Great Investors' Best Ideas Symposium: Notes Part 2 ~ market folly

Tuesday, October 27, 2009

Great Investors' Best Ideas Symposium: Notes Part 2

If you missed our first post, we've already covered our first set of notes from the Great Investors' Best Ideas Symposium. In that particular post, we detailed investment ideas from prominent hedge fund players Bill Ackman of Pershing Square & David Einhorn of Greenlight Capital amongst many others and we highly recommend checking it out. This post is a continuation of those notes as we wanted to post up some other notable investors' ideas that weren't covered in the first article.

Mario Gabelli, GAMCO Investors

Gabelli thinks the stock market will center around 7-9% returns for the next decade but thinks that talented managers will outperform that. His investment idea was National Fuel Gas (NFG). They are a major natural gas player and have a large holding in the Marcellus Shale, something he feels is not reflected in the stock price. Gabelli said that their business has a value of $42 per share and if it's trading around $46, you are getting around a million acres in the Marcellus shale for only a 'few bucks.'

Karen Finerman, Metropolitan Capital Advisors

Some of you may recognize this name from her frequent appearances on CNBC's show Fast Money. If you're unfamiliar, Finerman runs a long/short equity hedge fund. At the conference, Finerman focused on Golar LNG Limited (GLNG), a liquid natural gas carrier. She has presented this pick numerous times on television before and clearly has conviction in this play. Her thoughts were that GLNG is the premier player in the space and that they would eventually pay up to a 10% dividend based on the companies they own.

James Grant, Grant's Interest Rate Observer

We already covered some of James Grant's thoughts in our first set of notes, but we wanted to cover his insight in more detail. He presented two stock picks that are essentially options on inflation, citing that the Federal Reserve is 'late to arrive and late to leave.' He focused on UTS Energy (UTS) a Canadian company focused on the Canadian oil sands and he mentions this is a speculative play as they do not yet have income. If inflation rises, his thesis is that oil prices should rise and the hard-to-reach oil sands region will become more lucrative. Grant's second pick was Fidelity National Financial (FNF), an insurance company. He is not wagering on an increase in house prices here, but rather an increase in the number of transactions. Grant notes that the title insurance business is essentially an oligopoly and is controlled by 4 players where FNF controls 46%.

Mark Hart, Corriente Advisors

He focused on the trade of long the US dollar and short the Chinese Renminbi. He feels that the short US dollar is the most crowded trade in the history of financial markets and is set to explode. On the other side of the trade, he thinks that the practices in China are generating essentially the same outcome as if the central bank had been diluting the Renminbi. He cites the fact that often foreigners bring foreign currency into China and convert it at a bank who then takes it to the central bank and deposits them into their reserves and prints up Renminbi in order to repay the original bank.

Michael Price, MFP Investors

We touched on Price's thoughts briefly in our first article on the GIBI conference, but we wanted to add some more of his thoughts. In addition to his bullishness on the Washington Post (WPO) cited in our earlier article, Price also likes Smithfield Foods (SFD), a supplier of ham. The 'swine flu' name has caused shares to be beaten down and he feels the government now calling it H1N1 should help the tarnished 'image' of pork products. He also mentioned Vornado Realty Trust (VNO) as 'one of the best run REITs in the world.' However, he thinks it is overpriced and that they will likely come out with an equity offering, diluting shareholders like we have seen with many other REITs do this year. As is the case with much of the industry, VNO is facing a massive debt load and needs to pay it down.

Jim Barrow of Barrow, Hanley, Mewhinney & Strauss

He thinks there is a potential bubble in speculative raw materials and Asian markets. His picks included Cooper Industries (CBE) and Sysco (SYY). He likes CBE as a play on energy savings and also for their strong balance sheet and 3% dividend. He likes SYY, a food distributor, as a play on the economic recovery and for their 4% dividend.

Rusty Rose, Cardinal Investment Company

He feels that there will be a reversion to the mean in housing and expects an 18% further drop, citing that the Case Schiller Index is still 18% above the historical average.

So there you have it, some more thoughts from the various speakers at the Great Investors' Best Ideas symposium. Check out our first set of notes from the conference as well, where we covered what other hedge fund managers presented. These past few weeks have been ripe with investment conferences and have provided us with many potential investment ideas to sort through. If you've missed any of our coverage, it's well worth your time to check them out as they have been some of our most popular articles. You can read up on the following:

- Notes from prominent hedge fund managers at the Value Investing Congress Part 1

- Notes from the Value Investing Congress Part 2

- Bill Ackman's presentation on his short of Realty Income (O)

- Pershing Square's presentation on Corrections Corp of America (CXW)

- Our first set of Great Investors' Best Ideas conference notes

Thanks for reading and be sure to check back daily as we sort through the portfolio moves of prominent hedge funds.

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