Friday, November 10, 2017

Sohn London Investment Conference Only a Few Weeks Away: Register Now

The Sohn London Investment Conference is only a few weeks away.  It will take place on November 30 at London Marriott Hotel Grosvenor Square.  As always, the event will feature top investment managers sharing their latest investment ideas in order to benefit charity.

The event benefits The Sohn Conference Foundation, which is focused on the treatment of pediatric cancer and other childhood diseases. They provide assistance to various foundations and organizations tackling these issues. 

Past beneficiaries have included Cambridge Research UK Institute, Great Ormond Street Hospital Children's Charity, Royal Marsden Cancer Charity, DKMS, and more.

You can view more information about the event on the website:

2017 Speakers List: Sohn London

Sir Paul Ruddock, Lansdowne Partners

Davide Serra, Algebris

Dean Tenerelli, T. Rowe Price

Ross Turner, Pelham Capital

Pierre Andurand, Andurand Capital

David Craigen, Lansdowne Partners

Bruno Crastes, H2O Asset Management

Adrian Croxson, Oz Management

Beltran de la Lastra, BESTINVER

Reade Griffith, Polygon's European Event-Driven Fund

Per Johansson, Bodenholm Capital

Stephen Loukas, FrontFour Capital

Selvan Masil, Westray Capital

Michel Massoud, Melqart Asset Management

Emeric Preaubert, Sycomore Asset Management

Christian Vogel-Claussen, Alanda Capital

This year features 16 speakers so it should be an excellent event as always. To learn more about the Sohn London conference and to register for the event, please click here.

Hedge Fund Links ~ 11/10/17

Hedge funds are having their best year since 2013 [Bloomberg]

RenTech's Bob Mercer steps down [Bloomberg]

Bruce Berkowitz liquidates hedge fund that owned Sears [Bloomberg]

David Einhorn says value investing will make a comeback [CNBC]

Thursday, November 9, 2017

Summaries of Recent Investment Conferences

If you missed it, we've covered numerous recent investment conferences where top hedge fund managers shared their latest investment ideas to benefit various charities.  Here's links to all those notes.  Enjoy!

Recent Investment Conference Notes

Invest For Kids Chicago Notes (Dmitry Balyasny, Sam Zell, Alec Litowitz, Amos Meron & more)

Capitalize For Kids Conference Notes (David Einhorn, Dan Dreyfus, Jeffrey Olin & more)

Great Investors Best Ideas Dallas Notes (Bill Ackman, David Einhorn, Tom Russo)

Sohn San Francisco Conference Notes (Mark Okada, Mick McGuire & more)

Wednesday, November 8, 2017

Come network with 100's of investors and HNW ultra-wealthy families

Just a quick head's up for anyone raising capital or looking to connect with investors such as family offices.  The Family Office Club is hosting a 1,000 participant conference featuring over 50 ultra-wealthy investors on stage and 100's in the audience at the Family Office Super Summit.

If you are looking to raise capital and connect with many investors all within a tight 2 day event please check out the confirmed speakers and benefits of attending.  I've known Richard C. Wilson their founder for a decade now and they are the real deal - the Family Office Club guarantees you love the event or they give you a refund on your ticket (wonder why nobody else does that?)  Here are the details on attending:

What We're Reading ~ 11/8/17

Lou Simpson explains his portfolio strategy [Kellogg Insight]

Carl Icahn's making a $5 billion bet on the future of cars [Bloomberg]

A closer look at Ray Dalio's 1937 scenario for current markets [A Wealth of Common Sense]

Bill Miller has 30% of his assets in bitcoin?! [WSJ]

Analysis of Equinix and Interxion: network effects in a box [Scuttleblurb]

The psychology of designer handbags [Business of Fashion]

The biggest stock collapse in history has no end in sight [Bloomberg] shares a better deal than Alibaba's [Barrons]

Asia has more billionaires than the US for the first time [Daily Mail]

Caesars returns to building its gaming empire [Barrons]

A look at Snap Inc [Seeking Alpha]

The war to sell you a mattress is an internet nightmare [Fast Company]

Universities take a hard look whether MBA programs are worth it [WSJ]

On trying to boost your productivity [Thrive Global]

Third Point Trims Baxter Stake

Dan Loeb's hedge fund firm Third Point has filed a Form 4 with the SEC regarding its position in Baxter International (BAX). 

