We're posting up notes from the Capitalize For Kids 2018 investment conference. Next up is Alex Roepers of Atlantic Investment Managment who pitched three long ideas: Owens Illinois (OI), Huntsman (HUN), and G4s (GFS.L).
Alex Roepers' Capitalize For Kids Presentation: Three Long Ideas
• 3 High conviction value stocks
• Owens Illinois
o Third time pitching this
o Largest maker of glass bottles in the world
o 25% global market share
o Grown 20% despite largest segment shrinking 4% a year
o Very stable, luxury product is put in glass bottle
o Taking mega-beer capacity to craft and specialty bottles
o $400mm FCF, has $100mm annually in asbestos payments
o Pushing on major corp dev move
• Sell EU biz 8x EBITDA
• Use to cut debt in half, use rest to buyback stock
• With that, can get to $42 share price in 12-18 months
o All of the negative impact is multiple compression despite earnings power growing, lower debt, etc
o Talking to financial sponsors, Koch industries, BRK, trying to put fire under their ass
o 15 % global fund position, 25% US fund
• Huntsman
o 168% upside
o 5.4x PE, 5x EV / EBIT
o $55 target price
o Taking their most cyclical business (Venator) public, paid down debt
o Went from $23 -> $35 and has sold off
o Fears around their product
o Downstream, differentiated, not as effected by the spot price changes
o 6% organic growth in polyurethane, great biz
o Own 53% of Venator – listed spinoff
o Roadmap to $4.40 EPS by 2020
• G4S
o One of the big security contractors. For corps, embassies, airports
o 3-5 year contracts, price escalators
o Tech components, camera, software, etc which is higher margin
o 9.3x PE
o Target Price £3.9, 85% upside
o #1 or #2 player in cash delivery solutions (think Brinks truck)
o They have a contract with WMT for cash close that saves them two days from cash close at store level to delivering to bank acct at head office
• Target also starting a pilot
o Grow 360 cash biz then take it public at scale at high multiple
o High quality business
Be sure to check out the rest of the presentations from Capitalize For Kids 2018.
Monday, October 29, 2018
Alex Roepers Long Owens Illinois, Huntsman, G4S: Capitalize For Kids Conference 2018
Thursday, August 3, 2017
Alex Roepers Interview With Capitalize For Kids
Alex Roepers of Atlantic Investment Management sat down with Capitalize For Kids for their Investor Series and talks about his strategy for beating the market while holding only six stocks. Here's a few excerpts:
On the current markets: "From a 40,000 foot level,you know the 10-year treasury yield is around 2.4%, while the S&P 500 dividend yield is around 2.1% and the earnings yield is about 5%, based on an index P/E of 17x. So we see the market as not overly cheap for sure but also not overly expensive. The continued low interest environment remains supportive for the overall market.
Within the market of course, you have many different pockets – it is a bit of a barbell, bifurcated market. On one hand, you have Tesla and the other story stocks that have a cult following and valuations that we think make absolutely no sense. On the other hand, you have many overlooked but solidly profitable companies who have little or no top-line growth, such as General Motors, automotive suppliers, airlines and retailers.We would say the market is full of interesting opportunities, long and short. It is ok on balance as long as rates remain reasonable."
On one of his top holdings Commscope (COMM): "(COMM is) a $5 billion integrated manufacturer of end-to-end solutions connecting wired and wireless networks, including networking equipment like antennas as well as coaxial and fiber optic cables. Solid secular growth is rooted in increased use of streaming data, video and movies and increased use of smart phones and internet mobility in general. Foreign sales are 50% and increasing due to growth in less mature markets, both developed and emerging, which require improved bandwidth and connectivity. We see it as a solid business. Key customers include Comcast, Verizon, AT&T,Charter Communications, Anixter and Liberty Media.
