market folly

Today we're posting up notes from day 1 of the Value Investing Congress.  Below is the presentation from Tom Russo of Gardner, Russo & Gardner on global equities.  The following notes are courtesy of Kyle Mowery from GrizzlyRock Capital.

Capacity To Suffer - Global Value Equity Investing

•    SAB Miller, Pernot Ricard, Nestle, Berkshire: Total 4 above 28% of his portfolio. (total 70% international)
 •    High agency cost risk in public markets
•    Used to speak of Weetabix (cereal company with family control) compound of 21%. Was worth £150MM then sold to Hicks use for £600 pounds
•    Nestle saying Chinese companies are becoming players on the international front.  Sure enough – food firm from China just bought this cereal company for £2,000MM
•    Europe is where they are looking now
•    Culture of Nestle has culture of centuries old Japanese temple – take the time to do it right: Nestle has 35 year planning horizon.
•    Buying brands around the world that are strong and stable – Russo investing in companies’ which are investing across the emerging globe building brands and product lines.
•    Holds positions a very long time to take advantage of attributes compounding returns without taxation
•    Berkshire:  GEICO has $30mm advertising budget in 1996 to $1,000mm over period of owning GEICO.  Reason was $250 loss per new sub but BRK changed - but NPV of sub is $1,500.  So short term profits down with significant growth of subs.  Equity Put Options: $37bn of insurance sold for $5bn. At peak, BRK has $15b of losses on the income statement. $3bn charge for multiple.
•    Pernot Ricard (Credit Default Swap mayhem): Invested in China in early 2000’s, Absolute 2009, India now,  Family controlled – so can take the losses
•    SAB Miller investing aggressively in Africa – huge opportunity over time.
•    300MM bottles of homemade beer – will shift to bottled beer over time in Africa.
•    Just bought Fosters – will do well over time.


Question & Answer Session: ABInBev managers 2nd best in the world only to Buffett and Munger. Mentioned Brazilian railway with a 40% ROE.


Embedded below is Tom Russo's slideshow presentation:




Be sure to click here for other presentations from the Value Investing Congress.