Dinakar Singh: Long Yutong Bus Company at Sohn London Conference

We're posting up notes from the Sohn London Investment Conference 2015.  Next up is TPG-Axon Capital's Dinakar Singh.  He pitched a long of Yutong Bus Company (SHA:600066).


Dinakar Singh's Sohn London 2015 Presentation

Long Yutong Bus Company (SHA: 600066)

Yutong Bus Company’s main products are school coaches, enterprise shuttle buses, caravans, motor homes. Margins are improving. Expect revenues to grow 10-15% in coming years.

Dinakar Singh said that he would much rather invest in Chinese capital goods companies than in their European counterparts that have very high valuations.


Be sure to check out the rest of the Sohn London Conference presentations.

Dinakar Singh's Sohn Canada Presentation: Long Hitachi & India Private Banks

We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.)  Next up is Dinakar Singh from TPG Axon.  He pitched two long ideas: Hitachi and India private banks (Yes Bank and Axis Bank).

Dinakar Singh's Sohn Canada Presentation

-    Currently seeing problem markets rather than problem world
-    Services are doing well and manufacturing is doing poorly
-    Zero capex growth in 1990’s, may see this happen again
-    See opportunities in Japan (through restructurings) and India (earnings growth)
-    Long Hitachi: see operating margins improving from 6.5% to 10%, 8x PE, see going to 14x in line with industry
-    Long India private banks (Yes Bank and Axis Bank): bank sector restructuring, consumer growth, cyclical recovery, dramatic growth for private banks


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

TPG-Axon Capital Files 13D & 13G on SandRidge Energy Stake

Dinakar Singh's hedge fund firm TPG-Axon Capital has filed a 13D and then 13G with the SEC regarding their stake in SandRidge Energy (SD).

Per the 13G filing, the firm owns about 32 million shares, or 6.5% of the company: 4.1% via common stock and 2.4% economic on basket swap.  The firm executed a swap to realize certain gains/losses for tax planning.

This is a reduction in their position size, as they previously disclosed ownership of over 39 million shares at the end of the third quarter (via their last 13F filing with the SEC).

Per Google Finance, SandRidge Energy is "an independent oil and natural gas company. The Company is engaged in development and production activities in the Mid-Continent, Gulf of Mexico and Permian Basin in west Texas. Its primary area of focus is the Mississippian formation, a shallow hydrocarbon system in the Mid-Continent area of northern Oklahoma and Kansas. The Company also operates businesses that are complementary to its primary development and production activities, including gas gathering and processing facilities, an oil and natural gas marketing business and an oil field services business, including its wholly owned drilling rig business, Lariat Services, Inc. (Lariat)."

TPG-Axon Increases GNC Holdings Stake

Dinakar Singh's hedge fund firm TPG Axon has filed a 13G with the SEC regarding shares of GNC Holdings (GNC).  Per the filing, TPG has revealed a 5.8% ownership stake in GNC with over 5.28 million shares.

This marks an increase of 1,258,000 shares in their position size since the end of the first quarter.  The filing was made due to activity on June 16th.

You can view some previous investment picks from Dinakar Singh here.

Per Google Finance, GNC Acquisition is "a global specialty retailer of health and wellness products. The Company has three segments: Retail, Franchise and Manufacturing/Wholesale. Corporate retail store operations are located in the United States, Canada, and Puerto Rico, and in addition the Company offers products domestically through GNC.com, LuckyVitamin.com and www.drugstore.com. Franchise stores are located in the United States and 54 international countries, including distribution centers where retail sales are made. The Company operates its primary manufacturing facilities in South Carolina and distribution centers in Arizona, Pennsylvania and South Carolina. The Company manufactures the majority of its branded products, but also merchandises various third-party products. It sells products through a worldwide network of more than 8,100 locations operating under the GNC brand name."

Invest For Kids Chicago Notes 2013: Lasry, Eisman, Peltz, Cooperman & More

The fifth annual Invest For Kids Chicago conference just took place and MarketFolly has notes from the event which featured tons of prominent hedge fund managers presenting investment ideas to benefit charities.