We started scaling into CommScope last October around $30/share. From there, the shares rallied to $42, up by 40% within 6 months. We were trimming along the way to keep the position in check as a percentage of capital. Then, in early May, due to a reduced forecast for Q2-2017, for reasons we deem to be transitory, Commscope shares were knocked down to $35, where we added back the shares we had sold on strength previously. We see the shares reaching $50 in the next 6 to 12 months on reasonable earnings and valuation assumptions. Given our analysis CommScope has solid downside support here,compelling upside on its own and also takeover potential."
On overlooked value play Diebold Nixdorf (DBD): "They are a leading maker of automated teller machines (ATM) as well as electronic point-of-sale (EPOS) solutions for the retail market. In ATM’s, NCR and Hyosung are key competitors and in the retail vertical it is IBM-Toshiba and NCR mostly. There are some 3.3 million ATMs installed worldwide, one third of which are Diebold Nixdorf’s.
A key concern is that the proliferation of electronic payments will cause a reduced need for the use of ATM’s. We believe that this concern is overblown as cash transactions and notes in circulation continue to grow even in the United States and Europe. ATMs remain a productivity tool for banks and an integral part of their customer interaction.While there has been a lot of consolidation of bank branches, the total ATM count in mature markets has actually been stable and now we see the overall banking sector is improving which bodes well for new and upgraded ATMs. The installed base is an important barrier to entry and key driver of business. About 60% of Diebold Nixdorf’s sales come from maintenance services and software.
In the past two years, Diebold shares had fallen from $40 down to the low twenties. Besides a recent earnings warning in what is “year one” of a transformational merger, another key reason behind the share price weakness was a spell of declining capital spending by banks. The transformational deal was to buy a key competitor called Wincor Nixdorf out of Germany. Wincor, which was sold by Siemens to private equity in 1999, and subsequently listed in2004, generates $2.5 billion in sales, $1.5 billion from ATMs and $1 billion from retail point of sale systems (POS) used by retailers like Ikea, Zara and H&M. The cross-border deal took a year before it closed in August of last year, during which NCR and others took advantage of the uncertainty and inability by the two merger companies to react. We see significant potential from combining the complementary footprints and capabilities ... we see Diebold Nixdorf shares reaching over $40/share in 18-24 months, based on 11-12x our 2020 EPS target."
He also gives updates on Harman (HAR) and Owens-Illinois (OI) and chats about other topics. You can read the rest of the interview here.
Monday, October 31, 2016
Alex Roepers Long Owens-Illinois, Eastman, Harman: Capitalize For Kids Conference
We're posting up notes from the Capitalize For Kids conference 2016. Next up is Alex Roepers of Atlantic Investment Management who pitched three longs: Owens-Illinois (OI), Eastman (EMN - spin-off from Kodak), and Harman (HAR).
Alex Roepers' Presentation at Capitalize For Kids Conference 2016
• LONG Owens-Illinois (OI), largest maker of glass in the world. Wine, beer, liqueur.
• Overall, industry has suffered from substitution from plastic and cans. But it is relatively stable.
• This is the winning consolidator, has 80 plants with each plant having a $200 million investment. They operate local duopolies since it is uneconomic to ship glass far distances.
• Has great customers (Heineken, Pernod Ricard, etc), no technological obsolescence, no foreign competition.
• Believes stock price dropped as earnings has been impacted from strong USD (70% of sales outside of US).
• LONG Eastman (EMN). Spinoff from Eastman Kodak.
• Over 75% of the business is now speciality chemicals with sold margins and growth.
• Believes it can earn $8 to $9 cash earnings per share. Currently trades at $66.
• Have recently paid off debt and now are focusing on repurchasing shares and could be a takeout candidate.
• LONG Harman (HAR). Manufacture entertainment systems for cars and do professional services (for concerts, stadium, etc). Top 12 out of 15 car companies are their customers.
• Has followed the company since the 1990s. The company transitioned from audio to consumer to audio for business (car companies, professional services, etc).
• KKR has previously bid on the company in 2007 but deal fell apart leading into GFC. Has recently sold off due to china slowdown, peak auto sales, etc.
