Rupal Bhansali Long GSK & Baidu: Invest For Kids Chicago Presentation

We're posting up notes from the Invest For Kids Chicago conference 2015.  Next up is Rupal Bhansali of Ariel Investments who pitched longs of GlaxoSmithKline and Baidu (BIDU).


Rupal Bhansali's Invest For Kids Chicago Presentation

•    GSK – UK Pharma company with three pillars to the franchise – (1) respiratory franchise with 50% market share, growth industry. Very hard to enter respiratory biz.
 •    Advair was a victim of its own success. Believes Advair bear case has already played out. •    Competition for blockbuster drug, Advair is priced in.
•    2) Vaccines – market leader in business with high barriers to entry. Margin upside from purchasing Novartis vaccines biz. Vaccines one of the highest barriers to entry biz in the world. Only 4-5 manufacturers of vaccines.
•    Consumer – strong brands such as Flonase, Aquafresh, Theraflu and new mgmt. team with a mandate to double the margins. New mgmt. team from L’Oreal.
•    Internet penetration of 48% vs 75% - 80% in developed mkt.
•    Trades at 16x fwd. EPS and 6% div yield. Margins set to improve to high 20%/30% ROIC.


•    Second idea is Baidu (BIDU).
•    Baidu = Google + Expedia + YouTube + Opentable + Groupon.
 •    Internet penetration of 48% vs 75% - 80% in developed mkt.
•    “Silicon Valley of China”
•    Down 33% over past year due to a profit warning.
•    Back to $200, might have some hiccups and could have better entry point
•    3rd inning in 9 inning game. So still good capital appreciation over lt time view.
•    Not a family ran business, more like a corporate Anglo-Saxon business. CEO went to Stanford.
•    Conservative as they spend through the P&L investments made in core biz versus capitalizing.


Check out the rest of the presentations from Invest For Kids Chicago 2015.

What We're Reading ~ Analytical Links 10/31/13

A look at TransDigm Group (TDG) [Brooklyn Investor]

Repeatedly burned, short sellers avoid momentum stocks [Reuters]

Liberty Global: On the European empire John Malone's built [BusinessWeek]

Michael Lewis on the next crisis [BusinessWeek]

For once mighty Sears, pictures of decay [Dealbook]

Amazon and the profitless business model fallacy [Eugene Wei]

A write-up on Emerald Oil (EOX) [Dedwardssays]

Trucking companies inching toward using natural gas as fuel [WSJ]

The new reality of international bonds [Vanguard]

Time to buy former retailing darling Tesco [Institutional Investor]

GlaxoSmithKline's China conundrum [FT]

Moats widen for railroads & luxury goods [Morningstar]

Eastman Chemical: specialty chemical for commodity price [Seeking Alpha]

Current tech euphoria in Silicon Valley isn't exactly like 1999 [WSJ]

Third Point Trims Position in Nabi Biopharmaceuticals (NABI)

Dan Loeb's hedge fund firm Third Point LLC just filed an amended 13D with the SEC regarding its position in Nabi Biopharmaceuticals (NABI). Due to portfolio activity on December 16th, Loeb has disclosed a 9.4% ownership stake in NABI with 4,000,100 shares. They sold shares on dates ranging from the 13th of December to the 20th and at prices from $5.60 to $5.73.

Back in April we revealed that Third Point was selling NABI shares and this time is no different as they've reduced their position from a previous 10.7% ownership down to the current 9.4%. However, Third Point still retains a sizable stake. For more on this hedge fund's latest activity, we posted up Third Point's most recent investor letter.

A potential thesis associated with this investment was revealed by Seth Hamot of Roark, Rearden, & Hamot Capital. It is a play on curing addiction to smoking and Hamot likes the royalty stream as Nabi partnered with Glaxo Smith Kline (GSK) on this vaccine. You can read his NABI thesis here.

Per Google Finance, Nabi Biopharmaceuticals is "a biopharmaceutical company focused on the development of vaccines addressing unmet medical needs in the areas of nicotine addiction and infectious disease. As of December 31, 2009, the Company’s product in development is Nicotine Conjugate Vaccine (NicVAX), a investigational vaccine for treatment of nicotine addiction and prevention of smoking relapse."

To learn to invest like Loeb, check out his recommended reading list.