Notes From Invest For Kids Chicago 2013

- Marc Lasry (Avenue Capital): Long JC Penney & Connacher Debt

- Lee Cooperman (Omega Advisors): 4 long ideas

- Steve Eisman (Emrys Partners): Long Ocwen Financial & Altisource Portfolio Solutions

- Nelson Peltz (Trian Fund): Presentaiton on Mondelez

- Dinakar Singh (TPG-Axon): 2 investment ideas

- Sam Zell (Equity Group Investments): Real estate thoughts

- Jeff Gundlach (DoubleLine): His presentation

- Mark Kingdon (Kingdon Capital): Thesis on Boeing & Aegerion Pharma

- Steve Kuhn (Pine River Capital): Pitch on American Capital

- Rick Rieder (BlackRock): His presentation

- Stephen White (Castle Union): Pitch on Avid Technology

- Peter Zaldivar (Kabouter Management): Long Hotel Shilla

Dinakar Singh's Thesis on Hitachi & Daqin Railway: Invest For Kids Chicago

Next up in our notes from Invest For Kids Chicago 2013 is Dinakar Singh of TPG-Axon Capital.  He presented two long ideas: Hitachi and Daqin Railway.


Dinakar Singh's Presentation at Invest For Kids Chicago

•    Global fund – but pick best few dozen ideas
•    Average multiple of 14 is misrepresentative as some sectors are trading above historical number
•    Asia is discount of world
•    Many cyclical stocks in Asia trade at low multiples
•    Japan is seeing company change in some companies
•    At US with high prices with high margins
•    % of index trading at single digit multiple chart (very low in US and 32% in Europe and 30% in Thailand, and 27% in Hong Kong)
•    Likes to use auto sales for a proxy on where an economy is
•    Big recovery is over
•    Companies have restocked
•    Margin trend in Russell 3000
•    American listed companies has  come from interest and taxes – EBITDA margins are lower
•    Climb becomes harder when rates begin going up
•    Own 30 stocks and 5 happen to be US


•    Idea #1: Hitachi (Japanese) 
•    New CEO in 2008 was a change agent (even though insider)
•    Sold entire consumer business
•    Investing in healthcare equipment like Emerson and Phillips
•    Valuation is different than Emerson and Phillips
•    Hitachi has made tremendous process with margins at 5% yet could they double
•    Far more ways to win in terms of earnings
•    CEO boosted buybacks dividends


•    Idea #2: Daquin Railway (601006 CH) 
•    P/E multiple is half on union pacific at 8.2 versus 16.3x for Union Pacific
•    Good balance sheet
•    Good management and 6% dividend yield
•    Every year they should grow profits
•    Dividend should be growing
•    Could get tariff growth form coal
•    Rail rates could be up significant


Check out the rest of the hedge fund presentations from Invest For Kids Chicago here.

TPG-Axon Discloses Outerwall Stake

Per a 13G just filed with the SEC, Dinakar Singh's TPG-Axon has revealed a 5.1% passive stake in Outerwall (OUTR) with shares 1,434,429.  This is a brand new position for them and the filing was required due to activity on October 4th.

We just posted about how JANA Partners has gone activist on Outerwall and now TPG-Axon has disclosed a stake in the company formerly known as Coinstar as well.

The NYPost just highlighted that the company has "rebuffed fresh approaches from buyout firms."  Piper Jaffray has also said they see a sum of the parts value of $70 for OUTR.

Conversely, Bloomberg points out that around 30% of OUTR shares were sold short as of the beginning of October.

Per Google Finance, Outerwall is "a provider of automated retail solutions, which offers convenient products and services. The Company's offerings in automated retail include its Redbox business, where consumers can rent or purchase movies and video games from self-service kiosks (Redbox segment), and its Coin business, where consumers can convert their coin to cash or stored value products at self-service coin counting kiosks (Coin segment). Its New Ventures business (New Ventures segment) is focused on identifying, evaluating, building, and developing self-service concepts in the marketplace."

TPG-Axon's Dinakar Singh Likes Sirius XM & Time Warner Cable: Interview

Dinakar Singh, CEO of $4 billion TPG-Axon Capital recently sat down with Bloomberg TV so we wanted to post up some of the highlights of his rare appearance.

It seems as though he is betting against telecom stocks and is also bearish on some financials (in particular US regional banks).  He's bullish on names like Sirius XM (SIRI), Time Warner Cable (TWC), and W.R. Grace (GRA).  He sees growth in the chemical, aerospace, and healthcare industries.

A graphic on screen showed TPG-Axon's key long exposures in tech & media: SIRI, TWC, Viacom (VIA.B), Kabel Deutschland, Equinix (EQIX), Expedia (EXPE), Priceline.com (PCLN), and Yandex (YNDX).


On the current environment:   “For us, we pick stocks. That is how we make money. More and more, everyone has become more emotional in markets. We get scared by headlines and we all start acting the same way whether you are a CEO or a consumer. Jobs do matter. I think when you look at the U.S. in the last number of months, our view coming in this year is that people got too excited. There was a bounce back from last year and some good weather but it was going to be a slow gradual sloppy messy restructuring without a big recovery. Things have reversed. I think people are getting too pessimistic…I think ultimately consumers and CEOs are reading the same headlines and scared. I think you are seeing a cyclical or temporary step down. We do not think there one should expect a big bounce, but there won’t be much of a plunge either. It feels like the numbers are crummy but they will probably stay this way for a while. The fiscal cliff is a real issue. I think you're seeing an impact right now.”  


On how to play this market:   “People have gotten scared and they’re paying a lot for safety. On the safety side, people like dividends in safe industries. So Verizon is trading 18 times earnings because people want safety and a good dividend. There are companies like Time Warner Cable that we think are just as defensive but they did not happen to pay a dividend, they have even better cash flow, but they traded as a result much less well last year. For us, big opportunity. So media and cable that’s very cash flow rich and where we think management is going to turn that spigot on and turn it into a dividend or buy back machine that makes sense. Sirius, Time Warner Cable, companies like that. On the cyclical side, not everything is terrible. There are some sectors where we think there is good structural growth and balance sheets will be put to work. Some chemical companies are very good restructuring candidates. Aerospace suppliers.  Aerospace is in the middle innings of a very long term upgrade cycle.”


On telecom services:   “In a hedge fund, this is called a funding short. It is not that you think it is terrible and going straight to 0, but it is priced fully and not going up much so not a very good risk reward. Within telecom services there are two categories. There are the Verizons, we get it, they trade here for a reason, but they are pretty fully priced. On the other side, there are other companies that are legacy telecom companies where the dividend is a very high, but business really is eroding. It is priced well today because of a high dividend, but it is not sustainable. When you look around the world, a lot of high dividend stocks in Europe are not trading well because people are looking at them and saying I get it. I have a dividend today but it might not be there tomorrow.”


On China:   “If you look at China specifically, multiples had really collapsed…You have two general types of companies. Big, state-owned companies that people don’t trust and private companies that people really don’t trust. There isn’t a lot that trades at big multiples anymore. I think if you can find cases where there is real growth and they can pay cash back to you, you’ll make money.”


Embedded below is the first part of the interview of Dinakar Singh's interview with Bloomberg TV:



And here's the second part:

Ira Sohn Conference Notes: Hedge Fund Manager Presentations

The Ira Sohn Conference is taking place today in New York and features an all-star line-up of hedge fund managers. This post features part 1 of our notes from their presentations. ***Update: We've also posted up part 2 of our notes from Ira Sohn as well.

Part 1:


Erez Kalir / Sabretooth Capital: His pick was a long of MBIA (MBI) as a 'favorably asymmetric' play. His presentation was entitled, "Economic Death as a Special Situation." He feels that MBIA has 100%-200% upside with only 30% downside at worst, so the risk/reward skew is favorable.

He also likes Argentina as a compelling investment arena since its default in the early 2000's. In particular, he's looking at energy exploration & production names. He points to stocks like YPF SA (YPF) and Crown Point Ventures (CWV).

On the topic of inflation hedging, Kalir doesn't like gold. In fact, he warned against owning it. He also dislikes shorting treasuries. Instead, he prefers to buy farmland. This stance no doubt echoes the sentiment of Jim Rogers, the ex-Quantum fund manager who has also been a staunch advocate of owning farmland. Additionally, we've detailed how subprime profiteer Michael Burry also bought farmland.


Dinakar Singh / TPG-Axon Capital: Singh thinks the current market is a great environment for stockpicking and fancies shares of wireless provider Sprint (S), which David Einhorn's Greenlight Capital also likes (see Einhorn's thoughts here). Singh cites the company's low valuation and it's his favorite turnaround story.

He says S needs to consolidate its two networks starting now with the next generation phones. Singh actually feels like the T-Mobile / AT&T (T) merger is good for Sprint because it removes their largest competitor. Singh notes that the US wireless market could offer defensiveness like utility stocks, but with the added benefit of growth. He thinks S could have 40-70% upside, saying its worth $8-14 per share (currently trading around $6).

TPG-Axon's leading man cited Zhongpin (HOGS) as a compelling investment due to its top line growth and the fact that it's trading at 7x earnings.

Singh also mentioned he thinks that Orkla (OSL: ORK) has a fair value of $65 to $80 as the company was mismanaged and restructuring could unlock value.


Jeff Aronson / Centerbridge Partners: His pick was to go long shares of CIT Group (CIT). This has been a hedge-fund-favorite as some of the largest owners also include Bruce Berkowitz's Fairholme Capital, Howard Marks' Oaktree Capital, David Einhorn's Greenlight Capital, Marc Lasry's Avenue Capital, and Dan Loeb's Third Point. Before Chapter 11, Centerbridge was buying CIT debt. Since then, they've been buying the equity.

Aronson says that the company's intrinsic book value is $59 per share and notes that they have $12 billion in cash on their balance sheet. He highlights that CIT has publicly stated it could buy a retail bank (whose deposits would boost earnings). As a takeout candidate, Centerbridge thinks CIT could be worth as much as $65 (shares trade around $41 currently.)


Robert Howard / KKR: Howard (representing KKR's new equity team) pitched shares of Wabco (WBC), a company that produces anti-lock braking systems among other things. He cites three major trends that WBC can benefit from: cyclical recovery (US & Europe trucking recovery), emerging market growth, as well as tighter safety rules. Howard mentions the company is often overlooked by investors too.

KKR's man also pitched HSN, Inc (HSNI), otherwise known as the Home Shopping Network. He likes their demographic of 30-55 year old women with solid annual income to spend. Howard thinks that John Malone's Liberty Media could make a play for the company too, as he points out that Liberty owns 30% of HSNI and all of QVC, the other major player in the shopping-via-television arena.


Phil Falcone / Harbinger Capital Partners: Falcone talked about his wireless venture, LightSquared. We've covered this play numerous times and while it's not publicly traded yet, Falcone says that it will be some day. Essentially, this is Harbinger's concentrated bet on a 4G network.

Numerous hedge funds have invested in the 'more mobile data usage' theme via various plays. Some have elected to buy the wireless tower operators like American Tower, (AMT), Crown Castle (CCI), and SBA Communications (SBAC). Falcone, on the other hand, has elected to straight up build out his own network as his hedge fund has morphed into a semi-private equity-like fund. He noted that they've accumulated spectrum and are looking at a 4G terrestrial network.

Falcone also likes Crosstex Energy (XTXI). We covered his investment in XTXI back in December and the Harbinger manager likes it due to its complex financial structure. A master limited partnership owns the assets and then XTXI owns that partnership. He drew attention to the fact that this isn't a company that pulls gas out of the ground, but rather a play on gas processing and transmission. Falcone thinks XTXI is worth double what it's trading at now or more (around $9.50 currently).


Jim Chanos / Kynikos Associates: The well-known short-seller attacked alternative energy 'green' plays with a presentation entitled, "Does Solar and Wind = Hot Air?" Chanos said that, "wind is 50% more expensive than natural gas, and solar is 4 times more expensive" and that natural gas prices have essentially shot an "economic arrow" into alternative energy.

In particular, Chanos mentioned Denmark-based Vestas (CPH:VWS or PINK: VWDRY), a company focused on wind power that might be worth looking at for a short.

However, he is most excited about shorting solar power via First Solar (FSLR), a company he believes has outdated technology. Chanos was recently on television talking negatively about this name as well. He points out that Spain and Italy utilize solar power the most. But, the problem there is that the demand is highly subsidized. Also, he points to the management exodus at FSLR as a warning sign for investors to exit shares.


Sunjay Gorawara / Investment Idea Contest Winner: This year's Ira Sohn featured an investment idea contest where the winner was able to present their idea to all attendees. Michael Price introduced the contest winner but while he was talking, he mentioned that Goldman Sachs (GS) could be a buy as it should be worth $100 more than where it currently trades. And in general, he was bullish on financials.

Judges Bill Ackman, David Einhorn, Michael Price, and Joel Greenblatt selected the winning entry of Bridgepoint Education (BPI) from an undergraduate student at Indiana University who will be interning at JP Morgan this summer.

For more hedge fund coverage: Be sure to receive our free updates via email or free updates via RSS reader.


This concludes part 1. Please head to part 2 of our notes from Ira Sohn for coverage of presentations from David Einhorn, Bill Ackman, Carl Icahn and more.

TPG-Axon Capital Reduces International Paper (IP) Stake

Dinakar Singh's TPG-Axon Capital Management recently filed an amended 13G with the SEC regarding shares of International Paper (IP). Due to portfolio activity on December 31st, TPG-Axon disclosed a 1.4% ownership stake in IP with 6,300,000 shares.

This marks a decrease in their position as Singh's firm owned 14,270,005 shares back in the third quarter. Over the course of three months, they've decreased their position size by almost 56%.

The hedge fund firm also filed a separate 13G on shares of Zhongpin (HOGS). Based on the filing, it appears as though their position remains unchanged with 3,000,000 shares. This total represents an 8.5% ownership stake in HOGS. We covered when TPG-Axon was buying HOGS back in September. Per Google Finance, Zhongpin is "principally engaged in the meat and food processing and distribution business in the People’s Republic of China (the PRC)."

Singh founded TPG-Axon in 2004 in collaboration with private equity firm Texas Pacific Group. Prior to launching his hedge fund, Singh was co-head of Goldman Sachs' principal strategies group.

International Paper is "a global paper and packaging company. It is complemented by the North American merchant distribution system, with primary markets and manufacturing operations in North America, Europe, Latin America, Russia, Asia and North Africa. The Company operates in six business segments: Industrial Packaging, Printing Papers, Consumer Packaging, Distribution, Forest Products, and Specialty Businesses and Other."

For all other SEC filings, head to our ongoing hedge fund tracking series.

Dinakar Singh's TPG-Axon Capital Buys More Zhongpin (HOGS)

Dinakar Singh's hedge fund firm TPG-Axon Capital Management recently filed a 13G with the SEC regarding shares of Zhongpin (HOGS). Per the filing, TPG-Axon has disclosed a 5.18% ownership stake in HOGS with 1,800,000 shares. Due to portfolio activity on September 21st, this marks a 484% increase in their position size as Singh's firm only owned 307,845 shares back on June 30th.

A former partner at Goldman Sachs, Dinakar Singh founded TPG-Axon in 2004 in partnership with the private equity firm Texas Pacific Group, launching with $5 billion. The firm has offices in New York, Hong Kong, Tokyo and managed $13 billion as of 2008. Prior to founding his firm, Singh was co-head of the Principal Strategies group at Goldman Sachs.

Taken from Google Finance, Zhongpin is "is principally engaged in the meat and food processing and distribution business in the People’s Republic of China (the PRC). At December 31, 2009, the Company’s product line included 358 meat products, including chilled pork, frozen pork and prepared meats, and 34 vegetable and fruit products, that are sold on a wholesale basis and on a retail basis through an exclusive network of showcase stores, network stores and supermarket counters."

For more on the latest hedge fund movements, head to our constant coverage of SEC filings.

Hedge Fund Panel: Is There Alpha In Asset Allocation? (Och, Mindich, Singh & More)

We're moving along in coverage of the hedge fund panels that recently took place. Yesterday there was coverage of key takeaways from the event and the "Case For Global Equities in 2010" from a panel of prominent long/short equity hedge fund managers. Additionally, there was a hedge fund manager panel on the global investment landscape in 2010.

Next up are the thoughts of Eton Park's Eric Mindich, Highbridge Capital's Glenn Dubin, Highfields Capital's Jonathon Jacobson, Och-Ziff Capital Management's Daniel Och, and TPG-Axon's Dinakar Singh from the panel on:

The Art of Multi-Disciplinary Investing: Is There Alpha In Asset Allocation?

Overall, the panelists thought that multi-strategy was the best fund format to take advantage of all the attractive opportunities. They debated as to whether there would be further consolidation in the hedge fund industry, but agreed that if regulation becomes too onerous that more funds will close and managers will run their own capital. Larger funds are more aptly suited to provide the increased transparency that investors are requiring now. There was a consensus that letting fund managers focus on investing rather than administration was essential and this favored larger funds.


Daniel Och (Och-Ziff Capital Management): Och's outlook focused on a bottom-up basis where he noted that this is an extremely attractive period overshadowed by macro risks. He notes that interest rates are likely to rise and that we should expect a similar experience as in 1993-1994 when we saw global quantitative easing (i.e. a bumpy ride of up's and down's but overall a good environment for investors).

On the topic of hedge funds, Och felt that an alignment of interests and incentives at a firm is crucial to success. He favors multi-strategy because it allows access to many more research and deal flow resources. One interesting note on firm culture is he wants an environment where people talk about how they can be better, not how good they are. Regarding hedge fund consolidation, he thinks it is talked about too frequently and that in 5 years time there will be ample smaller firms finding success. Och Ziff's master fund was up 23% for 2009 as noted in our hedge fund performance numbers post. Their Asia master fund was up 33.6%.


Eric Mindich (Eton Park Capital): Mindich's market outlook focused on the deleveraging that is taking place. He said that this creates opportunity on a micro basis even though there are headwinds and signaled that merger arbitrage will pick up. Mindich also noted that there has been a reduction in prop capital that has allowed Eton Park to capitalize on new opportunities as hedge funds provide this transitional capital now. Eton Park is a part of our custom Market Folly portfolio that is seeing over 25% annualized returns, created with Alphaclone. In our recent portfolio coverage of Mindich's firm, we noted that Eton Park expanded its UK holdings.


Dinakar Singh (TPG-Axon Capital): Singh's outlook focused on the fact that there is still policy risk, as well as funding and China risk. That said, he thinks that in the next 6-18 months that investors will underestimate the industrial improvements in America (TPG-Axon is currently finding many attractive opportunities there). He also noted that rates will go up over time and they will use credit to hedge equity. Lastly, the global world is more challenging than ever to invest in and that the alternative industry needs to be proactive in terms of regulation. They are not going to focus on every strategy, as they know when to say 'pass' on certain strategies.


Jonathon Jacobson (Highfields Capital): Jacobson reminded everyone of the old adage that investing is a marathon, not a sprint. The easy money has been made and markets are now more fairly priced. He thinks that the US is the most attractive geographic region and that the large cap, high quality names are the cheapest plays. This is sentiment we've seen out of many prominent hedge funds now. Bill Ackman & hedge fund Pershing Square recently started a large Kraft (KFT) position and is one of the many examples. The "high quality names are cheap" meme was echoed on the long/short equity panel we covered yesterday.

Highfields doesn't want to swing at every pitch, but rather just the big ones where they can hit home runs. They have 70 employees (25 investment professionals) and they like to keep the firm smaller. They note that the barriers to entry in the hedge fund industry are higher than in the past as investors want more transparency, counter-party management, and there will be a higher regulatory environment. This obviously favors larger funds that have the resources to let the investment team focus on the investments and the back office team focus on administrating.


Glenn Dubin (Highbridge Capital): Dubin's outlook centered on two major assumptions: that we will be in a churning economic environment for a while and that the last two years have been dominated by beta. He thinks 2010 will be more focused on alpha and that the amount of money allocated to event-driven strategies is the lowest he's seen in a while. Highbridge sees attractive returns there and also finds Asia very interesting. In terms of hedge fund culture, Highbridge says culture is critical and they spend a lot of time on interviews as they want team-players. Lastly, turning to the topic of investing in hedge funds, he said that allocators have to focus on the risk/reward of investing with experienced versus newer managers.

This wraps up the "Is There Alpha in Asset Allocation?" conversation. Head to the overview of the conference, the post on the long/short equity panel, as well as coverage on the global investment landscape in 2010. Check back tomorrow for summaries of the remaining hedge fund panels.