• Believes it has strong end-markets and the company has recently posted solid results.
Be sure to check out the rest of the presentations from Capitalize For Kids/Sohn Canada Conference.
Tuesday, October 28, 2014
Alex Roepers' 3 Investment Ideas at Capitalize For Kids Sohn Canada Conference
We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place. Next up is Alex Roepers of Atlantic Investment Management who pitched 3 long ideas.
Alex Roepers' Sohn Canada Presentation
Looks to enter positions 7-8x EV/EBIT and close 10-12x EV/EBIT. Usually has a 12-24 month holding period but is a case by case basis. Considers the firm a gentle activist. Usually does not look to make too much noise (took a jab at some more public activist investors). Always has a plan ready once a position is taken and looks to work with management, if not, then work with the Board.
First pitch was LONG Owens-Illinois (OI). They are a glass bottle maker (the standard in most spirits). Price target $45 within 12 months (~71% upside from Friday’s close). Said it was un-economical to ship more than 300 miles which is why there is a need for plants to optimize distribution. The factories have an estimated replacement value of $13B. Believes can earn $3.25/share in 2014, target based on 14x 2015 EPS. The recent sell off has created an opportunity to get back in to the stock (has traded the stock since the firm’s inception in 1992).
Next, pitched LONG Triumph Group (TGI). Has a price target of $100 within 24 months (~62% upside from Thursday close). Should trade about 11x 2016 EPS. Operational improvements, share repurchases and M&A will lead to solid EPS growth.
Lastly, pitched LONG Harman International (HAR). Has a price target of price target $141, (~46% upside from Thursday close). The “infotainment” segment has 24% global market share and penetration is very high in car audio (10 out of 15 leading brands use Harman when). Was puzzled as to why Google or Microsoft hasn’t bought them yet. Lots of cross-over with a consumer focused and respected brand. A multiple year phase of 30% EPS CAGR, should allow return to higher multiple (14-15x) in 2016. Believes it could earn $7 2016 EPS.
Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.
Wednesday, September 10, 2014
Alex Roepers' Value Investing Congress Presentation: 5 Long Ideas
We're posting up notes from the 2014 Value Investing Congress in New York. Next up is Alex Roepers of Atlantic Investment Management who presented long Triumph Group, Sulzer, Owens-Illinois, Technip, and Koito Manufacturing.
Alex Roepers' Value Investing Congress Presentation
Takes minority positions for 1-2 year hold period. Longs represent 2-7% equity stake in the company to become actively engaged shareholder. 95% batting average with their core longs.
Because so concentrated, tend to trade around positions over time. Found that ~20% of returns come from trading around the positions and 40% of outperformance over benchmark is due to trading around positions.
Sticks to his knitting: sustainable competitive advantage, predictable cash flows, low cyclicality, strong balance sheet, low insider control, solid trading liquidity
Since they try to effect change, they see high insider control as an impediment so they avoid those types of names. Avoids >$30bn mkt cap and <$1bn. Atlantic doesn’t believe they provide differentiated view on mega cap blue chips. Also avoids areas of idiosyncratic risks (tech obsolescence, product liability, government intervention (utilities, cable TV), and lack of transparency (banks, brokerages, insurance). Target scale-in price of 7-8x EV/EBIT. 12-24 month hold. Scale out at least +50% upside at 10-12x EBIT. Mentioned that they are constructive on Japanese equities in next 3-8 years
Recap of ideas presented last year:
• Baker Hughes: Up 37%, still a buy at $65 with a $90 target. Atlantic is still holding
• Faurecia: Auto supply company. Peugot owns 51% but only represents 11% of sales. Fast growing Asia component. Up 22%, is an “absolute buy” at €27 w/ €40 target. Atlantic is still holding
• Itochu Techno: Up 31%. Atlantic is still holding
• Lanxess: Specialty polymer company. Sold it a few months after recommended at no gain. Timing wasn’t right, but they continue to watch
• Harman International: Largest maker of infotainment systems or the “integrated brain” of cars. Has >4,500 patents, sees as takeout candidate. Trading at 10x EV/EBIT on FY2016. Thinks it is worth $200-250/share (KKR got approved for $150/share takeover before crisis and company is worth “multiples of that” today). Up 70% and still holding
5 New Ideas:
• 1) Triumph Group: Aerospace supplier of wing assemblies, actuators, etc. Basically a rollup of niche suppliers to major companies including Boeing, Embraer, etc.
