Friday, December 1, 2017

ValueAct Capital Boosts KKR Stake, Trims CBRE Group

Jeff Ubben's activist firm ValueAct Capital has made a few notable transactions recently.

ValueAct Boosts KKR Stake

First, ValueAct has filed a 13D with the SEC regarding its stake in KKR (KKR).  Per the filing, ValueAct now owns 9.99% of the private equity firm with 47.75 million shares.

Per the filing, ValueAct was buying KKR shares throughout mid-to-late November.  They bought between $19.19 and $19.50 and in total acquired 2.19 million shares.

You can view the rest of ValueAct's portfolio here.

Per Google Finance, KKR is "a global investment firm that manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate, credit, and, through its strategic partners, hedge funds."

Ubben's Firm Sells More CBRE Group

Second, in a series of Form 4's filed with the SEC, ValueAct has disclosed a sale of over 3 million shares of CBRE Group (CBG).  They sold 2.3 million shares at $42.25 on November 28th, sold another 600,000 at $42.57 on November 27th, and sold 246,000 on November 22nd.  After all these sales they still own over 24.91 million shares.

Per Google Finance, CBRE Group is "CBRE Group, Inc. is the largest commercial real estate services and investment firm in the world. It is based in Los Angeles, California and operates more than 450 offices worldwide and has clients in more than 100 countries."

You can view the rest of ValueAct's portfolio here.

Viking Global Shows Jianpu Technology Stake

Andreas Halvorsen's hedge fund firm Viking Global has filed a 13G with the SEC regarding shares of Jianpu Technology (JT).  Per the filing, Viking now owns 9.6% of the company with over 6.62 million shares.

This is a newly disclosed equity stake and the company recently completed its initial public offering (IPO) in the middle of November.  The filing was due to activity as of November 20th.

We've also revealed the rest of Viking Global's portfolio in the latest issue of our newsletter.

Per Bloomberg, Jianpu Technology "operates as an open platform for discovery and recommendation of financial products. The Company offers loan applications, credit card services, and sales and marketing solutions."

Hedge Fund Links ~ 12/1/17

David Tepper says Fed faces challenge of letting markets correct [Reuters]

Tudor to shutter discretionary macro fund [Bloomberg]

Profile of Light Street's Glen Kacher [Fobes]

Tiger Global sells some Flipkart [Livemint]

Hedge fund recruiter on what it takes to get a senior level job [Business Insider]

Summary of the Legends4Legends conference [HF Journal]

A hf manager committed fraud. Would the US let him go? [NYTimes]

Wednesday, November 29, 2017

What We're Reading ~ 11/29/17

Lessons from a legendary short seller [CFA Institute]

How to be a CEO, from a decade's worth of them [NYTimes]

Elon Musk: the architect of tomorrow [Rolling Stone]

A conversation with David Swensen [CFR]

The future of retail in the age of Amazon [Fast Company]

Are malls too cheap to ignore? [WSJ]

Inside the revolution at Etsy [NYTimes]

The two biggest risks now are China and inflation [Bloomberg]

How decades of bad decisions broke GE [CNN Money]

What does a flat yield curve mean for stocks? [StockCharts]

Tuesday, November 28, 2017

15 Discounted Investor Conference Tickets Available - Family Office Super Summit [MarketFolly Subscriber Exclusive]

We have secured 15 discounted tickets for our work over the past decade with the Family Office Club which is offering an investor gathering next week featuring 1,000 participants, 75 family office speakers, and 100's of investors in the room.  This is the #1 largest family office wealth management and ultra-wealthy investor event globally with more speakers on stage that are family office investors than any other event ever held in the industry.

To reserve one of the 15 MarketFolly subscriber tickets for yourself if you are not already registered at just $399 instead of $995 please register here:

This offer is only good until these 15 tickets run out, is not available for those already registered, but can be used to bring a second guest or business partner to the event if you are already attending.  They do guarantee this event will be amazing and you will love it though or they will refund your full ticket price with no questions asked.  To register please complete the form at the bottom of this page: or call Daphny or Jennifer on their team at (305) 503-9077.

Benefits of Attending the Family Office Super Summit:

1.  Billions of Dollars in Capital On Stage (and much more in the room): The Family Office Super Summit features actual family offices and more of them on stage than any other event globally, not brokers or junior financial planners, because they know that families in their network and the hundreds of attendees in the room want to learn from the biggest single family offices and top-50 multi-family offices on what has worked for them, how they manage their capital, and what it takes to do business with a leading family office.

2.  Tap Into & Meet With the Fastest-Growing Investor Group: Family offices are becoming an increasingly important investor group for hedge funds, private equity managers, real estate companies, private companies, and anyone who relies on outside capital.  These families control hundreds of billions of dollars and we invite family offices from all asset classes to attend this annual summit in South Florida.

3.  Get Real Business Done: Unlike other conferences and trade shows, the Family Office Super Summit is all about getting real business done and building real relationships.  There are multiple networking sessions throughout the 3 days, starting with a welcome cocktail hour the night of December 4th and continuing through the conference.  A Florida single family office CIO cheerfully told them at the end of their last event, “I came here with 100 business cards; I have 4 left.” 

