We're posting up notes from the Capitalize For Kids 2018 investment conference. Next up is Jeff Smith of Starboard Value who pitched a long of Marvell Technology Group (MRVL). They added to the position recently and filed.
Jeff Smith's Capitalize For Kids Presentation: Long Marvell Technology Group
• Semi co. Acquired Cavium in July 2018
• Half their biz in storage, half in networking
• Both are growing, both are well positioned
• #1, or #2 in almost every key market
• What SB has done with Marvell
• 114% underperformance vs peers over 5 years pre-SB
• Options backdating, 8 CFOs 8 years. Accounting investigation, auditor resignation
• Loved the business was great, Marvell’s customers wanted them to succeed
• Entire board and management changed since 2016. Just a settlement, not a proxy. More than half the board replaced via settlement, rest turned over after
• New management and CFO
• Revenue shrunk, now its growing
• Gross margins shrunk, now record highs
• Op margins shrunk dramatically, now op margins at record highs
• Stock has 2x’d since first 13D filing
• Only partially closed underinvestment gap, still below index returns, gap is widening in underperformance
• Why now? The acquisition positions it well for 5G and internet megatrend.
• Now has complete solution in enterprise Cloud data centre and service provider. Now Marvell can compete with Broadcom, who was the only complete solution. Customers want them to compete and be strong against Broadcom
• Trades below unaffected deal price
• What’s changed?
o Concerns around Cavium’s growth trajectory and inventory destocking
o Fear related to Marvell’s end markets
o Macro concerns, tariffs etc
o 10%+ FCF yield
• Inventory sell down and 4G lag before 5G buildup has temporarily impacted growth rate
• Cavium taking share in these end markets
• Went from consumer products biz, now infrastructure end markets (data centres, etc)
• Storage concern - Hard disk drives secular declines.
o Great profitable biz in slow declineo Hard drive for notebooks only 7% of Marvell’s revs
o Storage biz as a whole now focused more datacentres and Edge / Other internet
o Desktop / notebook is only 20% today
o Data centre still a share gainer
• Networking biz - all are share gainers in high growth markets
o Wi-fi
o ARM
o EDGE
o Ethernet
o Data centre
o 5G
• Not included in LT Financial Model
o Not included 5G, Revenue synergies on deal, or ARM server processors. So not accounting for the revenue growth for the above
o However, they are accounting for all the costs
• Thinks management is credible, killed their guidance. Implying that they sandbag guidance very hard.
• Goes through earnings guidance and earnings and were all big beats
• R&D is higher than their peers. Still thinks it is a solid investment in product that will payoff
• Put managers in place, thinks they are making very responsible investments, that should allow them to continue to beat earnings
• Either get that revenue, or those R&D costs will come out.
o —> earnings $2+/shr. 8x earnings today
o Trades dramatically below their peers on most metrics.
• Company in the market buying stock, $1b+ buyback program
• Still excited about this idea
Be sure to check out the rest of the presentations from Capitalize For Kids 2018.
Monday, October 29, 2018
Jeff Smith Long Marvell Technology Group: Capitalize For Kids Conference 2018
Tuesday, July 14, 2015
Greenlight Capital Q2 Letter: New Positions in Applied Materials, Bank of New York Mellon
David Einhorn's hedge fund Greenlight Capital is out with its second quarter letter. Greenlight returned (1.5)% in Q2 and year-to-date is (3.3)%. Their average exposure was 103% long and 86% short, leaving them net long only 17%. The letter details numerous recent portfolio moves:
New long positions: Applied Materials (AMAT), Bank of New York Mellon (BK), CNX Coal Resources (CNXC)
Sold long positions: Altice (AMS:ATC), Conn's (CONN), EMC (EMC), Marvell Technology (MRVL), Nokia (NOK), Playtech (LON:PTEC)
Covered shorts: Intuitive Surgical (ISRG), Vale (VALE)
Einhorn talks about all of the positions in the letter and also gives commentary on Micron (MU), one of his biggest positions that has sold-off recently.
At the end of Q2, Greenlight's largest positions in alphabetical order were: Apple (AAPL), CONSOL Energy (CNX), General Motors (GM), gold, Micron Technology (MU), and SunEdison (SUNE).
Embedded below is Greenlight's Q2 letter:
ValueWalk first posted the letter.
Friday, July 25, 2014
Greenlight Capital Q2 Letter: Einhorn Reveals Lam Research Stake
David Einhorn's hedge fund Greenlight Capital was up 7.9% net in the second quarter and is up 6.4% for the year. In their Q2 letter, Greenlight reveals a new position in Lam Research (LRCX).
They see the company as a beneficiary as the process of converting semiconductor designs into chips becomes harder to do.
Greenlight also bought a stake in Mallinckrodt (MNK) but reversed course and sold the stake due to their negative stance on Questcor (QCOR), a company MNK has agreed to purchase. Greenlight thinks the combined company "is setting itself up to be a very attractive short sale candidate if the merger is completed." The letter notes that Greenlight was short QCOR.
During the quarter, the hedge fund also sold out of its longs in Aspen Insurance (AHL) and Rite Aid (RAD) at nice gains.
At the end of Q2, Greenlight's largest positions (in alphabetical order) were: Apple (AAPL), gold, Marvell Technology (MRVL), Micron Technology (MU), Resona Holdings (TYO:8308) and SunEdison (SUNE).
Embedded below is Greenlight's Q2 letter with commentary on more of their positions:
Wednesday, April 23, 2014
Greenlight Capital's Q1 Letter: Sees Tech Bubble Forming
David Einhorn's hedge fund firm Greenlight Capital is out with is first quarter letter. In it, they talk about how a potential bubble in tech is forming. As such, they've shorted a basket of momentum names in small size in order to manage risk.
Other main takeaways from the letter include various new longs for Greenlight: Resona Holdings (Japan: 8308), SunEdison (SUNE), Altice (Netherlands:ATC), and Conn's (CONN). The last long might be a surprise to some, as many hedge funds have been short the retailer that also deals in subprime lending.
Greenlight also covered many unsuccessful shorts, including Chipotle (CMG), Fortescue Metals, Loblaw Companies, and Michael Kors (KORS).
At the end of Q1, their largest long positions were Alpha Bank, Apple, gold, Marvell Technology, Micron, and Oil States International.
Embedded below is Greenlight Capital's Q1 letter:
You can view other recent portfolio activity from Greenlight here.
Wednesday, January 22, 2014
Greenlight Capital's Q4 Letter: New Positions in Micron, BP, & Anadarko Petroleum
David Einhorn's hedge fund Greenlight Capital returned 19.1% net in 2013. Greenlight's fourth quarter letter to investors unveils their thesis on new positions in Micron Technology (MU), BP (BP), and Anadarko Petroleum (APC).
Greenlight likes Micron because the industry has started to act a bit more rationally and MU will buyback shares instead of building new factories.
Their BP stake is a play on increasingly shareholder friendly capital allocation policies as well and they think the company is worth $70 per share (it trades around $49 now).
Additionally, their letter talks about some positions they've closed recently like Airbus Group (formerly EADS), and ThyssenKrupp.
At the end of 2013, Greenlight's largest positions in alphabetical order were: Apple (AAPL), General Motors (GM), Marvell Technology (MRVL), Micron (MU), and Vodafone (VOD).
Thanks to ValueWalk who posted up Greenlight's Q4 letter and you can view it below:
For more on Einhorn, we just yesterday revealed some more of Greenlight's recent portfolio activity.
And for more year-end hedge fund letters, head to Third Point's Q4 letter here.
Monday, July 30, 2012
David Einhorn Boosts Marvell Technology Position
David Einhorn's hedge fund Greenlight Capital filed a 13G with the SEC regarding its position in Marvell Technology (MRVL). Per the filing, Einhorn has revealed a 5.3% ownership stake in the company with 29,595,179 shares.
This means he's boosted his holdings by 61% since the end of the first quarter. The filing was made due to portfolio activity on July 16th. Einhorn talked about his stake in MRVL in Greenlight's Q2 letter.
He likes that the company only trades at "roughly 5x next year's earnings net of the cash on the balance sheet." Einhorn hopes the company's latest repurchase program will be aggressive and he used weakness in shares to add to his position. Over the past three months, shares are down 24%.
Per Google Finance, Marvell Technology is "a fabless semiconductor provider of application-specific standard
products.The Company develops complex System-on-a-Chip (SoC) devices.
Its product portfolio includes devices for data storage,
enterprise-class Ethernet data switching, Ethernet physical-layer
transceivers (PHY), mobile handsets and other consumer electronics,
wireless networking, personal area networking, Ethernet-based personal
computer (PC) connectivity, control plane communications controllers,
video-image processing and power management solutions. Its products
serve diverse applications used in carrier, metropolitan, enterprise and
PC-client data communications and storage systems."
For the latest on this hedgie, head to Einhorn on Apple, Green Mountain Coffee and Amazon (interview).
Tuesday, July 24, 2012
David Einhorn Sells Best Buy & Dell, Buys Cigna & Coventry Health: Q2 Letter
David Einhorn's Greenlight Capital is out with their Q2 2012 investor letter and Dealbreaker has it posted. In it, they reveal that they no longer own Best Buy (BBY) or Dell (DELL). Additionally, they started new stakes in Cigna (CI) and Coventry Health Care (CVH), playing the managed care sector. Here are some excerpts from the letter:
On Best Buy: "We thought that the core debate was whether or not the company could compete with Amazon. The answer at this point is that maybe it can and maybe it can’t. (Despite the consensus view, our store surveys have repeatedly shown that there is no price benefit for consumers to browse at BBY and then purchase at Amazon.) There has been some deterioration in BBY’s domestic performance, which we attribute to a lack of a “must have” consumer electronics product, rather than an erosion of BBY’s competitive position. While we held the shares, three unexpected problems emerged: First, BBY depleted $1.3 billion of its cash resources by paying a double-digit multiple for Carphone Warehouse’s share of the Best Buy Mobile profit stream. The market promptly revalued those earnings to BBY’s mid-single digit multiple. Second, in the most recent quarter, BBY’s international profits collapsed. In particular, comparable sales in its Chinese business fell 28% as the Chinese economy appears to have hit a wall. Finally, the company dismissed its CEO over his personal conduct, and also removed the Chairman for failing to respond properly to the CEO’s misbehavior. As a result, the company has an interim CEO and is trying to come up with a strategy. We worried that this could lead to additional business disruption so we exited with a loss."
On Dell: "We had thought that the growth in the non-PC business would be enough to
offset the deterioration in the PC business. The non-PC growth was smaller than we’d hoped
and the PC deterioration was worse than we’d anticipated. While DELL has a good balance
sheet, it appears likely that management will try to use much of the cash to try to buy its way
into better businesses. At a minimum, this will erode some of the value cushion that the cash
balance creates."
On Cigna: "CI is a managed care company with three primary divisions: Cigna HealthCare, Cigna Group Disability and Life, and Cigna International. Cigna HealthCare, which comprises about 70% of CI’s profits, offers medium and large companies traditional risk-based insurance, in addition to administering plans for those that prefer to self-insure. Cigna HealthCare recently bought HealthSpring to enter the fast-growing Medicare Advantage market. Cigna Group Disability and Life is a low-growth, stable business. Cigna International, which provides insurance policies for individuals, as well as insurance and administrative services for multinational companies and governments, is growing at more than 20% per year. We believe that CI deserves a higher multiple because the plan administration business is a service business that doesn’t take risk, and the other divisions do not warrant discounted values. Our purchase price of $45.42 per share valued CI at less than 8x estimated 2012 EPS and approximately 6x our forecast of post Obamacare 2014 EPS. CI shares closed the quarter at $44.00 each." Note: CI has since fallen further and you can currently buy it at cheaper prices than Greenlight.
On Coventry: "CVH is a regional managed care company with operations in the mid-Atlantic, Midwest and parts of the South. The company offers commercial risk-based insurance and has an expanding business in the government-sponsored Medicaid and Medicare programs. Problems with a recently-acquired three-year contract to provide managed care services to the Medicaid population in Kentucky caused the company to significantly reduce earnings guidance for 2012. This led to a large drop in the stock price. We believe the issues related to the Kentucky contract are manageable and finite, and CVH will return to breakeven or a profit on this contract in 2013 from a loss this year. Our average purchase price of $31.22 represents 8x our forecast for 2014 earnings net of $6 per share of cash and reflects our estimate of the negative impact of Obamacare. CVH closed the quarter at $31.79 per share."
We've also recently highlighted some of Einhorn's thoughts on Apple, Green Mountain and Amazon.
Einhorn's top five largest long positions at the end of the quarter (in alphabetical position) were: Apple (AAPL), General Motors (GM), gold, Marvell Technology (MRVL), and Seagate Technology (STX). We highlighted how Greenlight was adding to their STX position last month.
Instead of waiting for a copy of the letter, we'll send you over to Dealbreaker who already has it posted here.
Wednesday, May 16, 2012
David Einhorn's Ira Sohn Presentation on Martin Marietta Materials, Apple & More
We're posting up notes from the Ira Sohn Conference. Greenlight Capital's David Einhorn gave a presentation on a ton of different stocks.
He screamed through 100 slides and provided very little detail, more of a way to touch on several ideas, so people can do their own work.
Short Martin Marietta Materials (MLM): priced at 35 p/e. One time fiscal stimulus has goosed earnings. Multiple too high.
Short France: exposure to Italy and Spain. Default or return to Franc not out of the question. Spain, retailers.
On China: "Big trouble in little China" Big knowledge gap, and cultural gap. Shows all the RTO frauds, no specific names to short. Overbuilding outside of main cities in China, projects don't pay off the debt service. Now USD not coming in anymore, so the gig is up. Banks are in trouble. Chinese elites are taking money out of the country.
On Japan: bad demographics. Sales of adult diapers outsold those for babies this year. Shorting the yen. Long DeNA, Gree: Japan's two largest social network companies are in the cellar. Games under regulatory scrutiny. Better than FB.
Long Apple (AAPL): Hedge funds actually have less than 2% of assets. Says Trillion Dollar market caps aren't prohibited. Other bear case is hardware company, it's not, it's a software company. iOS platform sticky, "captured the customer" Also long Microsoft (MSFT), Marvell Technologies (MRVL).
Perpetual Preferred Stocks: Advocates use of perpetual preferred stocks. 4-6% dividend, taxed at preferential tax rates. Some special form of preferred. "Some will object that there is no precedent for this idea. That is because this is a new idea."
Thoughts on Tons of Other Stocks: Short Zara/Inditex. Long DIA. Long Norway. Long Cairn Energy, small cap E&P. has cash in USD. Negative words on Amazon.com (AMZN): Revenue growth, no op profits; criticized company's weak profit growth... didn't say he was shorting? "Is
Jeff Bezos Batman?" Impact on other retailers is clear. Hint at other
shorts. Short Dicks Sporting Goods (DKS)? He says co is in big trouble with Amazon's big push into the category. Trades at 20x, could be left in the dust. Short US Steel (X). Likes Norway's GJF.
David Einhorn will also be presenting investment ideas at the Value Investing Congress in NYC in October. Market Folly readers can receive a discount to the event by clicking here and using discount code: N12MF3
P.S. - Don't miss other presentations from John Paulson, Bill Ackman, Larry Robbins & more: notes from Ira Sohn Conference 2012.
Tuesday, November 8, 2011
David Einhorn Buys CBS, General Motors & Marvell Technology: Q3 Letter
David Einhorn's hedge fund Greenlight Capital just sent out its third quarter letter to investors and in it they reveal some of their latest portfolio activity. Einhorn's firm initiated brand new positions in CBS Corp (CBS), General Motors (GM), and Marvell Technology (MRVL) in the third quarter.
CBS Corp (CBS)
Greenlight likes CBS due to its growing retransmission fees, monetization of their content library, as well as the potential for increased advertising spending by clients. The hedge fund bought CBS at $20.79 per share (less than 10x their estimate of 2012 earnings) and it now trades just north of $25.
General Motors (GM)
The hedge fund writes on their new position in the largest automaker in the US that IPO'd last year: "GM is being priced by the market as a cyclical company trading at less than 6x this year's earnings. While some may see it as normal to value cyclicals at low multiples of peak earnings, we believe that 2011 is not a peak and, in fact, is below mid-cycle." They bought shares at $25.78 and GM currently trades around $24.
Marvell Technology (MRVL)
Einhorn's firm believes that hard disk drives won't become extinct anytime soon (the major bear case). They think the company will buy back 12% of its float and Greenlight bought at $14.35 per share (currently trades around $14.40).
The letter also follows up on Einhorn's short case on Green Mountain Coffee Roasters (GMCR) from the Value Investing Congress. Lastly, Greenlight mentions that they've sold out of their long positions in Pfizer (PFE) and BP (BP) during the quarter and covered their short of Amedisys (AMED).
Greenlight's Top Holdings at the end of Q3 in alphabetical order:
Apple (AAPL)
Gold
Market Vectors Gold Miners (GDX)
Microsoft (MSFT)
Vodafone Group (VOD)
Embedded below is Greenlight Capital's Q3 letter:
For more from Greenlight Capital, we detailed last week how Einhorn was buying gold miners.
Thursday, October 28, 2010
Lee Ainslie & Maverick Capital's Third Quarter Letter
Lee Ainslie's hedge fund Maverick Capital is out with their third quarter investor letter and year-to-date for 2010, they're up 8.2% and have now seen 14.1% annualized returns since inception in 1995. Their Levered fund is doing even better this year, up 17.3% and has seen 22.3% annualized since inception. In total, the firm now manages over $12 billion across their various investment vehicles.
These returns are pretty solid but Q4 might be off to a bumpier start considering that one of their larger holdings has been Apollo Group (APOL), the for-profit education play that's down over 23% in the past month. But on the converse side of things, their stake in Commscope (CTV) is up almost 40% over the past month on news of potential buyout talks. At the recent Value Investing Congress, Ainslie said he believed that technology stocks are cheap. The cheapest, he argues, that they've been in 20 years.
Maverick's Exposure Levels
Given this stance, it should come as no surprise that Maverick has a large allocation of capital to technology stocks. At the end of September, Maverick was 11.7% net long technology. And at the Value Investing Congress, he revealed that Maverick has its highest technology exposure ever.
At the end of September, other notable net long exposure include financials at 13% and the consumer sector at 12.6%. In terms of notable net short positions by geography, they are net short emerging market technology, European technology, emerging market industrials, and Japanese media & telecom. Maverick seems to be betting on US companies and hedging it via shorts in foreign companies to some extent.
Maverick's Portfolio
Regarding portfolio construction, Ainslie's firm currently has 67 longs and 80 shorts. Their largest long represents a 4.7% position whereas their largest short is 2.9%. Overall, Maverick's average position size is 2.1%. As we've detailed in our profile of Maverick Capital, Lee Ainslie implements strict position sizing rules and has a solid focus on risk management. The hedge fund's top 10 investments currently represent 29% of the portfolio.
We detailed Maverick's second quarter positions in our newsletter, Hedge Fund Wisdom. The next issue (released in a few weeks) will detail Ainslie's third quarter portfolio holdings. In the mean time, we know Maverick has been long Commscope (CTV), Marvell Technology (MRVL), and Adobe (ADBE). Dell (DELL), Intel (INTC), and Microsoft (MSFT) were others he recently talked about. Be sure to subscribe to our newsletter to see what top hedge funds are investing in once our next update comes out.
Bond Market Inflows/Equity Market Outflows
Embedded below is Lee Ainslie and Maverick Capital's third quarter 2010 letter to investors. In it, Maverick's Steve Galbraith talks about the potential bond bubble where he argues that government bonds are essentially trading at a P/E equivalent to 40x. He also addresses a noticeable change in investor sentiment as they prefer bonds to stocks in a knee-jerk reactionary maneuver:
"Since 2007 over seven hundred billion dollars has flowed into fixed income funds while nearly two hundred billion dollars has left equity funds. These flows are staggering; they suggest the (potentially lethal) combination of driving 100 miles per hour while looking through the rear view mirror because the scenery just past looks so good (bonds outperformed stocks by record levels in part of this period), but also being too afraid to look forward in fear that, well, there is no there there."
Here's the letter:
You can download a .pdf copy here.
Be sure to also check out Lee Ainslie's presentation from the Value Investing Congress just a few weeks ago for some more of his recent thoughts. To see what stocks Ainslie owned in Q2 (and in Q3 in our upcoming issue), head to our Hedge Fund Wisdom publication.
Tuesday, October 12, 2010
Notes From the Value Investing Congress: Burbank, Ainslie, Parames, & Singhi
We're pleased to present notes from the Value Investing Congress taking place today and tomorrow. Today's notes include presentations from John Burbank (Passport Capital), Lee Ainslie (Maverick Capital), Francisco Parames (Bestinver Asset Management), and Amitabh Singhi (Surefin Investments).
Below is a quick summary of today's ideas. We'll also cover tomorrow's presentations so be sure to receive our free updates via Email or our free updates via RSS.
John Burbank ~ Passport Capital
Burbank's presentation focused on the 'math of democracy.' His talk started off quite grim as he believes the US government's current level of spending is unsustainable. Burbank feels the US is changing and must now be viewed as an emerging market. This is along the lines of what Burbank presented at the Ira Sohn West Conference recently as well. Over the longer-term, he believes we're headed either in the direction of Argentina or Germany.
The most jolting claim in Burbank's presentation was the notion that classic bottom-up stockpicking is dead. This is intriguing of course because the majority of attendees at the VIC employ such a strategy. Burbank approaches things a bit differently, utilizing a top-down approach and actually feels that the next two years in the market could be more tranquil than currently anticipated.
In terms of portfolio allocation, Burbank likes being long countries with high political/economic freedom. He likes a group he refers to as the "new CASSH" referring to Canada, Australia, Singapore, Switzerland, and Hong Kong. Conversely, he likes being short developed countries with large debt.
In terms of specific positions, Burbank mentioned Passport's largest position as Riversdale Mining (ASX: RIV). He believes gold is a 'must have' investment, but preferably via the physical asset and *not* through the exchange traded fund, GLD. David Einhorn of Greenlight Capital has also in the past mentioned that owning physical gold is cheaper than GLD (due to expenses). Passport Capital currently has an 8% position in physical gold as it is a much cheaper way to play the metal.
Burbank is quite fond of hard assets/commodities and wants to buy assets that China needs. Specifically, he likes potash for that very reason and has big stakes in Mosaic (MOS) and CF Industries (CF). Additionally, he has a position in Potash (POT), the company subject to takeover bids from BHP Billiton. Recently, Dan Loeb's hedge fund Third Point disclosed a new stake in POT. Burbank also has a major investment in coking coal in Mozambique. The fund manager also said he is long steel and short copper.
In terms of other positions, Passport also owns big blue-chips with yield including Exxon Mobil (XOM), Kraft (KFT), Dr. Pepper (DPS), and Microsoft (MSFT). Lastly, the hedge fund manager mentioned that individuals who understand capital allocation need to boost their contributions to political candidates. Passport Capital's portfolio is detailed in our newsletter, Hedge Fund Wisdom.
Lee Ainslie ~ Maverick Capital
Ainslie's presentation focused on the 'case for technology.' The Maverick Capital founder noted that the investment landscape is very different now than it was two years ago. The hedge fund manager says this is a tough market for stock pickers and that we're seeing the highest correlation among large-caps since the 1930's.
Back in 2009, low quality and small-cap stocks (higher beta) rallied furiously and led the market rebound. Interestingly enough, these low quality names have also led the market thus far in 2010 and that fundamentals haven't played an important role.
According to him, the most attractive opportunities currently reside in high quality, large-cap, lower beta stocks. In essence, he's targeting companies with solid balance sheets and high return on equity. Currently, Ainslie believes technology stocks are the cheapest they've been in 20 years. He cites their high free-cashflow yields and points out that 'growth' tech is beating out 'value' tech.
He believes the weak US dollar is helpful to technology companies. Ainslie also points out the large amount of cash on their balance sheets and opines that this cash should be deployed via acquisitions, share buybacks or dividends to benefit shareholders. Maverick's fondness for technology is an investment theme of theirs we've tracked since the first quarter of this year.
In terms of specific names, Ainslie emphasized Commscope (CTV) as a good hold through 2012. This is one of the five major tech stocks in his portfolio. The others include Marvell Technology Group (MRVL), Intel (INTC), Microsoft (MSFT), and Dell (DELL). Maverick Capital is currently 17% net long technology, their highest exposure ever.
Lastly, shifting to the heated topic of for-profit education, Ainslie was positive on the sector. But then again, we already knew that considering his sizable long of Apollo Group (APOL) disclosed in Maverick's portfolio.
Amitabh Singhi ~ Surefin Investments
Singhi has returned 29.8% annualized since inception in mid-2001. He focuses on India with his investments often buys 'cigar butts' and plays special situations. His current portfolio is comprised of 12 positions (most of which have single digit P/E ratios as he typically doesn't like to pay for growth). At the Congress, he spouted off numerous ideas.
Firstly, he mentioned Larsen & Toubro as an infrastructure play in India. This company trades as LTOUF on the pink sheets and as BOM:500510 in India. Secondly, he likes Housing Development Finance Corp as a play on housing upgrades (traded as BOM: 500010 in India). The interesting thing about some of Singhi's picks is that they are stocks trading near highs and some would argue that valuation is stretched here. Singhi does not own Larsen & Toubro because it trades at a very high multiple, 40x earnings. He is recommending superbly run and very well known companies, though.
Singhi's main idea today was Balkrishna Industries Limited (traded in India as BOM:502355), a tire maker known as BKT. The company trades at a P/E of just 7, but Q1 in FY '11 was slow. His last idea was Agrimax.
Francisco Garcia Parames ~ Bestinver Asset Management
Parames is Spain's largest money manager at $6 billion under management. He is a follower of the Austrian School of Economics. From an investment standpoint, he typically looks for good businesses with strong management trading at a solid price. Currently, he feels the Europe is still a less efficient market than the US. Obviously as a value investor, this could be seen as a welcome development as it can present opportunities. But what's interesting here is that while Parames is based in Spain, he doesn't have a single cent invested in his country.
In his talk, Parames said that, "patience is our biggest competitive advantage." He likes to buy family owned companies, something that is much more common in Europe (80% of his investments fit this criteria). In general, Bestinver focuses on strong businesses with high free cash flow yield.
At the Congress, he said that he likes BMW Preferred Shares (LSE: 0KF2.L) which currently trade at 3.1x 2012 free cash flow per share. He thinks the preferreds have over 200% upside and he owns 11 million shares (they are thinly traded at around 60,000 shares daily). Parames notes BMW's 7% margins and that this can be improved to 8-10% via better manufacturing operations.
He also mentioned CIR SpA (BIT: CIR), through Sorgenia Group, a multi-utility operator in Italy. Also, Parames mentioned Ferrovial which trades on the pink sheets as FRRVY and in Europe as ETR:UFG. He believes shares are worth around 17 euros (the company currently trades around 7 euros per share).
*** We'll also cover tomorrow's presentations so be sure to receive our free updates via Email or our free updates via RSS.
In separate posts, we've also posted up other notes from the event, including:
- Bill Ackman's Q&A session from the Congress
- Presentations from Zeke Ashton, Guy Spier, & Michael Lewitt
Thursday, May 20, 2010
Lee Ainslie's Maverick Capital Bullish on CVS Caremark (CVS) & Technology: 13F Filing Q1 2010
(This post is part of our series on tracking hedge fund portfolios. If you're unfamiliar with tracking investments they disclose via SEC filings, check out our series preface on hedge fund filings.)
Next up is Lee Ainslie's hedge fund Maverick Capital. Lee founded the firm with seed capital from the Wyly Family in Texas after he left Julian Robertson's hedge fund Tiger Management. Maverick focuses on intensive fundamental research on both the long and short sides of the portfolio, but doesn't employ pairs trades. Ainslie likes to focus on risk management and positions typically do not exceed more than 8% of the portfolio. Maverick's analytical team is divided up by sector and place an emphasis on enterprise value to sustainable free cash flow.
The positions listed below were Maverick's long equity, note, and options holdings as of March 31st, 2010 as filed with the SEC. All holdings are common stock unless otherwise denoted:
Brand New Positions
Abercrombie & Fitch (ANF)
Increased Positions
Qualcomm (QCOM): Increased position by 269.7%
Reduced Positions
Berkshire Hathaway (BRK.A): Reduced position by 99.6%
Positions They Sold Out of Completely
Autodesk (ADSK)
Top 15 Holdings (by percentage of assets reported on 13F filing)
CVS Caremark is Maverick's largest stake and here's a brief history with their position: Back in the first quarter of 2009, we actually saw Ainslie sell out of CVS and buy into rival Walgreens. Then in the fourth quarter of 2009, we posted on our Twitter account that Ainslie mentioned he was very keen on shares of CVS at an investment conference as it was one of his highest conviction picks. That much is now evident in his portfolio as CVS sits as Maverick's largest holding as of the first quarter in 2010. CVS was also mentioned on a list of analysts' best stock picks for 2010.
This post is part of our daily hedge fund portfolio tracking series. We've already detailed activity from numerous managers so click the links below to be taken to the respective portfolio updates: Seth Klarman's Baupost Group, Warren Buffett's Berkshire Hathaway, Stephen Mandel's Lone Pine Capital, and Bill Ackman's Pershing Square, David Einhorn'sGreenlight Capital, Eddie Lampert's RBS Partners, David Tepper's Appaloosa Management, Mohnish Pabrai's Investment Fund, and John Griffin's Blue Ridge Capital. Be sure to check back daily for new hedge fund updates.
