 28 years of writing memos. 

His newest memo touches on the response and why he feels the way he does on where the market is currently.  He also addresses topics such as FAANG stocks, Bitcoin, and passive investing, among others.

Embedded below is Howard Mark's new memo: Yet Again?

You can download a .pdf copy here.

Be sure to also read Marks' cautionary memo on cycles.

Viking Global Takes aTyr Pharma Stake

Andreas Halvorsen's hedge fund firm Viking Global has filed a 13G with the SEC regarding shares of aTyr Pharma (LIFE). Per the filing, Viking now owns % of the company with over 2.93 million shares.

This is a newly disclosed equity position and the filing was made due to activity on August 31st.  aTyr Pharma recently issued a press release stating that they'd raised $45 million in equity financing, with Viking purchasing a block of non-voting Class X Preferred Stock at $13.25 per share, each which converts into 5 shares of common stock with various conditions.

We've highlighted previous portfolio activity from Viking Global here.

Per Google Finance, aTyr Pharma is "a clinical-stage biotherapeutics company. The Company is engaged in the discovery and clinical development of medicines for patients suffering from severe, rare diseases using its Physiocrine biology, a discovered set of physiological modulators. The Company focuses on the development of Physiocrine-based therapeutics for the treatment of rare diseases, including facioscapulohumeral muscular dystrophy (FSHD) and limb-girdle muscular dystrophy (LGMD) 2B. The Company is developing Resolaris, an intravenous protein therapeutic for the treatment of rare myopathies with an immune component (RMICs). The Company is investigating Resolaris in patients with LGMD2B. The Company is conducting approximately three open label trials in patients with early onset FSHD, in adult patients with FSHD or LGMD2B and a long-term extension study in adult patients with FSHD. The Company has not generated any revenues."