Per the filing, Third Point sold 5 million BAX shares at $64.23 on November 6th.  After this sale, they still own over 36 million shares and one of their partners, Munib Islam, is on Baxter's board.

For more on this fund, we've also posted Third Point's Q3 letter here.

Per Google Finance, Baxter International "provides renal and hospital products. The Company operates through two segments: Hospital Products and Renal. Its Hospital Products business manufactures sterile intravenous (IV) solutions and administration sets, premixed drugs and drug-reconstitution systems, pre-filled vials and syringes for injectable drugs, IV nutrition products, parenteral nutrition therapies, infusion pumps, inhalation anesthetics and biosurgery products. The Renal business offers a portfolio to meet the needs of patients with end-stage renal disease, or irreversible kidney disease and acute kidney injuries, including technologies and therapies for peritoneal dialysis (PD), hemodialysis (HD), continuous renal replacement therapy (CRRT) and additional dialysis services. Its products are used by hospitals, kidney dialysis centers, nursing homes, rehabilitation centers, doctors' offices and by patients at home under physician supervision. "

Tuesday, November 7, 2017

Lone Pine Capital Boosts Grupo Televisa Stake

Steve Mandel's hedge fund firm Lone Pine Capital has filed a 13G with the SEC regarding its position in Grupo Televisa (TV).  Per the filing, Lone Pine now owns 6.4% of the company. 

Their ownership stake is comprised of over 5.49 billion Series L shares represented by 157,110,155 CPOs represented by 31,422,031 GDSs.

This is up from the 20.55 million GDSs they previously owned at the end of the second quarter.  So they've boosted their stake by around 11 million TV shares.  The filing was made due to activity on October 27th.

Per Google Finance, Grupo Televisa is "a media company in the international entertainment business. The Company operates in four business segments: Content, Sky, Telecommunications, and Other Businesses. It operates four broadcast channels in Mexico City and has affiliated stations throughout the country. It produces pay-television channels with national and international feeds, throughout Latin America, the United States, Canada, Europe and Asia Pacific. It exports its programs and formats to television networks around the world. It is also a Spanish-language magazine publisher. Its pay-television channels include three music, six movie, seven variety and entertainment channels and two sports channels. Its programs include telenovelas, newscasts, situation comedies, game shows, reality shows, children's programs, comedy and variety programs, musical and cultural events, movies and educational programming. Its programming also includes broadcasts of special events and sports events in Mexico."

Eminence Capital Starts Ellie Mae Position

Ricky Sandler's hedge fund firm Eminence Capital has filed a 13G with the SEC regarding shares of Ellie Mae (ELLI).  Per the filing, Eminence now owns 6% of the company with 2.06 million shares. 

This is a brand new equity stake for the hedge fund as they did not own any shares at the end of the second quarter.  The filing was made due to activity on October 27th.

We've also highlighted another stock Eminence has been buying recently.

Per Google Finance, Ellie Mae is "a provider of on-demand software solutions and services for the residential mortgage industry in the United States. Banks, credit unions, mortgage lenders and mortgage brokers use the Company's Encompass mortgage management solution to originate and fund mortgages. The Company's Encompass software is an enterprise solution that handles functions involved in running the business of originating mortgages, including customer relationship management; loan processing; underwriting; preparation of application, disclosure and closing documents; funding and closing the loan for the borrower; compliance with regulatory and investor requirements, and overall enterprise management. It delivers Encompass software in an on-demand Software-as-a-Service (SaaS). It also hosts the Ellie Mae Network, an electronic platform that allows Encompass users to conduct electronic business transactions with investors and service providers they work with in order to process and fund loans."

Coatue Management Increases Shopify Stake

Philippe Laffont's hedge fund Coatue Management has filed a 13G with the SEC regarding Shopify (SHOP) shares.  Per the filing, Coatue now owns 8.2% of SHOP with over 7 million shares.

This is up from their previous ownership stake of only 2.62 million shares at the end of the second quarter.  The new filing was made due to activity on October 24th.

Per Google Finance, Shopify is "provides a cloud-based, multi-channel commerce platform designed for small and medium-sized businesses. The Company offers subscription solutions and merchant solutions. The Company's software is used by merchants to run their business across all of their sales channels, including Web and mobile storefronts, physical retail locations, social media storefronts and marketplaces. The Shopify platform provides merchants with a single view of their business and customers across all of their sales channels and enables them to manage products and inventory, process orders and payments, ship orders, build customer relationships and leverage analytics and reporting all from one integrated back office. The Shopify platform includes a mobile-optimized checkout system, which is designed to enable merchants' consumers to buy products over mobile Websites. Its merchants are able to offer their customers the ability to check out by using Apple Pay."

Monday, November 6, 2017

Notes From Invest For Kids Chicago Conference 2017: Balyasny, Zell, Litowitz & More

The 9th annual Invest For Kids Chicago conference recently concluded and featured top investors sharing investment picks to benefit charitable organizations.

Last year's conference picks returned 22.9% in an equal-weighted portfolio over the past year.  Here are this year's picks: click each link to go to that speaker's presentation.

Invest For Kids Chicago Notes 2017

- Dmitry Balyasny (Balyasny Asset Management): long Hertz (HTZ)

- Sam Zell (Equity Group Investments): On retail real estate 

- Alec Litowitz (Magnetar): Presentation

- Amos Meron, (Empyrean Capital): long Seritage (SRG)

- Rajiv Jain (GQG Partners): long Sberbank (SBER.RU)

- Rick Reider (Blackrock): long emerging markets debt

- Jimmy Levin (Oz Management): Long Chinese banks

- Mathew Klody (MCN Capital): short Domino's (DPZ)

- Seth Singerman (Singerman Real Estate): long Washington Prime Group (WPG)

- Bart Stephens, Blockchain Capital: bullish bitcoin, ethereum, blockchain

Dmitry Balyasny Long Hertz: Invest For Kids Chicago Presentation

We're posting up notes from the Invest For Kids Chicago Conference 2017.  Next up is
Dmitry Balyasny of Balyasny Asset Management who pitched a long of Hertz (HTZ).

Dmitry Balyasny's Invest For Kids Chicago Presentation: Long Hertz

First time back at the conference in eight years…when he pitched short Japanese government bonds because the 1.5% yield couldn’t go much lower.

Long Hertz (HTZ) – prior management mishandled the company; investors are overly worried about Uber/Lyft.  44% short interest creates big opportunity to be long if things are inflecting.  >5x leverage, previously losing money – many people scared off.

Uber/Lyft threat is overstated – only about 4% overlap.  Now an oligopoly industry – HTZ was the bad actor that over-expanded, dumping excess fleet inventory into the market at low prices; the fleet has now been restructured.  Used car prices may also be turning up.  Credit card data shows positive numbers in recent months.

HTZ is ½ leisure, ½ business – both doing well.  This was the last sloppy quarter, and we want to be long the most levered player as the cycle turns.  HTZ should be able to refi its high-cost debt.  Avis repurchases ~10% of its shares each year and HTZ should get there too.  The majority of their analysts create alpha within the first 3-6 months, and that could be the case here as shorts capitulate and real investors step up to buy the stock.

For more from this event, check out the rest of the presentations from Invest For Kids Chicago 2017.

Sam Zell on Retail Real Estate: Invest For Kids Chicago Presentation

We're posting up notes from the Invest For Kids Chicago Conference 2017.  Next up is Sam Zell of Equity Group Investments who gave his thoughts on the retail real estate industry.

Sam Zell's Invest For Kids Chicago Presentation: Retail Real Estate

There have been “bearish overtones” to each of the past five annual gifts that Sam gives to his friends/partners.

Retail real estate – most people agree about a decline here, but online is still only 8.5% of total retail; it is very early in tech’s impact; everyone is trying to catch a falling knife; where’s the bottom and what’s an appropriate cap rate – open questions; best malls are OK because they’re mini downtowns, and on the other side the strip-center convenience-driven stores are OK – everything in between is an oxymoron; USA has 5 square feet per capita more retail real estate than any other nation; a lot of retail could go away and nobody would notice; Sears, Penney created malls as anchors, but now they are the “anchor” dragging everyone down; free rent is still too expensive if there is no traffic; might be 1-2 years left on a lot of bad leases – big changes coming; we’ll always have some retail, but unclear as to what the right price is.

Taubman is selling at a 6.3% (?) cap rate, but look at some of their peers and look at some of the tenants – who will fill empty stores/leases?  The growth of passive investing and indexations and ETFs is very, very dangerous; many real estate companies now have heavy ownership from entities who aren’t real owners; something will precipitate a regulatory change; ISIS = ISIS; ETFs are untested in a downturn; markets should be about capital formation and price discovery, neither of which apply to ETFs

With low rates, the burden of carrying cash is as low as ever – a great option to hold.  Things don’t grow to the sky – we’ll have a correction eventually.  There is a reasonable chance of tax reform getting done.

For more from this event, check out the rest of the presentations from Invest For Kids Chicago 2017.

Amos Meron Long Seritage: Invest For Kids Chicago Presentation

We're posting up notes from the Invest For Kids Chicago Conference 2017.  Next up is Amos Meron of Empyrean Capital Partners who pitched long Seritage (SRG).

Amos Meron's Invest For Kids Chicago Presentation: Long Seritage

Looking for dramatic life-cycle changes that create opportunities in the market.  There is an ongoing misunderstanding of the Seritage (SRG) - Sears (SHLD) relationship.

SRG was created as a way to carve out (siphon) some of a SHLD’s best real estate – deal was structured as a giant sale-leaseback,  235 properties, 37 million square feet.  SRG can “claw back” certain properties from SHLD over time and redevelop them.

“I’m not dead yet” – all mall-based or retail real estate is pressured, but it’s not all the same. SRG has a national portfolio of really good assets with solid demographics.  SRG is nearing its goal of having 50% of its rent from non-SHLD tenants by FYE 2017; could be 2/3 by FYE 2018.  SHLD pays <$5 per square foot, while the average for new tenants is $19.

SRG trades at $80 per square foot versus $128 for “C” space companies.  SHLD chapter 11 would have a fleeting impact on SRG.  At a 6% cap rate on FY18 NOI, SRG has 40% upside to $60.

Risk is a further fall in retail, so short retail REITS against SRG long.

For more from this event, check out the rest of the presentations from Invest For Kids Chicago 2017.

Jimmy Levin Long Chinese Banks: Invest For Kids Chicago Presentation

We're posting up notes from the Invest For Kids Chicago Conference 2017.  Next up is Jimmy Levin of Oz Management who is bullish on Chinese banks (CCB, ICBC, BOC, ABC).

Jimmy Levin's Invest For Kids Chicago Presentation: Long Chinese Banks

Late in the cycle prefer to look for off-the- run ideas, not classic value investing, but that idea is now the consensus.  Chinese banks are one idea not at an all-time high, and they’re out of favor due to pessimism abroad.

Long-standing local presence yields insights.  Risks here are over-stated or misunderstood.  China is likely to keep doing well – growth, but how much?  At 0.85x BV on a 14% ROE the Chinese big four banks are too cheap – historically they’ve traded above book.   Compared to U.S. and European peers the Chinese banks look cheap.

Worries about a property bubble bursting but inventory is down.  Worries about industrial excesses and overcapacity, but there have been reforms and prices are up.  Worries about restraining credit, but GDP still growing.  Worries about shadow banking, but loans in wealth management products are falling.

The Big Four have safer balance sheets than other banks in China.  At a 15% ROE, at least 10% capital build. 30-60% potential return as the banks re-rate.  Downside case is 65% of BV, down 10% from here – good risk/reward.

For more from this event, check out the rest of the presentations from Invest For Kids Chicago 2017.

Rajiv Jain Long Sberbank: Invest For Kids Chicago Presentation

We're posting up notes from the Invest For Kids Chicago Conference 2017.  Next up is Rajiv Jain of GQG Partners who pitched long Sberbank (SBER.RU).

Rajiv Jain's Invest For Kids Chicago Presentation: Long Sberbank

Russia is not well covered, and the scant coverage is one-sided.  Rajiv has been looking at Russia for 20 years but has missed each of the two bear and bull markets.  Investors see a banana republic, politicians see an existential threat – reality is that things have improved quite a bit.  Despite sanctions, oil volatility, no foreign investment, etc. Russia actually has a good balance sheet and runs a tight ship.  Look at car sales, construction activity, etc.

Now has an independent central bank, and rates should decline.  World Bank “ease of doing business” survey now has Russia #35 in the world, better than Brazil, India or China.  MSCI Russia has 8% CAGR past 20 years – better than China.  Sovereign CDS at 5-year low – equity market is skittish, but bond market is sanguine.

Sberbank has > 50% of mortgages, >40% of retail deposits and loans.  20.8% ROE in 2016 at 1.3x TBV and 5.7x estimated FY18 earnings, all amidst a recession; ROA trough was 70-80bps in 2015 during very difficult macro conditions; very hard to find a bank anywhere in the world with an ROA above 1% like Sberbank’s.

25% dividend payout (3% yield) should rise, and yield could ultimately be 7-8%.  Systemically important.  Massive industry consolidation, flight to quality, technology all help Sberbank.  Earnings could grow 7-10% per year; pre-GFC it traded 2.0-2.5x book; at 10x earnings could return 20%compounded.

For more from this event, check out the rest of the presentations from Invest For Kids Chicago 2017.

Rick Reider Long Emerging Markets Debt: Invest For Kids Chicago Presentation

We're posting up notes from the Invest For Kids Chicago Conference 2017.  Next up is Rick Reider of Blackrock who pitched a long of emerging markets debt.

Rick Reider's Invest For Kids Chicago Presentation: Long Emerging Markets Debt

“Getting income the new-fashioned way”.  Huge, extraordinary demand for income; buy emerging markets debt – hard to find it elsewhere.  Aging populations, lower growth will drive more demand for income.  Tens of trillions of supply-demand imbalance for income.  Would growth will follow the demographics.  Rates may stay low for a long time, especially ECB and BoJ (China, India, USA are a little better).  China is the world’s demand growth driver – up to 40% of world growth is China.  26 of the world’s 27 largest economies are growing right now – rare and extraordinary.

A good capital spending cycle is underway and that bodes well for 2018.  There has been no deleveraging – private debt now on public balance sheets.  A rate increase is daunting – central banks can’t let rates rise in the next five years or else the debts become overwhelming.  Technology is deflationary, although wage pressure is slowly building in developed economies (not in EM).

Emerging market valuations are still attractive: real rates + inflation + credit (CDS) framework shows value.  Equilibrium in energy markets has led to very low volatility in inflation – that stability in emerging markets is a new paradigm.

For more from this event, check out the rest of the presentations from Invest For Kids Chicago 2017.

Alec Litowitz's Invest For Kids Chicago Presentation

We're posting up notes from the Invest For Kids Chicago Conference 2017.  Next up is Alec Litowitz of Magnetar Capital.

Alec Litowitz's Invest For Kids Chicago Presentation

A new age of decomposition in investing is upon us.  "The long-only paradigm shift" - smart beta, ETFs, etc - is an accelerating trend.

Asset classes and asset allocation now factor investing.  Active is not dead, but active will continue to lose share and get to < 50% share.

A more complete alternative return framework - alternative risk premia 3.0.

Looking at monthly data from 602 significant, durable hedge funds: 50% alpha, beta 40.9%, smart beta 1%, alternate risk premia 7.6%.

For more from this event, check out the rest of the presentations from Invest For Kids Chicago 2017.

Seth Singerman Long Washington Prime Group: Invest For Kids Chicago Presentation

We're posting up notes from the Invest For Kids Chicago Conference 2017.  Next up is Seth Singerman of Singerman Real Estate who pitched a long of Washington Prime Group (WPG).

Seth Singerman's Invest For Kids Chicago Presentation: Long Washington Prime Group

“Retail Apocalypse” has arrived.  The $100 billion increase in Amazon’s market cap since January is greater than the combined value of all REIT market caps.

Washington Prime Group (WPG) has a 12% dividend yield that is well covered, a 15% FCF yield, and trades < 7x earnings at a 10% cap rate.  30% upside if sentiment improves.  Only four analysts cover WPG.

Trades like a B-mall company but most of WPG’s value is better than B. CEO of Simon owns $250 mm of WPG stock.  WPG trades below the valuations of its own retail tenants.

Valuation: $10 base case, $7 down, $11.75 up over 3-4 years.  Rouse is a good comp; CBL is not a good comp.  WPG has low debt/EBITDA and no maturities over the next five years.

For more from this event, check out the rest of the presentations from Invest For Kids Chicago 2017.

Mathew Klody Short Domino's: Invest For Kids Chicago Presentation

We're posting up notes from the Invest For Kids Chicago Conference 2017.  Next up is Mathew Klody of MCN Capital who pitched a short of Domino's (DPZ).

Mathew Klody's Invest For Kids Chicago Presentation: Short Domino's

“Disruptors can be disrupted”.  Finding more shorts than longs right now.  The market seems to be a function of momentum, not valuation.   Look at the golden child > fallen angel phenomenon: Under Armour, Michael Kors, etc.

Patience is key – wait for the inflection point.  There is a shift coming for food. Domino’s (DPZ) is seen as a “disruptor” with strong comps/growth.   DPZ now has a demanding valuation and high leverage: >30x earnings, >20x EV/EBITDA, and 5.6x leverage.

Saturation? Management keeps moving the goalposts.  Declining international comps might be a sign.  Overexpansion? Pizza Hut finally turning the corner? Both would be a threat to DPZ.  Management uses high levels of debt to fund equity buybacks at ever higher prices.

For more from this event, check out the rest of the presentations from Invest For Kids Chicago 2017.

Bart Stephens Bullish on Bitcoin, Blockchain: Invest For Kids Chicago Presentation

We're posting up notes from the Invest For Kids Chicago Conference 2017.  Next up is Bart Stephens of Blockchain Capital who is bullish on bitcoin, ethereum, and all things blockchain.

Bart Stephens' Invest For Kids Chicago Presentation: Bitcoin, Blockchain

$150 billion of value created in digital assets this year alone.  Silicon Valley and Wall Street have been totally absent so far in this rally.

Is bitcoin a bubble? Look at historical bubbles – they all involve levered financial speculators. Not here.

Bitcoin is driven by young people. Establishment hates it. Scale also matters in bubbles, and bitcoin is still very small.

Bitcoin is “gold 2.0”.  Blockchain technology is the world’s largest, most decentralized database – 1,000x larger than the sum of all of Google’s servers.  Blockchain has never had a hack of its protocol.  ICOs -- $2.5 billion raised YTD October; more ICOs this year than Nasdaq IPOs; some ICOs are good, some are bad.

Regulation – not illegal; taxable by the IRS; was a criminal conduit at first but gaining legitimacy; regulators have given us the rules of the road.

For more from this event, check out the rest of the presentations from Invest For Kids Chicago 2017.