The winter issue of the Graham & Doddsville newsletter is out. Columbia Business School's publication this time around interviews Glenn Hubbard and Joseph Stiglitz, as well as Damon Ficklin and Jeff Mueller of Polen Capital, and finishes up with DG Capital Management's Dov Gertzulin.
The newsletter also features student investment pitches from the 2018 Women in Investing conference: long Nordstrom (JWN) and a pitch from the 2018 CSIMA stock pitch challenge: long Lions Gate Entertainment (LGF.A).
Polen Capital talks about their positions in Alibaba (BABA), Adobe (ADBE), Align Technology (ALGN), and Starbucks (SBUX).
Embedded below is the Winter 2018 issue of Graham & Doddsville from Columbia Business School:
You can download a .pdf copy here.
Monday, February 25, 2019
Graham & Doddsville New Issue: Polen Capital, Glenn Hubbard & Joseph Stiglitz, DG Capital
Tuesday, October 9, 2018
Bill Ackman Long Starbucks: Pershing Square Presentation
At the Grant's Interest Rate Observer Conference, Bill Ackman of Pershing Square unveiled a new long position: Starbucks (SBUX). The presentation is entitled 'Doppio' and Pershing now owns over 15 million shares with a cost basis of $51 and they've used forward contracts. It's around a $900 million stake.
Pershing notes SBUX is trading at 22x, a discount to the average of 26x and they feel premium coffee is a secularly growth category. If same store sales and valuation can return to average levels, SBUX shares can double in three years.
Pershing's thesis is that this is a rare opportunity to own one of the world's best franchises at a discount. They're encouraged by actions of the new leadership team, as they've streamlined the portfolio (sold Tazo, closed Teavana stores, sold the consumer packaged goods business to Nestle). They're also initiating cost savings and a significant share buyback plan (~$19bn three year target).
Pershing Square: Long Starbucks Presentation
Embedded below is the .pdf of the presentation:
You can download a copy here.
For other recent hedge fund commentary, we also posted up David Einhorn & Greenlight Capital's Q3 letter.
Wednesday, January 24, 2018
What We're Reading ~ 1/24/18
Thinking in Bets: Making smarter decisions when you don't have all the facts [Annie Duke]
The playing field: five levels of investor development [Graham Duncan]
Op-ed written by Warren Buffett [Time]
Breaking out of low growth 'new normal' is on horizon [Mohamed El-Erian]
The annual Barrons roundtable: outlook for economy & stocks [Barrons]
A look at Starbucks (SBUX) [Scuttlebutt Investor]
Inside the eccentric, relentless dealmaking of Softbank's Masa [Bloomberg]
How Charlie Munger became an 'expert generalist' [Quartz]
India has 600 million young people & they're set to change our world [The Guardian]
A slowdown is in store for the self-storage business [WSJ]
How automation will change work, purpose, meaning [HBR]
Beyond the Bitcoin bubble [NYTimes]
Thursday, November 16, 2017
What We're Reading ~ 11/16/17
15 questions to ask management teams [Clear Eyes Investing]
Jim Chanos betting against dialysis companies [Reuters]
A handful of value managers hoard cash as stocks surge [Bloomberg]
How the right decisions and compounding can lead to huge results [Of Dollars and Data]
The nature of underperformance and why it pays to wait [Of Dollars and Data]
CenturyLink / Level 3 merger: 1+1 = 1/2 ? [Peridot Capitalist]
America's 'retail apocalypse' is really just beginning [Bloomberg]
Withdrawal symptoms: cash is still king in India [SCMP]
How India is moving toward a digital-first economy [HBR]
Byron Wien measures China's tech success [Barrons]
In-depth interview with Shake Shack's Danny Meyer [CBS]
America's coffee market is getting too crowded [WSJ]
Who is investing in e-sports startups? [VentureBeat]
A look at Entercom: CBS Radio Reverse Morris Trust [Clark Street Value]
Thursday, January 31, 2013
Contrafund's Will Danoff Bullish For 2013: What Stocks He Likes
Will Danoff is manager of Fidelity's Contrafund and he recently sat down with Fidelity Viewpoints to share his outlook for 2013. He's bullish and so we wanted to highlight what stocks he's looking at.