o Thesis: Earnings stabilization and a return to growth. Management is focused on new business opportunities. Doing well with small bolt-on acquisitions and has a strong barrier to entry due to FAA / etc regulation. Also a takeout candidate
o $3.6bn mkt cap, 10x P/E, 8.4x EV/EBIT. Price target based on 11x FY2016 EBIT (+43%)
o Bought in low $60s
• 2) Sulzer: Pump business similar to Flowserve in the US. Also have chemtech and rotating equipment services. These are “mission critical systems” and 44% of the business is after-market products
o Thesis: Management vacuum created a buying opportunity. New chairman was Chairman & CEO of Siemens. Roepers expects company to set new targets in 2 months, thinks we will see margin improvement and the company has a strong balance sheet while you wait
o €4bn mkt cap, 9.2x EV/EBIT. Price target of CHF 165 (+35%)
o Peers trade in mid-teens EBIT multiples. LT upside CHF>200
• 3) Owens-Illinois: Glass maker, sounds boring but has a huge moat and balanced sales in US, Europe, LATAM, & APAC
o Thesis: Monopoly or duopoly in all of their markets. Noise created when Chavez appropriated 2 plants and they had some logistical challenges in US.
o Legacy asbestos liabilities also create noise but are actually an opportunity (to be successful as an asbestos claimant, need to have been working in 1958 and there aren't many of those left). Annual asbestos payments of $150mm/yr, going down 5-10% per year. This is a positive catalyst and a finite issue. $350mm of FCF is after $150mm, so this reduction represents a built-in FCF growth of 3-4% per year
o $7.2bn mkt cap, 10x P/E and 9x EV/EBIT
o Price target of $50/share (+62%) based on 15x 2015 P/E multiple on $2.80-$4.00 of 2015 EPS
o At $31/share today great risk/reward
• 4) Technip: Oil services company (64% subsea, 36% onshore/offshore). 54% market share in subsea. Subsea involves gigantic reels of flexible pipe. They sell these pipe services by the foot and charge exponentially more as you go deeper for their installation services.
o Thesis: As low-hanging fruit of subsea oil plays have been plucked, E&P companies have to go deeper. 2015 profits will be higher than market realizes.
o High barriers to entry and high-quality management team
o Petrobras has also caused noise, but interestingly Petrobras stock has since recovered while Technip hasn't
o €15bn sales, trades at €9.9bn EV and 6.9x EV/EBIT
o Price target of €105 (+49%) based on 11x 2015 EBIT
• 5) Koito Manufacturing: Largest maker of car lamps including LED headlamps. Toyota owns 20% of the company and represents 30% of sales. Japan and China are its biggest markets
o Thesis: Ride wave of adoption of LED headlamps. In Japan LED headlamps went from 0% to 15%, still just 1% in Europe / US. Also potential spinoff of KI holdings (maker of airline seats).
o Also a huge beneficiary of Abenomics. Has a history of poor capital allocation (20% of market cap is cash)
o $7.1bn sales, $3.1bn EV priced at 5.4x EV/EBIT
o Price target ¥4,200 PT (+48%) based on trading at 6x EV/EBIT. Thinks it can get to 9x 2017.
Be sure to check out the rest of the Value Investing Congress presentations here.
Tuesday, September 17, 2013
Alex Roepers' 5 New Ideas: Value Investing Congress Presentation
We're posting up notes from the 2013 Value Investing Congress in New York. Next up is Alex Roepers of Atlantic Investment Management and his presentation was called: "Insights from 25 Years of Constructive Shareholder Activism." He also pitched 5 new ideas.
Alex Roepers' Value Investing Congress Presentation
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Be sure to check out the other presentations from the New York VIC here.
Tuesday, October 2, 2012
Alex Roepers' 5 Investment Ideas: Value Investing Congress
Continuing coverage, we're posting up notes from the Value Investing Congress. Below are notes and the presentation of Alex Roepers of Atlantic Investment Management. His presentation was entitled 'Corporate Action, Activism & Takeovers: Gaining Momentum.'
Atlantic: $1.8B in AUM, concentrated in 5-7 core positions in US. Investment grade, mid-sized. Uses significant minority positions, 2-7% to for shareholder activism. Strict buy/sell discipline, buy 7x EBIT, sell around 11x. 1-2 year holding period is typical. Largest fund 5-7 stocks, that’s it! Averaged 18.5% annually over 20 years vs. 8.5% for the SPX.
On Investor Activism
Last year he said environment was good for corporate action, activism and takeovers (JANA's Barry Rosenstein agrees). Today we have:
1. Attractive valuations, because people are VERY gun-shy due to market crashes.
2. Strong balance sheets now, much better post-2008
3. Private Equity under pressure to put capital to work
4. Super low interest rates, easy to make acquisitions
5. Moderate organic growth due to economy; "Need to buy growth"
6. Some hostile in M&A, nowhere near record levels of past
Earnings yield of SPX is 6.8% vs. 1.8% 10 year treasury. Expect the decade long outperformance of bonds to reverse; stocks will outperform next ten years. He also showed the same chart of fund flows of investors pulling money from stocks into bonds. "You will have phenomenal returns in equities if you pick your stocks right."
PE firms have $400B in dry powder for buyouts. VIX is greatly reduced, which helps create environment more buyouts. Japanese and Chinese are stepping up cross-border M&A.
Atlantic's Approach:
1. Sufficient size and liquidity. >$1B to move the needle, but <$10B or it's too big to get a deal done 2. Strong strategic franchises with high barriers to entry
3. Attractive valuations: <8x ebit="ebit" forward="forward" nbsp="nbsp" p="p">4. Strong balance sheets: EBITDA> 4x interest expense
5. Predictable and recurring cash flows, high MRO content
6. Low insider ownership <10 blocking="blocking" by="by" family="family" held="held" management="management" nbsp="nbsp" or="or" p="p" shareholders="shareholders">7. Noticeable activity in a sector; e.g. chemicals, mining equipment
8. Liquidity. Take 2-7% ownership stakes, no board seats, so proxy battles
9. Write detailed shareholder engagement letters and have active discussions with management
Recap of last year's investment ideas: ENR up 5%, ASH up 59%, FLS up 63% (sold it), MTX GY up 22% (sold it), and ATO FP up 53%.
Roepers' 5 Investment Ideas
Energizer (ENR). $75.43, $4.9B market cap. 47% of business is batteries; the other 53% is personal care products: Schick shaving, Hawaiian tropic skin care. Margins should be higher; eps should be $7.50 up from $6.00. Target price is about $100 in 6-12 months.
Rockwood Holdings (ROC). $49. $3.9B market cap. Specialty chemical company. Lithium, Advanced Ceramics, TiO2, Surface treatment, Performance additives. Stock trades on the TiO2 business, but they should IPO or spin this segment. Real bull case here is Lithium, 8% organic growth without the electric car. #2 lithium producer in the world. Sum of the Parts (SOTP) to get valuation. Catalysts are IPO of TiO2 business. Target price $70/share in 12-18 months based on 10x 2013e EBIT.
Clariant (CLN VX). Swiss conglomerate. Disposal group, pigments, oil and mining services. Being restructured, de-levering now. 46% capital appreciation potential in a year.
FLSmidth (FLS DC), Danish mining supply company. Concerns about China slowing. Cement, Customer service for mining, and non-ferrous metals. They help mining companies set up operations. 33% upside at DKK 467/share in 12-18 months.
Joy Global (JOY). $59.41. Coal mining equipment. Coal is out of favor. Half surface mining, half underground. Actually though, a lot of coal buying out of the most green countries, Japan and Germany. Growth industry, but not in the US as much. But he says all the switching from coal to gas that could happen, has already. Stock has dropped in half this year on China slowdown and emergence of natural gas in the US. Says 2013 is the trough year, but it will grow over time. Their only competition was bought for 13x by CAT. Very likely takeover candidate. Price target is $105 in 12-18 months based on 11x FY13E EBIT, 77% upside.
Q&A Session:
1. Why did ENR not do well? Part of it was FX, the Euro. Also they've been slow and shareholders have become disenchanted with management.
2. Still own Owens Illinois? They own 6.5% of the company, number one glass bottle maker in the world. 40% of business from Europe, demand a bit slow and FX issues, but trades at only 6x next year P/E and they are paying down debt. Trades at only $18 now.
3. Will JOY survive the "war on coal?" It still generates 35-40% of the electricity in the US. Gas prices coming up. US segment is only 22% for JOY. He says when being activist "I'll fade out of the stock when you achieve X, Y and Z" which makes people listen to them.
Embedded below is Roepers' slideshow presentation from the Value Investing Congress:
Check out the rest of the hedge fund presentations from the Value Investing Congress.
Monday, October 17, 2011
Alexander Roepers: Expects Increased M&A (Value Investing Congress Presentation)
At the Value Investing Congress today, Alexander Roepers of Atlantic Investment Management made the case for longs of Energizer Holdings (ENR), Ashland (ASH), Flowserve (FLS), MTU Aero Engines (MTX.GY), and Atos (ATO.FP) in a presentation entitled "Conducive Environment for Corporate Action, Activism & Takeovers".
Be sure to check out all of our notes from the Value Investing Congress.
Alexander Roepers (Atlantic Investment Management)
Embedded below is Roepers' full slideshow presentation:
His outlook is very positive for both stocks and especially takeovers/mergers.
1. Valuations attractive due to worst crash in 70 years. Record high equity risk premium
2. Balance sheets of corporations are strong
3. There are large cash pools for LBO out there
4. Low interest rates
5. Moderate organic growth in developed markets, so room for M&A
6. Cross border M&A activity heating up
7. If fear index falls below 25 (32 today) for 2-3 months, we will see increased M&A activity
What they look for: $1-10B, big enough to move the needle, small enough to get the deal done. Strategic franchises with high barriers to entry, <8x forward EBIT preferred, strong balance sheets, predictable & recurring cash flows, low insider ownership (<10% owned by management/family), noticeable activity in sector.
Investment Ideas:
Energizer Holdings (ENR): Batteries and personal care (razors). “A small Proctor and Gamble” good number two. Target is $102 in 12-18 months, based on 11x FY12E EBIT.
Ashland (ASH): Special chemical company. Trades at 5x EBIT, 7x P/E on FY2012 estimates. Target is $105 in 12-18 months at 10x EBIT.
Flowserve (FLS): Flow control products, pumps, valves, seals for pipeline and nuclear power industries. Trades at 5.7x EBIT on 2012 estimates, target is $135 in 12-18 months on 11x 2012E EBIT. Competitor just bought for 12x EBIT.
MTU Aero Engines (MTX.GY): German company. Military and commercial engines. Same thing, price target depends on multiple going from 7.8x EBIT to 11x EBIT
Atos (ATO.FP): French version of Accenture. IT and high tech consulting.
About Alexander Roepers: Manages $1.4 billion (part of which is long only). Has seen 19% compounded returns.
You can view our notes from the Value Investing Congress for the rest of the hedge fund manager presentations.
