Friday, May 1, 2015

Third Point's Q1 Letter: New Stakes in Yum Brands, Devon Energy

Dan Loeb is out with Third Point's first quarter letter.  In it, he details how he's "constructive on the US" mainly for 3 reasons: economic data improving, the Fed not raising rates in June, and when they do raise, the expectation is they'll do it gradually. 

New Stake in Yum! Brands

Third Point also reveals two new equity longs.  They've built a stake in Yum Brands (YUM) which includes KFC, Taco Bell and Pizza Hut restaurants.  They see the company turning around its troubles in China with KFC and note Pizza Hut needs to improve to battle competitors on margin. 

Third Point writes, "We think investors should want to own Yum! for its unique open-ended middle-class growth story in China and its strong and growing franchise-led cash flows outside China."

New Position in Devon Energy

Also, the hedge fund revealed a new position in DVN.  They like certain steps the company has taken such as exiting certain businesses, entering joint ventures, and sale of non-core assets.  However, they want the company to continue to streamline its portfolio "to focus on top-tier US assets in the Permian Basin, Eagleford, and Cana-Woodford."

Lastly, it's also worth noting that Third Point now has 10% of its assets invested in Japan.  They also update their positions in Fanuc and IHI.

Embedded below is Third Point's Q1 letter:

For more from this hedge fund, head to Third Point's Q4 letter which outlines their thesis on Fanuc.

London Value Investor Conference Presentations Announced: Discount Expires Tonight

Our readers can save  £120 with the discount code: MARKETFOLLY-APRIL-DISCOUNT

With less than 3 weeks to go, there are now only 29 tickets left for the London Value Investor Conference on 20th May.

The speaker line-up is now complete and we are able to announce some of the presentation titles below.  You can also view the timings on the conference programme page.

Here are the presentation titles for 20th May:

Foghorns in the Fog
Jonathan Ruffer, Ruffer LLP

Audience Q&A session led by David Shapiro
Neil Woodford, Woodford Investment Management

Enduring Principles of Value Investing, Audience Q&A Session led by Richard Oldfield
Charles Brandes, Brandes Investment Partners

The Chinese Stockmarket: from Ugly Duckling to Beautiful Princess
Dato' Cheah Cheng Hye, Value Partners Group

Ageless Insights - Sir John Templeton's Insights From Seven Decades of Investor Correspondence
Jeff Everett, EverKey Global Equity

Value Investing: the Good, the Bad or the Ugly?
Nick Kirrage and Kevin Murphy, Schroders

Calculating Intrinsic Value
Tim Hartch, Brown Brothers Harriman

Franchise Investing
Hassan Elmasry, Independent Franchise Partners

Growth Hiding Value
Simon Denison-Smith, Metropolis Capital

Volkswagen - in Rust we Trust
Bernd Ondruch, Astellon Capital Partners

Ivan Martin Aranguez, Magallanes Value Investors - TBC
Kevin Gibson, Eastspring Investments - TBC
Nathaniel Dalton, Affiliated Managers Group - TBC

In order to claim your special £120 discount on this conference, please use the code "MARKETFOLLY-APRIL-DISCOUNT"

Offer expires May 1st, 2015 (Tonight!)

Hedge Fund Links ~ 5/1/15

Billionaire investors reveal their best ideas at the Milken conference [CNBC]

Lakewood Capital's short thesis on TASER [ValueWalk]

Small funds struggle to find big backers [FT]

Activist hedge funds actually good for investors [South China Morning Post]

Hedge fund patent crusade benefits whom? [Boston Globe]

When hedge funds become family offices [Forbes]

Wednesday, April 29, 2015

What We're Reading ~ 4/29/15

A book with a really cheesy title that supposedly 3G Capital hands out [Amazon]

More detailed notes from Charlie Munger's annual meeting part 1 & part 2 [Forbes]

A dozen things learned about investing from Peter Lynch [25iq]

The first rule of short selling is: don't talk about short selling [Dead Companies Walking]

Margin debt: a market indicator that predicts nothing [Bloomberg View]

The great bond conundrum [Economist]

Wang Jianlin - a billionaire at the intersection of business and power in China [NYTimes]

On China in Africa [Council on Foreign Relations]

Common biases that affect business decisions [HBR]

Jeff Bezos penned his annual letter [Amazon]

The biggest threat to your portfolio [Reformed Broker]