On Why He's Bullish This Year
"I’m bullish. Stocks are relatively cheap, and U.S. companies have become much leaner. Management teams were worried about the environment, so they were conserving cash and allocating capital prudently. M&A activity was down about 20% in 2012. Boards were saying, 'We’re not going for the long ball. We’re going to focus on maintaining lean inventories, low capital spending, and tight expenses.' As a result, companies are nicely profitable and generating a lot of cash.
So looking forward, I’m hopeful that we’re going to have modest top-line growth that will lead to decent earnings-per-share growth, good free-cash-flow yields, and total returns that may be a lot better than what we will see from cash and bonds."
He also went on to say that,
"My guess is a year from now the economy’s going to improve and stocks are going to be a good place to be. I’m bullish. So, I think if you’re in cash, you have to really think hard about it and say, 'How much cash do I really need?'"
This is a concept that's been talked about by many managers, including Bridgewater's Ray Dalio who said cash will move into 'stuff' in 2013. David Tepper of Appaloosa Management has also been quite bullish.
What Stocks He Likes
Danoff notes that the key to his strategy has been identifying the best companies in each industry. There's a few themes/industries he likes this year, and they all seem hinged on an economic recovery: housing, manufacturing, and industrials.
In particular, the Contrafund manager says he's finding most opportunities that should benefit from more competitive US manufacturing (companies are moving plants back from overseas).
He also likes US companies with lots of international exposure, like Colgate-Palmolive (CL), Estee Lauder (EL), and Starbucks (SBUX).
In tech, he likes internet plays such as Google (GOOG), Facebook (FB), and Yahoo (YHOO). He also is bullish on the software as a service trend, fancying the likes of Workday (WDAY), Salesforce.com (CRM), and Concur (CNQR).
On Tech Giants Google (GOOG) & Apple (AAPL)
These two tech giants are some of his fund's largest holdings.
Danoff's take on Google: "The stock has done basically nothing since 2007, but the earnings have roughly doubled, and the company is generating a huge amount of free cash flow—we estimate the stock is producing roughly a 9% free-cash-flow yield. And net of the cash, the stock has been trading around 13 times earnings while core revenues have been growing almost 20% annually. So I have believed that Google could continue to grow and had the potential for P/E (price-to-earning multiple) expansion."
We've also highlighted how Ricky Sandler's hedge fund Eminence Capital has been bullish on Google as well as it's their largest position at around a 9% position for them.
Danoff also notes that AAPL has been a good holding for his fund as the company's been generating a ton of free cash flow. The problem is that most of it is overseas (and it's a massive amount of money too) and he also pointed out that competition has intensified in the smartphone and tablet markets. You can read more of Danoff's outlook here.
Wednesday, May 16, 2012
John Lykouretzos' Presentation on Starbucks (SBUX): Ira Sohn
We're posting up notes from the Ira Sohn Conference. Hoplite Capital's John Lykouretzos gave a presentation on going long Starbucks (SBUX). Note: This is his largest disclosed equity long per the most recent 13F filed with the SEC. He just initiated the position in Q1.
Lykouretzos started at Tiger Management as an industrial analyst, PM. He then launched Hoplite in 2003. He thinks about owning and shorting businesses, not stocks. No pair trades, no short ETFs.
Long Starbucks (SBUX): $54 now. $90 price target in next 3 years. $42B market cap. Net cash $1.7B. Two main drivers:
1. Coffee market is large, growing rapidly, driven by "premiumization" $76B market, not cyclical. Single serve is gaining share, still only 10% of coffee market. US single serve is only 8% of market, but growing at 55% CAGR. K-cups are driving the market, from 5% to 18% share. Stores getting better, mobile payments, etc.
2. SBUX will capitalize; CPG, China growth. CPG growing, K-cup now 17% share from 8% a few months ago. China growth; brand like NKE or AAPL. In US, it's a morning coffee business, in China, it's an evening/afternoon with food, great margins, best in the company. Not undiscovered, but "winners keep on winning"
P.S. - Don't miss other presentations from David Einhorn, John Paulson, Bill Ackman & more: notes from Ira Sohn Conference 2012.