Thursday, October 14, 2010
Whitney Tilson, Carlo Cannell, Alexander Roepers: Notes from Value Investing Congress
Continuing our coverage of day two of the Value Investing Congress, we have summaries of the presentations from Whitney Tilson & Glenn Tongue (T2 Partners), Carlo Cannell (Cannell Capital), as well as Alexander Roepers (Atlantic Investment Management).
If you missed it, we've posted a plethora of resources from the event, including:
- Presentations from John Burbank & Lee Ainslie
- Bill Ackman's Q&A session from the Congress
- Presentations from David Einhorn, Kyle Bass, & Mohnish Pabrai
- Summaries of speeches from fund managers Zeke Ashton, Guy Spier, & Michael Lowitt
Next, onto the last round of speakers at the Value Investing Congress:
Carlo Cannell ~ Cannell Capital
The fund manager's presentation was named after 'Megaloceros Giganteus,' or an Irish elk that became extinct. Cannell says that over a long enough timeline, all companies will die and his talk zeroed in on a company he believes to be on the verge of extinction. He is short Pitney Bowes (PBI), a company that he says has an obsolete business model. There has been a decline in mail demand and this is hurting the mail processing equipment company.
Cannell warns that it might not be an 'actionable' short at the moment. At the same time, he cautions that stubborn short sellers can be come extinct just as easily. Remember the old market adage? The market can stay irrational longer than you can stay solvent. This isn't the first fund manager we've seen with a negative stance on Pitney Bowes. In the past, we've seen that Matt Iorio's White Elm Capital has owned puts on PBI for numerous quarters.
Two companies that are on Cannell's watchlist as potential shorts are Buffalo Wild Wings (BWLD) and Texas Roadhouse (TXRH). You can view notes from a previous talk by Cannell here.
Whitney Tilson & Glenn Tongue ~ T2 Partners
Tilson and Tongue began their presentation focusing on the economy and their fund has been positioned conservatively given their tepid economic outlook. The T2 managers highlight that the market is likely to remain range-bound, trading sideways via oscillations in either direction that cancel each other out. Housing remains the biggest issue to the economy as prices still have further to fall and inventories need to be absorbed. As such, T2 Partners is short the homebuilders via the exchange traded fund XHB.
The hedge fund is still long BP (BP) as they purchased it back in the company's darkest hour as shares tanked due to the unfortunate oil spill. He jokingly said that he's thankful for Jim Cramer, who he has utilized as a contrarian indicator. Tilson thinks the stock is easily worth $50 (it currently trades around $41 per share, so 20% upside potential). Fears from the oil spill have been greatly overblown and T2 feels the company is still cheap and will reinstate the dividend at some point.
Regarding other portfolio positions, recall that Tilson has been short InterOil (IOC). We've also detailed T2 Partners' latest letter to investors for those interested.
Alexander Roepers ~ Atlantic Investment Management
Roepers typically runs a concentrated portfolio and focuses on mid-cap stocks. He likes predictably profitable companies with solid balance sheets and solid cashflows. Roepers will focus on companies with market caps of $1 billion to $20 billion with a holding period of typically 1-3 years.
He pitched Owens Illinois (OI), pointing to its very strong moat and increasing share in emerging markets and thinks it goes to $45 per share (currently trading around $27). Roepers labeled the company a growth business and points to their packaging business in particular. Hedge fund Viking Global had previously held a position in OI, but they sold completely out in the first quarter of this year.
He also mentioned positions in Xerox (XRX) which he views as an acquisition target and targets $18 per share as a fair valuation of the company. The manager also mentioned ITT (ITT). Lastly, Roepers also rattled off positions in Rheinmetall (RHMGY) in Germany, as well as Muraka and Creata Water.
That wraps up our series of notes from the event. You can scroll through our entire coverage of the Value Investing Congress by clicking here. Stay tuned because in the coming days we'll take in-depth looks at some of the investment ideas from select hedge fund managers. Don't miss out! Receive our free updates via email or free updates via RSS reader.