Examining Einhorn's latest investment: AerCap Holdings [Value and Opportunity]

A look at Windstream [J.Allen Capital]

The cable era is over [Bloomberg View]

A profile of billionaire banker Andy Beal [Bloomberg]

Homeownership rate falls to lowest since 1993 [HousingWire]

The slow death of the University [Chronicle]

Broyhill Asset Management Q1 Letter on Ally Financial & Subprime Auto Lending

Chris Pavese's Broyhill Asset Management is out with its first quarter letter.  In it, they note their interest in the automobile industry.  Having previously invested in General Motors (GM) and CDK Global (CDK), they've recently found another idea that they found intriguing: Ally Financial (ALLY).

Broyhill notes that Ally is trading at 70% of tangible book value and they see book value approaching $40 over the next few years.  If the stock trades back to book value, this would mean a 2x return. They're not alone in their bullishness here, as late last year we detailed how Perry Capital liked ALLY as well.

In addition to looking at Ally Financial specifically, Broyhill also takes a deeper look at the myths and realities surrounding the subprime auto lending industry as a whole in an appendix at the end of the letter.

Embedded below is Broyhill's Q1 letter on Ally Financial and the subprime auto lending industry:

Lee Cooperman Trims Pennymac Financial Stake, Exercises Warrants on Aspen Group

Omega Advisors' Lee Cooperman has made two separate filings with the SEC recently.

Trims Pennymac Financial Services Stake

First, Cooperman has submitted a Form 4 regarding his stake in Pennymac Financial Services (PFSI).  Per the filing, Cooperman was out selling 58,100 shares on April 27th and 28th at prices around $18.34.  After the sales, he still has exposure to over 3.3 million PFSI shares.

Per Google Finance, Pennymac Financial is "a specialty financial services firm with a mortgage platform and integrated business focused on the production and servicing of United States residential mortgage loans and the management of investments related to the United States residential mortgage market.."

Exercises Warrants on Aspen Group

Second, Cooperman filed a 13G with the SEC regarding shares of Aspen Group (ASPU).  Per the filing, Cooperman continues to own 9.9% of the company.  However, on April 23rd he exercised warrants yielding him 4 million more shares.

The filing also notes that, "In connection with the exercise of the warrants, the reporting person and the issuer have agreed to waive the 9.99% Blocker contained in the warrant agreement."

Per Google Finance, Aspen Group "offers relevant online education. The Company derives revenue primarily from tuition and fees derived from courses taught by the Company online, as well as from related educational resources that the Company provides to its students, such as access to its online materials and learning management system. The Company’s subsidiary, Aspen University Inc. (Aspen University), delivers education experiences and has served thousands of students."

We've previously detailed other portfolio activity from Lee Cooperman here.

Tuesday, April 28, 2015

Pershing Square's Presentation From European Investor Meeting

Bill Ackman's Pershing Square Holdings has just released a presentation on its portfolio from a recent European investor meeting.

In it, the hedge fund outlines their thesis on various portfolio companies and updates regarding those positions.  They also offer a look at their thinking on a recent addition to their portfolio: Valeant Pharmaceuticals (VRX).

Embedded below is Pershing Square's presentation from its recent European investor meeting:

You can download a .pdf copy here.

For more from this hedge fund, check out Pershing Square's annual report here.

Falcon Edge Capital Discloses Jumei International Position

Rich Gerson's hedge fund firm Falcon Edge Capital has filed a 13G with the SEC regarding shares of Jumei International (JMEI).  Per the filing, Falcon Edge now owns 5.9% of the company with over 5 million shares.

This is a newly disclosed equity position for the hedge fund and the filing was made due to activity on April 17th.

For more from this hedge fund, we've previously detailed some of Falcon Edge's portfolio activity here.

Per Google Finance, Jumei International is "an online retailer of beauty products. The Company has sold over 30,000 stock keeping units (SKUs) of beauty products."

Paulson & Co Reveals Synthesis Energy Stake

John Paulson's hedge fund firm Paulson & Co has filed a 13G with the SEC regarding shares of Synthesis Energy (SYMX).  Per the filing, Paulson & Co has disclosed a 11.7% ownership stake in SYMX with over 10 million shares.

This is a newly revealed equity position for the hedge fund and the disclosure was made due to portfolio activity on April 14th. 

On this date, the company announced a direct placement of 12 million shares to accredited investors.  While Paulson was not specifically named, it seems likely that this is where their stake was acquired.

Per Google Finance, Synthesis Energy is "a development-stage global energy and gasification technology company that provides products and solutions to the energy and chemical industries. The Company provides technology, equipment and services to global projects which involve the conversion of low quality coals, coal wastes, municipal wastes, agricultural biomass, and other biomass feed stocks into clean synthesis gas (syngas)."

Monday, April 27, 2015

20th Annual Sohn Investment Conference in New York Next Week: Tepper, Einhorn, Ackman & More

The 20th annual Sohn Investment Conference is right around the corner.  On May 4th, 2015 in New York City (Avery Fisher Hall, Lincoln Center), top hedge fund managers will share their latest investment ideas to benefit charity.

In partnership with Bloomberg, the Sohn Conference Foundation puts on investment conferences in support of pediatric cancer research.   You can find more details about the event, register to attend, and donate here.

As usual, this conference is absolutely loaded with some of the biggest names in the hedge fund industry.  At the event, you'll hear from:

Sohn Conference NYC Speakers List

- David Tepper, Appaloosa Management
- David Einhorn, Greenlight Capital
- Bill Ackman, Pershing Square Capital
- Lee Cooperman, Omega Advisors
- Mala Gaonkar, Lone Pine Capital
- Larry Robbins, Glenview Capital
- Barry Rosenstein, JANA Partners
- Keith Meister, Corvex Management
- Jeff Gundlach, DoubleLine Capital
- Magnus Carlsen, Chess Grandmaster
- Ian Bremmer, Eurasia Group
- Jay Walker, TEDMED

You can register for the Sohn Conference by clicking here.

Next Wave Sohn NYC Speakers List

And just like last year, up and coming managers will be speaking at the Next Wave Sohn Conference that is held just before the main Sohn event.  Next Wave Sohn takes place at 9:15 AM at Alice Tully Hall at Lincoln Center on the same day.  Speakers include:

- Snehal Amin, Windacre Partnership
- Didric Cederholm, Lion Point Capital
- Alex Denner, Sarissa Capital
- Daniel Dreyfus, 3G Capital
- David Zorub, BlueMountain

You can learn more about the Next Wave Sohn event here.

As always, this looks to be a fantastic day of top hedge fund managers presenting investment ideas all to benefit pediatric cancer research.  If you can't attend, you can still learn more about the Sohn Conference Foundation's efforts and donate here.

Barry Rosenstein on Wall Street Week Talking Activist Investing

The classic show Wall Street Week has recently been rebooted by Skybridge Capital's Anthony Scaramucci.  The second episode just aired and featured Barry Rosenstein of activist hedge fund JANA Partners.

In it, Rosenstein talked about activist investing and more.  Rosenstein started JANA in 2001 with $17 million and now manages over $10 billion.  He describes his strategy as: "We try to bring out the full value of the company."

On how he identifies candidates, Rosenstein says: "There are still plenty of companies that should be making changes and aren't.  It's not necessarily that management is bad or the board are bad people... We bring attention and a spotlight.  We're looking for companies that have underperformed... both relative and absolute ... We look at these companies and figure out why."

Embedded below is the video of Rosenstein's appearance on Wall Street Week which starts around the 4 minute mark:

For more on this hedge fund manager, head to our recent post on how JANA has gone activist on Qualcomm.

Jeff Gundlach's Appearance on Wall Street Week

The classic show Wall Street Week has recently been rebooted by Skybridge Capital's Anthony Scaramucci.  The first episode recently aired and featured DoubleLine Capital's Jeff Gundlach.

In it, Gundlach talks about his specialty: fixed income markets.  He pointed out that in 2018-2019, there will be tons of bond maturities.

He's also worried about junk bonds:  "One thing that I think is really important that nobody talks about or has been thinking about is the entire life of the junk bond market has been secularly declining interest rates."

On what will happen to the junk bond market when interest rates go up, Gundlach proclaimed: "I think that's the next bond market crisis."

On interest rates, Gundlach said, "I think the probability of a rate hike in June is very, very low." He also thinks it could be possible that the Fed doesn't raise rates at all in 2015.  He emphasized that the Fed is data dependent and so the data will need to give them a reason to act.

Embedded below is the video of Jeff Gundlach's appearance on Wall Street Week, which starts around the 3:30 minute mark: