Clifton Robbins' Sohn Canada Presentation: Long AGCO

We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.)  Next up is Clifton Robbins from Blue Harbour Group.  He pitched a long of AGCO.

Clifton Robbins' Capitalize For Kids Presentation

-    Friendly activist and target $2-10Bn companies
-    Long AGCO, own 7.5%
-    3rd largest equipment manufacturer
-    $4Bn market cap, $5Bn EV
-    Concentrated industry, lots of price increase opportunities
-    Strong network of dealers, 55% of sales in Europe
-    20% market share in Europe, 6% in North America
-    98% of profits from Europe
-    See Europe as a different agriculture industry, more focused on small tractors versus larger
-    Stock has come down on concerns in US market
-    Short term issues in Brazil, only small part of business anyway
-    Attractive valuation, improving margins, 24% ownership of TAFE which is a hidden balance sheet
-    9% FCF yield with trough earnings
-    TAFE (India) worth $7/share
-    AGCO has high earnings power
-    Management targeting 10% operating margins (10 year average of 7.4%), $10Bn revenue or $7.82 EPS
-    They can support more debt, closer to 2x debt/EBITDA
-    Therefore can buy back 17% of stock with the proceeds
-    Interest coverage will remain above 5x
-    Buybacks of 13% of stock over last 6 quarters
-    M&A opportunity being < $5Bn
-    $75-$95/share at historic multiples, from $45 today


Be sure to check out the rest of the presentations from the Capitalize For Kids Conference.

Jeff Ubben & Barry Rosenstein on Activist Investing at Milken Institute

At the Milken Institute Global Conference, prominent hedge fund managers gathered on a panel about activist investors and the search for alpha.  The panel consisted of:

- Jeff Ubben, ValueAct Capital
- Barry Rosenstein, JANA Partners
- Clifton Robbins, Blue Harbour Group
- Chris Teets, Red Mountain Capital

In it, the fund managers talked about the different styles of activist investing.

Rosenstein said that, "I'm happy to be friendly as long as the company does what I want them to do."

Robbins contributed, "I think that there's been a palpable change in the last four or five years generally in the attitudes of boards and CEOS in their willingness to listen to large stockholders."

Ubben took issue with activist investing being 'daytrader fodder' and labeled it as 'bad.'  Ubben revealed he had built an eBay stake at $50 and wanted to buy more but Icahn's involvement pushed shares higher.  He says Carl's a great stockpicker, but the activist situation there was a non-event.

Ubben later noted that he thinks activist investing is too short-term these days rather than building a company over the long-term.  Robbins agreed with him.  However, Rosenstein took the other side of the argument.

Embedded below is the full activist investing panel from the Milken Institute Global Conference:



For more on the subject, head to Mason Morfit's lectures on activist investing (he's part of ValueAct with Ubben).

Clifton Robbins' Presentation on Chico's: Value Investing Congress

We're posting up notes from the 2013 Value Investing Congress in New York.  Next up is Clifton Robbins of Blue Harbour Group.  He presented "Think Like An Owner - Finding Companies Poised To Unlock Value" and pitched Chico's FAS (CHS).

Clifton Robbins' Value Investing Congress Presentation

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KKR guy. Says leverage wasn't the key to PE, it was the good management.

Bullish on Chico's (CHS)

$2.3B EV. 5.8x EBITDA of $400m they filed a 13d, own 6% of stock.

1427 stores, they think they could have 2200 stores.

4 brands. Chico’s is 720 stores. White House is 465 stores. Soma 235 stores. Boston proper only 2 stores.

Soma lingerie business for older women, run by former Victoria Secret people.

"Growth stock trading as a value stock"

Claims Chico’s is gaining share.

Missy's space is loyal customers.

New CEO with strong retail experience.

Debt free. Could do a buy back with cash over time.

Be sure to check out the other presentations from the New York VIC here.

Clifton Robbins' Ira Sohn Conference Presentation on CACI & Akamai

We're posting up notes from the Ira Sohn Conference 2013 in New York.  Next up is a summary of the presentation from Clifton Robbins of Blue Harbour Group.  He presented the long case for CACI (CACI), which he owns 93% of and his second pick was a new position in Akamai (AKAM).


Long CACI (CACI)

Robbins expects a lot of M&A due to cash on balance sheets.  Two longs. CACI. Government Services Contractor. Intelligence, Cybersecurity, etc. Was originally a software company. Strong FCFs. Trades at only 7x EBITDA, valuation implies 30-40% upside.


Long Akamai (AKAM)

He says it's a unique business at crossroads of megatrends. Say it can do better balance sheet optimization, no debt $1B in cash. Says stock up only 18%, while growing faster than comps. Disputes margin pressure problems. Argues stock from today's price of $45 is undervalued by $15. All the cash is in the US. Says they can do accretive acquisitions.


Check out the rest of the hedge fund presentations from the event: notes from Ira Sohn Conference 2013.