Stock Pick Performance From Value Investing Congress Speakers Presenting at September's Event

The Value Investing Congress is only a few weeks away and will take place on September 16th & 17th in New York.  MarketFolly readers can receive discounted admission by clicking here and using code: N13MF7  This code expires tonight so be sure to take advantage.


Performance of Last Year's Picks From Speakers

We thought we'd check in on the performance of the stock picks from last year's Value Investing Congress.  These picks are from speakers who presented last year that will also be presenting again this year.

Here's the performance breakdown from October 3rd, 2012 until August 29th, 2013:

- 17 out of 21 picks outperformed the S&P 500

- Average performance of picks: +49%

- Performance of S&P 500 over same time frame: +13.3%


Jeff Ubben's Picks
Long Valeant Pharmaceuticals (VRX) +77.1%
Long Moody's (MCO): +44.2%
Long CBRE (CBG): +14.3%
Long Motorola Solutions (MSI): +11.7%

He also mentioned these names: Halliburton (HAL): +42.5%, Adobe (ADBE) +41%, & C.R. Bard (BCR): +9.8%


Mick McGuire's Picks
Long Gencorp (GY): +50.5% 
Long Brookfield Residential Properties (BRP): +39.6%

Long Alexander & Baldwin (ALEX): +28.7%


Alex Roepers' Picks
Long Rockwood Holdings (ROC): +34.9%
Long Energizer (ENR): +34%
Long Clariant (CLN VX): +33.9%
Long FLSmidth (FLS DC): -5.7%
Long Joy Global (JOY): -45.1%


Whitney Tilson's Picks
Long Netflix (NFLX): +409.8%
Long Howard Hughes (HHC): +46%
Long Berkshire Hathaway (BRK.A): +26.1%


Guy Gottfried's Picks
Long Canam Group (TSE:CAM): +81.2%
Long ClubLink Enterprises (TSE:CLK): +19.1%


Bob Robotti's Picks
Long Calfrac Well Services (TSE:CFW): +34.8%


As you can see, these managers' picks performed quite well on average.  And don't forget: each one of them will be presenting their new picks at this year's event in a few weeks along with plenty of other new speakers (full list of speakers here).


Hear Ubben, McGuire, Roepers & More Pitch Their Latest Ideas

Find out what stock picks these hedge fund managers will pitch at this year's Value Investing Congress in September.  Market Folly readers can save $800 off admission by registering here and using code: N13MF7  Remember, the code expires tonight!

Mick McGuire's 3 Ideas With Hidden Value: VIC Presentation

Continuing coverage, we're posting up notes from the Value Investing Congress.  Below are notes from the presentation of Mick McGuire of Marcato Capital Management.  His talk was entitled 'Perspectives on Book Value.'

McGuire was named a rising star in 2012 by Institutional Investor and he was previously an analyst at Bill Ackman's Pershing Square before launching his own fund and now manages around $750 million.

He sees a theme of companies owning significant assets which exceed the carrying value on the balance sheet. "Land,"  especially very old land.  Accounting rules, under GAAP, record land at cost, and it is valued at the lower of cost or fair value. It is only adjusted to mark it down, if value drops.  So it is almost never marked up on balance sheets.  So businesses with old holdings have land worth a lot more than they carry them for.

Here are his pitches that are all real-estate themed to some degree:


3 Ideas With Hidden Value

Alexander & Baldwin (ALEX):  One of Hawaii's oldest companies.  Owns commercial real estate in HI and CA.  $30/share, Market Cap $1.3B, EV $1.5B.  Revenue isn't the way to value it. Owns 7.9M sq ft of commercial real estate, and a pipeline of resorts/residential, 75,000 acres of land on Maui and Kauai.  Shows total assets of $1.43 on balance sheet, but only $832M in real estate value.

How to value their properties: Look at comps, or rental cash flow, commercial real estate worth about $442M.  mainland, similarly, get about $500M. So about $900M for real estate, about $22/share, but reduce for corp expense, so net $13.50/share, about 50% of current market value.

Active development projects are in Wailea, Kauai, still owns 100 acres in Wailea, worth about $1M/acre.  Kahului property, and highrise in Honolulu.  Total worth about $294M.   1000 acre master planned community on Kauai, up to 1500 units, selling for $1-4M each.  So JV interests another $400M,  means total, $30.00 of value, same as the share price.

You get the land "free."  What is it worth? They have 20% of Maui, and 15% of Kauai. It's mostly ag land, selling for $27k/acre. They have leased out some of the land, imply value of around $7k/acre. Will take many years to monetize the land, they use 100 years. Low value: $13.72/share to as high as $17.32 per share. Company strategy is to farm the land, waiting for  Total valuation: $43.70 to $47.30, up from $30.00 stock price today.

Q&A:  how about their corporate expenses?  They don't have a good handle on where it should be relative to where it is. "it's not an agenda item with me."  He says they've provided a lot of information to investors. 


Gencorp (GY):  Missile and rocket supply maker. $600M market cap. 11.5% FCF yield to the equity. Non core real estate holdings: carries it at $64.4M.   They said they are the largest shareholder.

Q&A:  What is the catalyst?  Says new CEO, attacked cost structure and capital structure complexity.  One questioner said they had about $300M in environmental claims.


Brookfield Residential Properties (BRP):Trading at $14.39, like ALEX, its value depends on how fast they monetize their land holdings.  62% of their balance sheet is raw land.  Yet they are considered a homebuilder.

"Positive carry call option on inevitable US housing recovery." Concerns about Toronto and Vancouver, which are priced at 6.5x and 8.9x median HH income, like the US was before the collapse.

When they value all the assets, they get approximately $2.2B of TBV, 58% increase in value, or stock move of around $44-55 per share, around 3x current share price!  No analysts covering the stock.

Q&A: Catalyst?  Analyst coverage would help.


Embedded below is McGuire's slideshow presentation from the Value Investing Congress:




Be sure to check out the rest of the hedge fund presentations from the Value Investing Congress.

Bill Ackman Starts Activist Position in Alexander & Baldwin (ALEX)

Bill Ackman's hedge fund firm Pershing Square has initiated a new activist position in Alexander & Baldwin (ALEX). Per a 13D filed with the SEC, Pershing has disclosed a 8.6% ownership stake in ALEX with 3,561,943 shares due to portfolio activity on March 21st. This comes after Ackman's other activist position in J.C. Penney (JCP) as well as his stake in Fortune Brands (FO).

Not a New Position?

While this appears to be a brand new position, Pershing also filed an amended 13F for the fourth quarter of 2010. And guess what all of a sudden appears? Shares of ALEX. At 2010 year-end, Ackman's hedge fund actually owned 172,001 shares. This position was previously unreported on their last 13F filing because they filed with the disclaimer of "confidential information has been omitted from this report and filed separately with the Commission."

Ackman obviously did this in order to stealthily accumulate his position. Because let's face it, had he been forced to disclose the tiny new position back in February, the imitators who mimic his every move would have seen this new position and driven prices. Pershing accumulated most of their stake in March. To see the rest of Pershing's investments, head to our Hedge Fund Wisdom newsletter.

Working With Marcato Capital Again

Also worth highlighting in Pershing's new activist stake is the fact that they will be working with fellow hedge fund Marcato Capital again. Marcato was founded by ex-Pershing analyst Mick McGuire and he had previously recommended shares of Landry's Restaurants to Pershing and the two worked together on the activist position.

They've teamed up again on shares of Alexander & Baldwin and Marcato owns 1.3% of ALEX with 551,881 shares. Collectively, the two hedge fund firms together now own 9.9% of the company. Their average purchase price seems to be around $41.xx per share given they spent $168.8 million on the stake.

Additionally, the hedge fund firms have exposure to 372,900 shares via total return swaps. These have a price of $45.12 per share and their ownership stake inclusive of these jumps to around 11% of the company. Overall, the SEC filings contain the standard activist boilerplate regarding talking to management about enhancing shareholder value. We'll have to see what tricks Ackman and McGuire have up their collective activist sleeves.

Per Google Finance, Alexander & Baldwin is "engaged in property development and agribusiness operations. The Company’s wholly owned subsidiary Matson Navigation Company, Inc., together with its two subsidiaries, is engaged in ocean transportation operations, related shoreside operations in Hawaii, and intermodal, truck brokerage and logistics services. The Company operates in five segments in three industries: Transportation, Real Estate and Agribusiness."

To learn more about this hedge fund, check out our profile of Pershing Square.