market folly

Next up in our notes from Invest For Kids Chicago is Jeff Ubben of ValueAct Capital.  He presented two ideas: Moody's (MCO) and CBRE Group (CBG).

•    Describes firm’s style as “strategic block investing” 
•    Expert is someone who has made & learned from many mistakes 
•    ValueAct looks for 12 companies that can flourish 
•    Join a board about half the time usually a couple years into the investment 
•    Motorola Solutions (MSI) = top holding 
•    ValueAct looks for companies with small cost of customers product but are valuable inputs 
•    Don't like traditional financials as its hard to analyze banks 
 

Ubben on Moody's

•   Moody's: Investment is in the 5th inning  and is a 9% position for ValueAct (they run a concentrated portfolio) 
•    Maintenance fees are 60% of revenue and is very critical 
•    Moody’s rating are a de minims cost of debt 
•    Transaction revenues provide huge growth potential 
•    European growth in credit markets as banks fall away as source of funds is highly probable 


Ubben on CBRE Group

•    CBRE Group (CBG): Investment is in the 2nd  inning 
•    Scale & cross sales 
•    Real estate is the last bastion of outsourcing as companies have already done HR etc. 
•    CBRE essentially now a partner to companies instead of a broker 
•    Scrapping bottom of property sales 
•    "Ridiculously cheap cyclical" with tons of transaction volume coming (2/3rds of commercial wave expected to trade hands with 1/3rd refinancing) 

Jeff Ubben also pitched MCO & CBG and other stocks at the Value Investing Congress if you want more color.


For the rest of the hedge fund presentations from the event, check out our notes from Invest For Kids Chicago.