Boston Investment Conference Notes 2014: Summary of Stock Picks

Today we're posting notes from the 2014 Boston Investment Conference that recently took place.  The event features hedge fund managers pitching their latest ideas to benefit the Boston Children's Hospital. 

This event follows "Chatham House Rules" which means unfortunately that the pitches will not be linked to any particular speaker.  That said, if you look at some 13F filings, you might be able to guess who pitched what.

Speakers (In No Particular Order)

David Abrams, Abrams Capital
Will Danoff, Fidelity Investments
Jason Capello, Merchants' Gate Capital
William Duhamel, Route One Investment
James Grant, Grant's Interest Rate Observer
Jeremy Grantham, GMO
Jonathon Jacobson, Highfields Capital
Alex Klabin, Senator Investment Group
Seth Klarman, Baupost Group
Beeneet Kothari, Tekne Capital
James Litinsky, JHL Capital Group
Michael Lowenstein, Kensico Capital
Joshua Resnick, Jericho Capital
Barry Sternlicht, Starwood Capital


Notes From The Boston Investment Conference 2014

First Pitch: Brookdale Senior Living (BKD):  EV/EBITDA (2015) about 11.5.  $33-34 stock price: 6B market cap, 6B debt with 12B EV.  He likes the services businesses they are developing.  They offer a premium product.  There is limited supply and strengthening demand and demographics.  They recently purchased #2 operator and believes there are cost synergies.  They own 40% of their real estate and have option to buy more. 

They have 10% market share in their industry and are 4X bigger than #2.  The industry has years of consolidation in front of it.  Lack of current supply a result of over-building in the late 1990s and it took about 15 years to absorb this.  Supply shortage is driven by demographics.  He compared FFO multiple to multi-family housing operators: 10.6   c/w 20.2 

Their services business includes home health care, hospice care, car/transportation services and physical therapy, speech therapy and occupational therapy.  “They have a captive customer base of 100,000 high net worth individuals.”  They can institute group purchasing and get bulk discounts.  He believes their real estate is worth $27-35 share.  In a few years their operating business can produce   $750M EBITDA and 8X this gives you a stock price in the 50s.  They can potentially spin out their operating company.  He talked about a proxy statement filed in June that had some interesting information.


Second Pitch: Ctrip.com (CTRP):  Could be a double in 2-3 years.  $9B market cap.  50% market share.  15% growth.  Tourism is the new luxury in China vs. branded goods.  Online travel penetration is 17% vs. 45% in US.  Company can grow with both secular growth and increased online penetration.  C-trip is synonymous with travel in China.  Because of competition, they were spending heavily on IT, sales, engineers and to recruit more hotels.  This has affected their margins.  Compared their gross margins and (I believe) their operating margins to other companies:

PCLN  EXPE  CTRP('14)  CTRP('08)
84        78        70               73
44        25        12.5            38.2

So the company still has high gross margins and their increased spending is affecting SGA.  According to the investor, 2014 is their last big year of investment spending and the 'heavy lifting' will have been done.

CTRP has bought stakes in multiple travel related businesses that are marked at cost on their balance  sheet.  Investor values those stakes at $2B giving company an adjusted market value of $7B.  PCLN is the 800 lb. gorilla in online travel space and they are partnering with CTRP and purchased a 10% stake   They are expecting an IPO of E-HI (phonetic spelling), one of their travel related companies, in early 2015. They expect earnings to go from $2 to $4 in the next 3 years.  They value $4 at 25X (a smaller multiple than current one) plus $20/share in investment stakes representing $120/share or about double current share price.  He considers it a high growth business.  He notes that in 2009, PCLN had a $7B market cap and now-5 years later-has a $60B market cap.


Third Pitch: Western Union (WU):  They will earn about $1.50 this year and since they have some excess depreciation FCF will be higher.  Next year will be better.  Have about a 3% yield.  They had problems in the past by pricing their product too high.  They took a price cut.  But this mess creates the current opportunity.  A similar thing happened to MO many years ago.  They cut prices which freaked out the market but did well from there.  Talked about a competitor XOOM but they have a narrow market.  Thinks WU can use technology to their advantage.  Their expenses are high because of compliance costs but he feels this can ultimately deepen their competitive moat.  Their volumes are growing and so should their earnings. 


Fourth Pitch: Sberbank.  This is a Russian bank.  Investing is simple but not easy.  They have NIM of over 5%.  They compare favorably to WFC on most metrics.  He says they have terrific management.  They have a 4.1% yield (but it may be cancelled).  They have over 100 million accounts.  Competitors are Alpha Bank and Bank of St. Petersburg.  He thinks situation with Russia should straighten out next year.  The sanctions will be under vote to be renewed on 7/31/15.  He feels there is no point for them to make concessions well before this.  “Everyone is a value investor until prices get really cheap.”  They have an unfair funding advantage.  They have 46% deposit share.  They don’t have to take high risk to get high returns (like Geico).  They can pick and choose among customers.  There is risk from falling oil and from the ruble.


Fifth Pitch: Cogent (CCOI):  It has a $2B EV and is involved with Internet connectivity.  It has corporate customers ($700/month) and net-centric content providers like Netflix (NFLX).  They have a high quality network.  Apparently $14B of invested capital with the lowest cost network.  20-25% demand growth.  The industry is consolidating with higher pricing and profitability and more efficient cap-ex.  Should be strong revenue growth with capex going down. 

Talked about net neutrality debate.  ISPs are backing away from pay prioritization since alternative is regulation from FCC.  In worst case, sees Cogent losing 4% of revenues.  Mentioned “take or pay agreements”.  He thinks that pay prioritization will likely be banned.  He sees company returning about $2.70 in capital: ½ in dividends and ½ in buybacks (total 8.1%).  He thinks the stock can trade into the low $60s (currently $34 ~ not sure when or what assumptions he has made). 


Sixth Pitch: Ophthotech (OPHT):  A speculative biotech play.  Drug in pipeline is Fovista.  I believe it is a platelet development growth factor inhibitor used in conjuction with anti-VEGF (vascular endothelial  growth factor) drug to treat wet AMD, which is some type of macular degeneration. 

Says leading cause of blindness in 55 and older population in US and EU.  Has market cap of $1.5B and EV of $1B (about $500M cash)  Has another drug called Zimura, which is in phase 2.  Cheap because no near term catalyst.  Feels probability of approval is mispriced.  Novartis made a deal with company for their ex-USA licensing rights with possible $1B milestone   payments.  He feels this has de-risked the investment.  A launch could occur 2017-2019.


Seventh Pitch: China Mobile (CHL): Largest mobile company and has over 800 million subscribers.  Trades at 4.3x 2015 EBITDA and 3.4% dividend yield.  75% owned by China; 25% publicly traded.  Has $73b in cash.

Has the world's leading 4G network.  They previously had TD-SCDMA network that was disappointing.  Now 4G with global standard TD-LTE.  China Mobile has one year head start over competitors China Telecom and China Unicom.  He expects data usage to "explode" and expects capex to decline materially.  National Tower Co is a separate company that may be spun out that will be very valuable. 

He expects ARPU, 4G and data revenues to ramp up making up for compression in voice and SMS.  Margins should improve.


Eighth Pitch: HDFC Bank (HDB):  This is a bank in India and he likes the country overall.  Thinks it is a high quality bank at 16x earnings and notes that Modi is pro-business.


Winning Student Presentation: Short Diamond Resorts (DRII).  (Very short presentation and did not catch gist of the thesis)
 

This concludes notes from the 2014 Boston Investment Conference.  If you missed it, we've also posted notes from the following recent hedge fund conferences:

- Invest For Kids Chicago Notes: Ackman, Robbins, Zell & more

- Sohn San Francisco Notes: Ubben, Billick, McGuire & more

- Capitalize For Kids Sohn Canada Notes: Ainslie, Dinan, Robbins

- Summary of Stock Picks From Robin Hood Investors' Conference

- Great Investors' Best Ideas Dallas Notes: Einhorn, Perry, Ackman & more

- InvestPitch 2014: Stock Picks From Emerging Hedge Fund Managers

InvestPitch 2014: Summary of Stock Picks From Emerging Hedge Fund Managers

While most investment conferences feature big names that manage large sums of money, the recent InvestPitch competition put on by Institutional Investor and SumZero highlighted up and coming smaller hedge fund managers.  Videos of the pitches will be available at II in a few weeks, but in the mean time here's a quick summary:


Summary of InvestPitch 2014 Stock Picks

Sahm Adrangi (Kerrisdale Capital): long Savills (LSE:SVS)

Kyle Mowery (GrizzlyRock Capital): long Leucadia National (LUK)

Daniel Lawrence (Elmrox Investment Group): long Realogy (RLGY)

Spencer Grimes (Twinleaf Management): long E.W. Scripps (SSP)

Travis Cocke (Voss Capital): Short GW Pharmaceuticals (GWPH)

Ian Clark (Dichotomy Capital): Short Transocean (RIG)

Michael Zapata (Sententia Capital): Long Aaron's (AAN)

Keith Rosenbloom (Cruiser Caiptal): long Ferro (FOE)

Brian Pitkin (URI Capital): long JPMorgan Chase TARP Warrants (JPM/WS)

Sam Hendel (Levin Capital): long Newcastle Investment (NCT)

Nicholas Snyder (Snyder Brown Capital): long Sears Holdings (SHLD)

David Hanson (Hanson Wells Partners): long Alleghany (Y)

Josh Young (Young Capital): long Stone Energy (SGY)

Donald Marchiony (Westpark Capital): long Tower Semi (TSEM)

Vad Yazvinski (Jordan Capital): long American Capital (ACAS)

(ValueTree Investments): long Kohl's (KSS)

Terry Lally (Spotlight Funds): long Staples (SPLS)

Mike Winston (Sutton View Capital): long Starz (STRZA)

Charles Goldblum (Hurley Capital): long Lifepoint Hospitals (LPNT)


There have been a ton of investment conferences lately and if you missed any of them, we've got you covered with notes below:

- Notes from Sohn San Francisco (Ubben, McGuire, Billick etc)

- Notes from Capitalize for Kids Sohn Canada (Ainslie, Dinan, Robbins)

- Robin Hood Investors' Conference: Summary of stock picks (Tepper, Loeb, Einhorn, etc)

- Great Investors' Best Ideas Dallas (Ackman, Einhorn, Perry & more)

-  Check back for Invest For Kids Chicago notes later this week as well

Great Investors' Best Ideas Dallas 2014 Notes: Ackman, Einhorn, Perry & More

The 2014 edition of Great Investors Best Ideas Dallas took place this week benefiting the Michael J. Fox Foundation for Parkinson's Research and the Vickery Meadow Youth Development Foundation.


2014 GIBI Dallas Notes



Bill Ackman (Pershing Square):  He was positive on Fannie Mae and Freddie Mac (FNMA & FMCC), which have obviously seen volatility as of late.  They own 10% of each and are quite bullish.  They've been buying both and say private property can't be taken by the government.  Pershing owns common versus the preferred and think it's just as good of an investment.  Thinks there's an opportunity for settlement.


David Einhorn (Greenlight Capital):  He continues to like Micron (MU) and Apple (AAPL), and also really likes Greek banks.  AAPL/MU his 2 largest stakes.  Says DRAM has been a bad business for a while and should make $4 per share as the industry is only 3 players now after consolidation.  Likes Greek banks as they're at or below book value.  Also likes shorting French government bonds: Marine Le Pen wants to leave the Euro and bonds yield around 1%.


Richard Perry (Perry Capital):  Based on his pitch that was circulated a few months ago, Perry likes the idea of containerboard sponsored MLPs (they've owned International Paper (IP), KapStone Paper (KS), and Rock-Tenn (RKT)).  He also likes tax loss candidates of AIG (AIG) and Ally Financial (ALLY).  ALLY = Trading below book value but should trade 1x at least.  Government still owns 15%, last sold some @ $25, trades $22.50 now, should finish selling at year-end.  Also says Perry is appealing the Fannie/Freddie ruling and that this particular judge has been overturned a bunch.


T. Boone Pickens (BP Capital): He was positive on Marathon Oil (MRO) and Clean Energy (CLNE) again.  2 of his picks last year were up (FANG and BAS), except for CLNE which is down big.  He owns 20m shares, could be biased "pride of ownership".  Says he thinks we drill too much and US is only place that's growing production.  Likes MRO because it's cheaper on EV/EBITDA than peers like XOM and OXY.  Says we won't see $10 natural gas in his lifetime.


Michael Price (MFP Investors): 2 ideas (1 old, 1 new): Still likes Dolby (DLB, old idea).  55% of the company is owned by kids of the company.  PC sales dropped but have recovered.  Company can see new growth in India/China.  Undervalued stock, attractive to private equity and Apple.  Also likes FMC Corp (FMC), new idea.  Stock whacked on overreaction that company won't be splitting into two parts.  Thinks it trades $120 or so in next few years.


Tom Russo (Gardner Russo & Gardner): They like family controlled businesses.  Look for 50 cent dollars.  Focuses on global consumer stocks.  He was positive on Cie Financiere Richemont SA.


Paul Isaac (Arbiter Partners):  He likes Credit Agricole Regional Banks.  CMO, CRTO, CCN, CAF, CIV, CRSU.  40% price to tangible book value.  Well capitalized and inexpensive on relative basis.  Shorted French 10 yr bonds to hedge as there is euro risk.  Also pitched Japanese General Trading Companies.  8001.JP, 8002.JP, 8031.JP, etc.  Some 70% tangible book value, trading 6x PE.


Bill Miller (LMM): Buy the homebuilders as he likes the sector in general.  Specifically mentioned KB Homes (KBH), Lennar (LEN) and Pulte (PHM).  Market at new highs yet builders aren't even though they've got a nice clean path for earnings growth.  Says employment is the key and housing starts are improving.  He also said he likes Intrexon (XON).   This is a bet on management, who owns a huge chunk of the company.  Big upside but also could lose half your investment.


Ray Nixon (Barrow Hanley Mewhinney & Strauss):  He's positive on Q4 tax loss candidates, noting that many mutual funds end fiscally in October so there's various pressures that month, not to mention that it's one of the worst months historically.  Recommends buying across October, November and into December.  Buy a basket of tax loss names.  Pitched Mattel (MAT):  Stock's down over 30%, losing Disney license in 2016, losing shelf space, missed the past 3 quarters.  He says toy industry is growing 5%, likes the dividend yield, and points to $1b in cash on balance sheet.  They've started buying shares.

Invest For Kids Chicago Next Month: Ackman, Robbins, Kuhn, McGuire & More

The sixth annual Invest For Kids Chicago is coming up next month.  This Investable Ideas Conference benefits local children and features a heavy hitting line-up of top hedge fund speakers.  You can learn more about the conference and register here.

This year's event benefits Chicago Scholars, Intrinsic Schools, LEARN Charter School Network, North Chicago Community Partners, OneGoal, and Reading in Motion.  The co-founders of the event underwrite all the costs so 100% of the money raised goes directly to charity.


Event Details

Date: November 6th, 2014
Location: Harris Theater, Chicago, IL
Time: 1:30 - 5:30 pm


Speakers List

- Bill Ackman, Pershing Square
- Larry Robbins, Glenview Capital
- Steve Kuhn, Pine River Capital
- Mick McGuire, Marcato Capital
- Michael Sacks, Grosvenor Capital
- Wally Weitz, Weitz Investment Management
- Nehal Chopra, Tiger Ratan
- Mason Hawkins, Southeastern Asset Management
- Sam Zell, Equity Group Management
- Jonathan Kolatch, Redwood Capital
- Mike Wilkins, Kingford Capital
- Tim Hurd, BlueSpruce Investments
- Nancy Prial, Essex Investment Management


As you can see, some top hedge fund managers will be sharing their latest investment ideas. If you're in the Midwest, you don't want to miss it.

Last year's event had over 1000 attendees and raised almost $1.4 million for charities.  To attend Invest For Kids next month, simply click here to register.

FINforums Annual Hedge Fund Summit

FINforums Annual Hedge Fund Summit  

Thursday, September 19, 2013  |  New York City 

Now in its third year, the FINforums Annual Hedge Fund Summit is a must attend for anyone   involved in the hedge fund industry, including fund managers, high-net-worth investors, institutional investors, lawyers, accountants, technology providers, private bankers, advisors and consultants. 

Keynote Address: 

• Barbara Novick, Vice Chairman, BlackRock 

Topics Covered Include: 

• The Global Macro Outlook 
• The Business of Running a Hedge Fund 
• Tips on Marketing and Capital Raising 
• An Investment Consultants Roundtable 

Registration: 

Buy-Side / Fund Managers / Investors: $395.00 
Service Providers / Other: $695.00 

Friends of MarketFolly receive a 15% discount. Use code: MF15  

Register Today 

Visit www.finforums.com for a more information, including a detailed agenda

Great Investors' Best Ideas Symposium: Einhorn, Ackman, Bass, Chanos & More

Investment conference season is in full swing and up next on the circuit is the Great Investors' Best Ideas Investment Symposium in Dallas, Texas.

The sixth annual event will take place on Tuesday, October 30th, at the Winspear Opera House.  All proceeds will be donated to the Michael J. Fox Foundation for Parkinson's Research and the Vickery Meadow Youth Development Foundation.  You can register for the event by clicking here.

Since inception, the event has raised more than $6 million. Founded by Shad Rowe (Greenbrier Partners) and John Neill (Telesis Company), the event's goal is to "enlighten, inspire and inform attendees while raising much-needed funds for two worthy causes."

The panel of speakers at this symposium features prominent hedge fund managers, all of whom have been featured on Market Folly at one point or another.  Here's your chance to hear all of them speak at one event:

Speakers List

David Einhorn (Greenlight Capital)
Bill Ackman (Pershing Square Capital)
Kyle Bass (Hayman Capital)
Jim Chanos (Kynikos Associates)
Lee Cooperman (Omega Advisors)
Boone Pickens (BP Capital Management)
Michael Price (MFP Investors)
Clint Carlson (Carlson Capital)
Rusty Rose (Cardinal Investment Company)

Moderator: Gretchen Morgenson of The New York Times 


Event Information

Date & Time: October 30th, 2012 from 2:00 p.m. to 6:00 p.m. with a cocktail reception afterwards

Location: Dallas, TX at the Winspear Opera House

Website: www.gibidallas.com

Phone: 214-754-9997

Email: info@gibidallas.com

Registration Form: Click here to download the .pdf


The GIBI registration form is also embedded below:





This should be a fantastic event both for investment ideas and networking.  Market Folly will be attending so we encourage everyone to come say hi and to support some great causes.  You can learn more and register for the event by clicking here.

Notes From Delivering Alpha Conference

Here's an index of notes from the various panels at CNBC & Institutional Investor's Delivering Alpha Conference:


- Best Ideas Panel featuring Omega's Leon Cooperman, Kynikos' Jim Chanos, BlueMountain's Andrew Feldstein, BlackRock's Robert Kapito, and Queen Anne's Gate Capital's Kathleen Kelley.

- Global Opportunities Panel featuring Richard Perry (Perry Capital), Fortress' Peter Briger, Harvard Management's Jane Mendillo, and JPMorgan's Mary Callahan Erdoes

- Less Than Zero Panel featuring Avenue's Marc Lasry, Marathon's Bruce Richards & Morgan Stanley's Gregory Fleming

- Real Estate Panel featuring Pershing Square's Bill Ackman, Starwood's Barry Sternlicht, and Blackstone's Johnathan Gray

- Commodities Panel featuring Ospraie's Dwight Anderson, Arbalet's Jennifer Fan, and Taylor Woods Capital's Beau Taylor

Notes From Invest For Kids Chicago: Lasry, Perry, Cooperman, Zell & More

Yesterday at Invest For Kids Chicago, numerous high profile hedge fund managers shared their latest investment ideas. The event had 800 attendees and raised $1.1 million (100% of the proceeds went to charities benefiting children). Please click the links below to view notes on each speaker's presentation:


Invest For Kids Chicago Notes:


Marc Lasry (Avenue Capital): Long General Motors & Hovnanian Bonds


Richard Perry (Perry Capital): GSE Junior Preferred Securities & RBS Tier 1 Securities


Leon Cooperman (Omega Advisors): Charming Shoppes (CHRS), KKR Financial (KFN), E*Trade Financial (ETFC)


Sam Zell (Equity Group Investments): Brazil's Investment Opportunity


Barry Rosenstein (JANA Partners): long McGraw Hill (MHP)


Thomas Russo (Gardner Russo & Gardner): Look abroad for opportunities, Nestle


Michael Milken (Milken Institute): Thoughts on Capital Markets


John Keeley (Keeley Asset Management): ITT Corp (ITT)


Barry Sternlicht (Starwood Capital Group): Likes Lowe's, Toll Brothers, NVR


Michael Elrad (GEM Realty Capital): Long Macerich (MAC)



For more of our coverage of the latest investment conferences, be sure to also head to notes & presentations from the Value Investing Congress.

Invest For Kids: Chicago's Investable Ideas Conference

Invest For Kids is modeled after the Ira Sohn Conference and features prominent hedge fund managers presenting their latest investment ideas to benefit local children in Chicago. Last year the event sold out and raised $800,000. 100% of the money raised directly benefits children via local charities so it's a great cause.

Invest For Kids will take place November 3rd at the Harris Theater in downtown Chicago from 2pm to 6pm with a cocktail reception afterward. Speakers include:

Bill Ackman of Pershing Square Capital Management
Larry Robbins of Glenview Capital
Meredith Whitney of Whitney Advisory Group
Sam Zell of Equity Group Investments
Joshua Friedman of Canyon Partners
William Browder of Hermitage Capital
John W. Rogers of Ariel Investments
Doug Silverman of Senator Investment Group
Richard Driehaus of Driehaus Capital
Brian Feltzin of Sheffield Asset Management
David Herro of Herris Associates


A great line-up of speakers for a great cause. Embedded below is the registration form for Invest For Kids:



You can download a .pdf registration form here.

Given that so many conferences take place on the coasts, this event in Chicago is great for those of you in the Midwest or close by. To learn more about the event, head to http://www.investforkidschicago.org.