4.  Skip the Bull: This conference isn’t a pitch fest by sponsors; it is a conference for investment and wealth management professionals.  You’ll hear directly from real family offices looking to allocate capital and, like all of our events, the investors on stage will give it to you straight on what drives their portfolio strategy, how they select investments, and where they are looking to invest their money going forward.

5.  More Value for Less Money: If you are wondering how to budget your marketing and conference dollars, consider this – the Family Office Super Summit is their largest conference of the year, featuring 60+ family offices on stage and many more in the audience over 2 days.  For the chance to engage such an exclusive audience for a single day, you can usually expect to pay north of $2,000 for just one day.

Reserve one of the 15 tickets available for just $399 instead of $995 as a MarketFolly subscriber here:

Citadel's Ken Griffin: Valuations Stretched But "Very Constructive" Environment For Stocks

Citadel's founder Ken Griffin made a rare appearance on CNBC.  Citadel started with $4.7 million in 1990 and now manages over $27 billion.  In the interview, he talked about his market views.  He noted, "Valuations are stretched.  We're not in the sort of classic mania that you get at the very end of a bull market."

Using a baseball analogy, Griffin said we're in the 7th inning (out of the usual 9) of this market rally.  That said, he still seemed to believe that there was a "very constructive" environment for stocks given interest rates are still low, there's low inflation, and companies are seeing ok sales growth.

And while the government has been working on a tax cut plan, Griffin noted this sort of reform would be typically reserved for a recession.  So he asks if we really need to cut taxes as much as they're proposing.  That said, he still thinks that lowering and simplifying taxes is a win for keeping America competitive.

Griffin said, "To the extent that this represents fiscal stimulus, this is a late in the business cycle move.  It would be contrary to what you would traditionally do from an economics perspective."

He also touched on one area that he thinks has become very speculative:  "Bitcoin has many of the elements of the tulip mania in Holland."  He thinks many people buying don't understand what they're buying and instead are just reading articles about it going up and up, so he wonders about how this bubble might end.  He did think that the blockchain technology could definitely have practical uses going forward though.

The CNBC host said Citadel was up 11.4% for the year through October in its Wellington fund.  Griffin attributed this to "good old fashioned stockpicking."  He says their entire strategy is finding which companies are outperforming expectations and which are underperforming.  

Embedded below is the video of Griffin's interview

Citadel founder and CEO Ken Griffin on seeking out talent with exceptional problem solving skills from CNBC.

You can also read the transcript of the interview here.

Monday, November 27, 2017

Warren Buffett, John Templeton & Robert Wilson Interview From 1985

A reader was kind enough to pass along an old interview from around 1985 with Adam Smith featuring Warren Buffett, John Templeton, and Robert Wilson where each investor talked about their investment process and style.

Warren Buffett Interview

Buffett starts the interview with his trademark quote: "The first rule in investment is don't lose.  And the second rule in investment is don't forget the first rule, and that's all the rules there are."

Buffett said the most important quality of an investor is the temperamental nature rather than the intellectual capacity.

He also pointed out the short-term nature of others: "Most of the investors focus on what the stock is going to do in the next year ... They do not really think of themselves as owning a piece of the business."

Buffett said he prefers to value the business first without even knowing the price.  That way he can make a determination and then decide how it compares to the current valuation.

He said to define your area of competence, then within that area of competence find whatever sells at the cheapest price relative to value.

It's funny to hear Buffett say that he doesn't own IBM (IBM) in the interview as he noted he doesn't dabble in tech stocks.  Fast forward 30+ years and his views have evolved a bit.  He now owns both IBM and Apple (AAPL) today, though he's been selling the former as we noted in our recent newsletter.

"Boredom is the problem with most professional money managers."  He's perfectly content to sit and wait for the fat pitch.

Buffett was featured in Adam Smith's book Supermoney.

John Templeton Interview

Templeton made his mark by going against the herd, and thought his distance from Wall Street was an advantage (he was in the Bahamas).  Buffett, of course, has also been positioned away from New York in Omaha, Nebraska.

Templeton developed a motto: "To buy when others are despondently selling and to sell when others are avidly buying, requires the greatest fortitude and pays the greatest reward."

He said his average holding period was 6 years so patience was the name of his game.  His strategy was to look for bargains worldwide and to buy the cheapest stocks and then to extrapolate earnings further into the future than most investors.

Robert Wilson Interview

He was focused on stocks with rapidly growing earnings and bets against those whose earnings are going down.

He said, "I am not an original thinker.  I tend to rely on other people to feed me ideas.  And more bright people are in New York than anywhere else. I'm a derivative thinker."

His philosophy is to be in stocks that have potential for huge gains and risk/volatility is perfectly fine by him.  "The only way one makes money in the market is when the market's perception of a stock changes."

He was looking for stocks where earnings haven't started to improve yet, or if they're improved they're going to accelerate.

Wilson also focused on the notion of hubris in markets and how he too fell victim to it.

Embedded below is the video of the interview with these well known investors: