Notes From Great Investors Best Ideas Conference (GIBI) Dallas: Einhorn, Pickens, Gabelli

Below are some notes from the 2016 Great Investors Best Ideas (GIBI) conference in Dallas, TX.  It featured prominent investors sharing investment ideas to benefit the Michael J. Fox Foundation for Parkinson's research and Vickery Meadow Youth Development Foundation.


Notes From Great Investors Best Ideas (GIBI) Dallas Conference 2016

David Einhorn (Greenlight Capital):  Likes Mylan (MYL), thinks the Epipen situation is overblown relative to the rest of their business as they're mainly in generic drugs.  "So the earnings that we're looking at in 2018 are in the low $6's and we think only about 25 cents of it comes from EpiPen, so you're gonna earn something in the high $5s, excluding EpiPen and the stock's today in the mid $30's."

Contrasted the situation to that of Mallinckrodt (MNK) which bought QuestCor, a formerly highly shorted hedge fund name.  Their Acthar Gel drug has raised prices from $40 in 2001 up to a whopping $40,000 a dose but you don't hear about it as much because less people use it but says they're more exposed to potential health care focus on lowering drug prices given Acthar is a much larger portion of MNK's profit. 

Thinks General Motors (GM) is cheap and can earn its entire market cap before Tesla turns a profit.  Laid it out as follows:  stock could fall 3/4 and still has enough to pay the dividend.  Another quarter of the earnings are stock buybacks so you're basically getting a 5-6% share reduction, a 5% dividend so you're almost getting a 11% return just by sitting around. 

Thinks the Rite Aid (RAD) deal closes and separately also sees upside in Chemours (CC).  You can view his thesis on Chemours in Greenlight's Q2 letter.

Talked about the active vs passive investing debate.  Noted that "It seems to me that passive money management strategies are fundamentally momentum strategies.  In other words, the more the stock goes up, the more it becomes weighted in the index.  The more it becomes weighted in the index, the more important it becomes.  It continues going up, it doesn't ever revert."  Also called stocks like Apple (AAPL), Herc Holdings (HRI), and CIT (CIT) 'very cheap stocks.'



Boone Pickens (BP Capital):  Sees oil at $60 by the end of 2016 and up to $70 by the end of next year.  Likes EOG Resources (EOG) as well as Pioneer Natural Resources (PXD). Says 'you can't miss' on the later, argued that the only thing that can mess up his thesis is a recession.  Says PXD has a huge amount of oil.  (In the past we've posted how David Einhorn has/had been short PXD.)  Pickens says he's up 300% this year



Mario Gabelli (GAMCO Investors): Likes Herc Holdings (HRI), recent spin-off from Hertz Global (HTZ),  as a play on infrastructure: thinks EBITDA margins widen up to 1000 basis points.  Says the biz is growing 4-5% and is a highly fragmented biz but with 3 major players (other two being Ashtead (LSE:AHT) and United Rentals (URI).  Thinks stock triples over next 5 years.  He also posted about HRI on his Twitter account here.



Andy Beal (Beal Financial): He was pretty bearish and argued that government policies are basically depriving them of potential investment opportunities and basically said to get out of everything.  Talked up rental real estate.



Lisa Hess (SkyTop Capital):  Formerly of Loews, now manages SkyTop.  Her pick was Constellium (CSTM) as a proxy for more use of aluminum in automobiles etc.



Caroline Cooley (Crestline Investors):  Long Shutterfly (SFLY).  Says they have 60% market share and likes it as a growth play.  Said she's not worried about competition from the likes of Amazon (AMZN) and others like Snapfish.  Cited Apple trying and failing to compete with a similar service.  Says SFLY earns ten times that of its next biggest competitor, giving them a huge advantage.  Likes new CEO Chris North (previously of Amazon UK) and says company has some potential partnerships in the works and has bought back stock in the past.



Ray Nixon (Barrow Hanley Mewhinney & Strauss):  Talked about active vs passing investing.  Argued Buffett could potentially buy Phillips 66 (PSX) around $100 per share.  We've highlighted how Buffett has been accumulating PSX.


For more coverage of other recent investment conferences, head to our notes from the Sohn San Francisco conference.

Warren Buffett Continues Buying Phillips 66

As we've detailed previously, Warren Buffett's Berkshire Hathaway has been continuously buying Phillips 66 (PSX) shares.  They've filed yet another Form 4 with the SEC indicating they've purchased even more PSX.

The latest filing shows Berkshire purchased 82,361 shares at a weighted average price of $77.8617 on September 1st.

After this round of buying, Berkshire now owns over 79.65 million shares of PSX.

Per Google Finance, Phillips 66 is "an energy manufacturing and logistics company with midstream, chemicals, refining and marketing, and specialties businesses. The Company operates its business through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties (M&S). The Midstream segment includes its equity investment in DCP Midstream , LLC (DCP Midstream) and its investment in Phillips 66 Partners LP. The Midstream segment consists of three business lines: Transportation, DCP Midstream and NGL. The Midstream segment also transports crude oil and other feedstocks to refineries and other locations, and delivers refined and specialty products to market, and provides storage services for crude oil and petroleum products. The Chemical segment manufactures and markets petrochemicals and plastics. The refining segment buys, sells and refines crude oil and other feedstocks into petroleum products. The M&S segment purchases for resale and markets refined petroleum products."

Warren Buffett Files Another Form 4 on Phillips 66

Warren Buffett last week indicated he had bought more Phillips 66 (PSX) for Berkshire Hathaway.  That trend continued with the filing of yet another Form 4 with the SEC.

The latest filing notes he purchased another 83,466 shares at a weighted average price of $78.2878 on August 25th.  This brings his total PSX ownership up to over 79.56 million shares.

You can view the rest of Buffett's latest investment activity in the brand new issue of our newsletter.

Per Google Finance, Phillips 66 is "an energy manufacturing and logistics company with midstream, chemicals, refining and marketing, and specialties businesses. The Company operates its business through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties (M&S). The Midstream segment includes its equity investment in DCP Midstream , LLC (DCP Midstream) and its investment in Phillips 66 Partners LP. The Midstream segment consists of three business lines: Transportation, DCP Midstream and NGL. The Midstream segment also transports crude oil and other feedstocks to refineries and other locations, and delivers refined and specialty products to market, and provides storage services for crude oil and petroleum products. The Chemical segment manufactures and markets petrochemicals and plastics. The refining segment buys, sells and refines crude oil and other feedstocks into petroleum products. The M&S segment purchases for resale and markets refined petroleum products." 

Warren Buffett Buys More Phillips 66

Warren Buffett's Berkshire Hathaway has filed a Form 4 with the SEC regarding his stake in Phillips 66 (PSX).  Per the filing, Buffett acquired more shares on August 22nd, 23rd, and 24th.

In total, he purchased 704,181 shares at weighted average prices of around $77.04 - $78.15.  After these transactions, Berkshire now owns 79.48 million shares of PSX.

We've highlighted in the past how Buffett has been acquiring PSX shares in recent months.

Per Google Finance, Phillips 66 is "an energy manufacturing and logistics company with midstream, chemicals, refining and marketing, and specialties businesses. The Company operates its business through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties (M&S). The Midstream segment includes its equity investment in DCP Midstream , LLC (DCP Midstream) and its investment in Phillips 66 Partners LP. The Midstream segment consists of three business lines: Transportation, DCP Midstream and NGL. The Midstream segment also transports crude oil and other feedstocks to refineries and other locations, and delivers refined and specialty products to market, and provides storage services for crude oil and petroleum products. The Chemical segment manufactures and markets petrochemicals and plastics. The refining segment buys, sells and refines crude oil and other feedstocks into petroleum products. The M&S segment purchases for resale and markets refined petroleum products.."

Berkshire Hathaway Buys More Phillips 66 (PSX)

Warren Buffett's Berkshire Hathaway has filed another Form 4 with the SEC regarding its stake in Phillips 66 (PSX).  Per the filing, Berkshire was buying PSX shares on June 3rd, 6th, and 7th at prices ranging from $80.085 to $80.76.  In total, Berkshire bought 469,604 shares.

We highlighted how Berkshire Hathaway bought PSX shares last month as well, as this has been an ongoing purchase for some time.

After the most recent transactions, Berkshire now owns over 78 million PSX shares.

Per Google Finance, Phillips 66 is "an energy manufacturing and logistics company with midstream, chemicals, refining and marketing and specialties businesses. The Company operates its business through four segments: midstream, chemicals, refining and marketing and specialties. It gathers, processes, transports and markets natural gas, and transports, fractionates and markets natural gas liquids (NGL) in the United States. The Chemical segment manufactures and markets petrochemicals and plastics. The Chemicals segment consists of its 50% equity investment in Chevron Phillips Chemical Company LLC (CPChem). The refining segment buys, sells and refines crude oil and other feedstocks into petroleum products (such as gasolines, distillates and aviation fuels) at 14 refineries, mainly in the United States and Europe. The Marketing and Specialties segment purchases for resale and markets refined petroleum products (such as gasolines, distillates and aviation fuels), mainly in the United States and Europe." 

Berkshire Hathaway Acquires More Phillips 66

Warren Buffett's Berkshire Hathaway has filed a Form 4 with the SEC regarding its stake in Phillips 66 (PSX).  Per the filing, Berkshire was out buying PSX shares on May 19th, 20th, and 23rd.

They purchased 824,630 shares in total at weighted average prices ranging from $76.70 to $78.63.  After these buys, they now own over 76.37 million Phillips 66 shares.

We've previously highlighted how Buffett has been buying PSX across multiple quarters now.

Per Google Finance, Phillips 66 is "an energy manufacturing and logistics company with midstream, chemicals, refining and marketing and specialties businesses. The Company operates its business through four segments: midstream, chemicals, refining and marketing and specialties. It gathers, processes, transports and markets natural gas, and transports, fractionates and markets natural gas liquids (NGL) in the United States. The Chemical segment manufactures and markets petrochemicals and plastics. The Chemicals segment consists of its 50% equity investment in Chevron Phillips Chemical Company LLC (CPChem). The refining segment buys, sells and refines crude oil and other feedstocks into petroleum products (such as gasolines, distillates and aviation fuels) at 14 refineries, mainly in the United States and Europe. The Marketing and Specialties segment purchases for resale and markets refined petroleum products (such as gasolines, distillates and aviation fuels), mainly in the United States and Europe."

Warren Buffett Increases Phillips 66 Position Again

Warren Buffett's Berkshire Hathaway has filed a Form 4 with the SEC regarding its position in Phillips 66 (PSX).  Per the filing, Berkshire has acquired over 3.5 million more shares.

After the purchases, Buffett now owns over 61.48 million shares of PSX.  Buffett was out buying at prices around $77-82 on September 4th, 8th, and 8th.

This is the second time Berkshire has added to its PSX position recently.

Per Google Finance, Phillips 66 is "an energy manufacturing and logistics company with midstream, chemicals, refining and marketing and specialties businesses. The Company operates its business through four segments: midstream, chemicals, refining and marketing and specialties. It gathers, processes, transports and markets natural gas, and transports, fractionates and markets natural gas liquids (NGL) in the United States. The Chemical segment manufactures and markets petrochemicals and plastics. The Chemicals segment consists of its 50% equity investment in Chevron Phillips Chemical Company LLC (CPChem). The refining segment buys, sells and refines crude oil and other feedstocks into petroleum products (such as gasolines, distillates and aviation fuels) at 14 refineries, mainly in the United States and Europe. The Marketing and Specialties segment purchases for resale and markets refined petroleum products (such as gasolines, distillates and aviation fuels), mainly in the United States and Europe."

For more from the Oracle of Omaha, we also posted a summary of Buffett's recent media appearances.

Summary of Warren Buffett's Recent Media Appearances

Berkshire Hathaway's Warren Buffett recently made the media rounds so here's a quick summary.

In his interview with Fox Business, Buffett said that his brick business isn't doing as well as his carpet business.  He also noted that furniture retailing is doing well.  He also said, "The insurance business (GEICO) has been quite good to us over the years, and continues to be."

Regarding oil, Buffett points out a common misperception that his railroad (Burlington Northern Santa Fe) is not as affected as people might think.

When asked if he would raise rates in September if he was on the Federal Reserve, he said he probably wouldn't.

Embedded below is the video of Buffett's interview on Fox Business:





Buffett also talked with CNBC.  There, he said that he bought more IBM (IBM) thus far in the third quarter.

Interestingly, Buffett said that "I'll never go below $20 billion in cash."  This pertains to Berkshire's upcoming purchase of Precision Castparts (PCP) where he'll opt to finance part of the deal with debt in order to maintain that certain cash level.

Buffett also said that on big down days with higher volume in the stock market, Berkshire will be out buying more than usual of certain stocks if for instance they were buying 20% of the volume for that day.  He likes to stay around that level so that he doesn't affect the price too much.

He re-emphasized his focus on 5-10 years from now as he thinks markets will be higher then and that's all that really matters to him.  He isn't concerned with short-term gyrations and isn't about to predict what will happen in the near-term.

On why he bought a bunch of Phillips 66 (PSX), Buffett said, "I had always intended that we would come back in, assuming the price is right.  PSX has no upstream production.  PSX is not a pure refiner, they've got a big chemical division.  We're buying it because we like the company and we like the management very much."

Embedded below is the video of Buffett's interview with CNBC:




Lastly, Buffett also chatted with Bloomberg.  There, he revealed that he doesn't see local TV broadcasting as a growth business.

On the global economy, he noted that, "I think it's unlikely that the world has some great slowdown, but it always can."

He also noted he's bullish on China over its long-term potential.

Embedded below is the video of Buffett's talk with Bloomberg:

Warren Buffett's Berkshire Hathaway Boosts Phillips 66 Stake

Warren Buffett's conglomerate Berkshire Hathaway has filed a Form 3 and Form 4 with the SEC.  Per the filing, Berkshire now owns over 57.9 million shares of Phillips 66 (PSX).

Berkshire was out buying on August 26th - 28th at prices between $71.56 and $77.26.  In total, they bought over 3.17 million shares over those three days.  They now own over 10% of the company with a stake worth over $4.4 billion.

However, they had to have also acquired a ton of shares prior to that.  As the brand new issue of our Hedge Fund Wisdom newsletter flagged 10 days ago, Buffett requested confidential treatment with the SEC regarding one of his holdings for his Q2 13F filing.  PSX did not appear in his holdings list at that time so it looks like this could be the position he was requesting privacy on.

Back in the first quarter of this year, Buffett owned just 7.49 million PSX shares.  So basically between April 1st and August 28th, Berkshire ramped up its exposure to PSX in a big way.  Shares largely traded sideways over that timeframe, between $75 and $84.  During the recent market turmoil, however, they traded as low as $69.79.

Buffett has been busy lately, as he's also agreed to takeover Precision Castparts (PCP).

For more on Buffett's firm, be sure to also check out our analysis of Axalta Coating Systems (AXTA), another stock Berkshire bought in recent months.

Berkshire Hathaway Buys Phillips 66 (PSX) Shares

Warren Buffett this morning on Bloomberg TV said that his Berkshire Hathaway has invested in Phillips 66 (PSX).  We've also posted up a summary of Buffett's lengthy interview.

PSX was spun-off from ConocoPhillips (COP) on May 1st and Buffett said one of his portfolio managers (either Todd Combs or Ted Weschler) have reduced holdings in COP and bought into the refining operations ~ PSX.

Owners of COP shares received 1 share of PSX for every 2 shares of COP owned as of April 16th.  Berkshire owned just over 29 million COP shares as of March 31st (before the spin-off).  Assuming that number, that would mean they received just over 14.5 million shares of PSX in the spin.

But it sounds like they've gone a step further by selling some of their post-spin COP shares and adding to their PSX stake.

For more from Berkshire Hathaway's leading man, head to notes from Buffett's meeting with MBA students.