What We're Reading ~ 5/6/15

A must-read on behavioral finance: Thinking, Fast and Slow [Daniel Kahneman]

Margin debt hits all-time highs: why you shouldn't be concerned [Kimble Charting]

What you should and shouldn't learn from Warren Buffett [WSJ]

With big names and money flowing in, tech startups in India heat up [NYTimes]

3 stocks pitched by Weitz Value Fund [Forbes]

Transdigm: when is a large moat worth more than 30x earnings? [Seeking Alpha]

On the pricing and valuing of top managers [Aswath Damodaran]

A guide to reading for investors [Safal Niveshak]

A pitch on Viacom [BeyondProxy]

Tim Cook on Apple's future: everything can change except values [Fast Company]

Silicon Valley veteran steers Softbank's deals [WSJ]

How Airbnb could spawn an M&A frenzy in the hotel industry [Fortune]

Casinos failed Atlantic City, but they're still part of its future [The Deal Newsroom]

Insurers take on more risk in search of returns [NYTimes]

Meryl Witmer's Presentation on Viacom & Gildan: Ira Sohn

We're posting up notes from the Ira Sohn Conference.  Eagle Capital Partners' Meryl Witmer gave a presentation on going long Viacom (VIA.B) and Gildan (GIL).

She started with Michael Price and is a Barron's Roundtable member.  She seeks out excellent management teams, great capital allocation, FCF machines, strong balance sheets.

Long Viacom (VIAB): Media Networks, Filmed Entertainment. Bear case is NICK ratings collapse, 20-30% per Nielsen, but VIAB says it's not that bad. Bull case is they won't take as big of an eps hit on NICK. Says affiliate fees grow, gets $6.72 per share by 2015, 14x multiple, $94.13 stock price by then, 94% upside from current levels.


Long Gildan (GIL): Gold-toe Sock maker. Co-founder owns 8%, low cost producer, earnings temporarily depressed due to cotton price spike, high cost inventory gone in a quarter or two. Could earn $3.30 to $3.50 per share by 2014/2015. Took share from Fruit of the Loom, Hanes and others. Management allocates capital well, ROIC above 15% As cotton went up from $0.80 to $2.00, GIL absorbed some of the increase instead of passing it all on to customers. Speaker believes this is a "debt of goodwill." Stock to $39.50 in 2013, $51 by 2014.


P.S. - Don't miss other presentations from David Einhorn, John Paulson, Bill Ackman & more: notes from Ira Sohn Conference 2012.

Notes From Invest For Kids Conference: Ackman, Robbins, Whitney, Zell

The Invest For Kids Conference took place last week in Chicago and was a resounding success, raising over $1 million to benefit local children. We wanted to post up a quick summary of the event, including in-depth notes below from the prominent hedge fund managers that presented. Speakers included Bill Ackman (Pershing Square), Larry Robbins (Glenview Capital), Meredith Whitney, and more. Here are some of their latest investment recommendations:

Bill Ackman of Pershing Square Capital Management: Instead of doling out equity specific investment advice, Ackman instead turned to real estate. At the conference, he proclaimed his bullishness on the housing market and said to buy single family homes, citing home affordability at its highest level in many years. The low interest rate environment obviously helps this but he cautions rates won't stay low for long. This is the same recommendation as John Paulson who said to buy housing recently as well. Stay tuned next week as we'll examine Ackman's latest portfolio in our newsletter, Hedge Fund Wisdom. For our recent posts on the manager, head to Ackman's potential thesis on JC Penney (JCP).

Meredith Whitney of Whitney Advisory Group: Whitney harped on the issues found on the state and local government level regarding their fiscal problems. In short, she feels that municipalities are in trouble, especially New Jersey, Illinois, Massachusetts, and Michigan.

William Browder of Hermitage Capital: Browder focused on emerging markets and an inflationary environment. As such, he tossed out Koza Gold as an idea, a miner in Turkey. He cites their cheap valuation and cheap production costs at $320 an ounce. He also recommended Renhe Commercial Holdings, a shopping mall developer in China.

Larry Robbins of Glenview Capital: Robbins has been presenting the case for McKesson (MCK), Express Scripts (ESRX), and Life Technologies (LIFE) as of late. This conference was no different as he again pointed out the attractiveness of each investment. ESRX is well positioned for the generic drug boom in 2012 and Robbins likes their $6 billion in cash. He fancies LIFE due to its valuation and thinks the company should buyback shares. MCK is attractive due to the company's use of cash to accelerate EPS growth. He also cautioned about mortgage put-backs and appears to be short two banks with high exposure there. Head to our Hedge Fund Wisdom newsletter to view the rest of Glenview's portfolio. We also recently detailed how Glenview increased its position in Punch Taverns.

Joshua Friedman of Canyon Partners: Friedman's suggestion was to play the Lehman Brothers bankruptcy but cautions that it's a complex situation, to say the least. More detailed thoughts are found below.

John W. Rogers of Ariel Investments: Rogers offered three ideas: CBS (CBS), Viacom (VIA), and Gannett (GCI), the last of which he likes the best. He believes a natural move for CBS would be to go private later on as Sumner Redston ages. He also believes Redstone could push VIA private as well. Of the two, Rogers says VIA is cheaper and has solid upside. On GCI, Rogers argues that despite the unpopular print media business, he has been buying on the way down. In a sense, this is an economic recovery play as ad sales pick up.

Doug Silverman of Senator Investment Group: Possibly the most telling information from Silverman's presentation was the fact that they had previously focused on credit the past few years but are now focused on value equities. In terms of specific recommendations, Senator likes rental car companies at present. He referenced the bidding war for Dollar Thrifty (DTG) and sees consolidation in the space. Senator owns 6% of Avis Budget (CAR) and then a lot of Hertz (HTZ) shares as well. You can read his detailed thoughts below.


Numerous other speakers presented at the Invest For Kids Conference and we highly recommend reading the full set of notes attached. Embedded below are the notes, courtesy of Simoleon Sense:



You can download a .pdf copy here.

Overall the second annual conference was a resounding success, raising over $1 million to benefit local children. And, the various hedge fund managers that spoke presented some interesting investment ideas.